|Parents Give Children A Leg Up The Property Ladder|
‘Bank of mum and dad’ helping to ease burden for first time buyers
With house prices out of reach for most first time buyers, the ‘bank of mum and dad’ is helping to ease the burden for the children writes Oliver Finn's Christian Harper.
One in three UK parents, equivalent to approximately 10 million people, intend to help their children buy their first home, with an average contribution of £22,401 per child. They are collectively preparing to donate £223 billion in housing deposits to their offspring.
These figures are based on new research from Heartwood Wealth Management which reveals that an estimated 5.5 million parents have already provided financial support to help their children on to the property ladder. This equates to an overall total figure of around £116 billion, or 4% of the UK’s total housing equity.
It comes as no surprise that this help is most prevalent amongst the wealthiest households, where two thirds of parents have either given or intend to give their children financial support towards home buying, with an average amount given of £29,765. Over 150,000 UK parents who have already given their children more than £100,000 towards buying a home.
Any similarity to banks ends there. The research shows that those parents yet to take the plunge, and are preparing to make this gesture, on average expect to see just 5% of their outlay paid back.
Of those who have already provided financial support to help their children, only one in ten is treating the gesture as a loan, expecting it to be repaid in full. Over two thirds (68%) have made the donation and expect none of it to be returned.
Whilst this is good news for those lucky enough to have parents able to dig deep, this is disappointing for parent’s expecting their financial responsibility to end after university.
Christian Harper Oliver Finn
April 25, 2008