A report by the Social Mobility Commission has shown a rise in the number of children who rely on their parents for help to buy their first home. Parental lending of this nature is generally known as the Bank of Mum & Dad! The research also shows that young people are purchasing their first home at a later age.
The report states that the percentage of first time buyers who rely on help from their parents has risen to 34%. This help is given either in the form of a gift or a loan. It is in addition to the nearly 10% of first time buyers who use inherited wealth to get onto the property ladder. This means that nearly half of those looking to buy their first home need this kind of financial help.
In addition, the percentage of 25 to 29 year olds who own property has reduced over the last 25 years. In 1990, 65% of this age group owned their own home. That figure now stands at 31% now – that’s less than half in a relatively short space of time.
The Commission predicts that if economic activity weakens, the percentage of first time buyers relying on this kind of help will remain at the level of 34% until 2024/25. After that it will increase to nearly 40%.
Interestingly, there is also evidence that more than 1 in 10 existing owners depend on parental help when buying a new property.
What conclusions about the Bank of Mum & Dad did the report reach?
One of the conclusions reached by the researchers was that the number of first time buyers will actually rise in the short term. They then say it will fall back gradually over the following 25 years. Much will depend on just how robust the UK economy is.
As a by-product of efforts to promote housebuilding in Scotland, there is help available to purchasers. One source of help is the Affordable New Build and Smaller Developer Schemes. There are also Low-cost initiatives for first time buyers schemes involving shared equity. These schemes help first time buyers in particular to get onto the property ladder. This can happen with or without the help of the Bank of Mum & Dad!
If you are a first-time buyer and would like to have a chat about how you can get onto the property ladder, please give us a call on 0141 647 9851.