Revealed! How first-time buyers receive £30k towards buying a home

According to new research, first-time buyers are beating record house prices by accessing an average of £30k from a particular source.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A couple hug having moved into their new home

New research reveals that many first-time buyers are overcoming record house prices thanks to one of the UK’s biggest mortgage lenders – the Bank of Mum and Dad.

So, what else did the research reveal? And how can you get support towards buying a home if you don’t have access to parental help? Let’s explore.

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How much help are first-time buyers getting?

According to Zoopla, 64% of parents say they have given financial assistance to help their children get on the property ladder. The average contribution is £32,440, though some parents go much further than this.

The survey shows that 14% have awarded their adult children over £50,000 towards buying their first home, while 4% of parents have bought their adult children a property outright. 

While these figures may seem staggering, it’s important to put these contributions into context. Right now, first-time buyers are facing the highest house prices in history. 

According to the ONS, average house prices now stand at an eye-watering £270,000. This means the typical contribution from the Bank of Mum and Dad equates to just 12% of the average house price. While this is nothing to be sniffed at, the price of an average home has increased by almost £30,000 in 2021 alone. 

This fact, coupled with soaring rents and stagnating wages in recent years, means buying a home is now harder than ever. 

What else does the survey reveal?

The survey also reveals that 24% of first-time buyers believe buying a house would be impossible without help from Mum and Dad. In light of this, 18% of parents say any financial assistance given was a result of ‘guilt or sympathy.’

The survey also reveals that many parents give their offspring help towards other housing costs. For example, 17% of respondents say they currently help their children with mortgage or rent payments. Meanwhile, 8% even say they’ve always made a monthly contribution.

According to Daniel Copley, content manager at Zoopla, those who don’t receive any parental help are now in the minority. He explains, “While it is accepted that many parents give their children help to get on the property ladder, these new figures reveal just how high a proportion of young adults who own homes today have had financial support from their family.

“When looking at the data, it is very clear that average house prices in the UK have increased at a greater rate than salaries over recent decades, reinforcing the notion that it is harder for young adults to get on the property ladder today than it was for previous generations.”

Copley adds that the Bank of Mum and Dad will continue to play a huge part in helping first-time buyers get on the property ladder.

He explains, “Putting more money towards the purchase of a home can help reduce mortgage payments and in turn can unlock lower interest rates, so it’s clear that, when it comes to property, the ‘Bank of Mum and Dad’ will be in business for a long time to come.”

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What help is available for those without access to the Bank of Mum and Dad?

For those unable to access the generous Bank of Mum and Dad, buying a house may seem an impossible task.  

While the government has implemented a number of policies to support the housing market, such as the recent Stamp Duty holiday and the introduction of 95% mortgages, many feel that these support schemes simply help to inflate current prices

Despite this, if you’re a first-time buyer looking for help, then it is worth exploring the Lifetime ISA. This is a savings product that allows you to save for a deposit tax free. You can save a maximum of £4,000 per year, and the government adds a 25% bonus to your savings. The total maximum bonus available is £32,000 which is just a smidgen less than the typical Bank of Mum and Dad contribution!

To learn more, see The Motley Fool’s Lifetime ISA guide. 

Please note that tax treatment depends on your personal circumstances and may be subject to change in the future. The content in this article is provided for information purposes only. It is not intended to be, nor does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

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