Two thirds of home buyers relying on financial support from parents

The majority of 20 to 45 year olds in the UK who purchased homes did so with financial support, a report from Halifax has revealed.

Parental contribution has become a necessity for those who still aspire to own a home, according to the research, with 6 in 10 people in ‘generation rent’ agreeing that there is now expectation for parents to help young people to buy their first home.

For parents, this belief can bring with it a significant emotional and financial burden. By looking at how the parents of prospective owners view today’s market it becomes apparent as to just how invested they are in helping their children achieve the dream of homeownership.

The study found:

A parent’s perspective

• 38% of parents who have given financial support to their children to buy a property are concerned about their own financial future as a result
• 92% of parents think that its hard or impossible for first time buyers to obtain a mortgage
• 25% of parents said their children had moved back in with them after moving out as a result of not being able to buy their own property
• After helping a child buy a property, 92% of parents would not anticipate their children to help them out financially in return

Great expectations

57 per cent of parents of 20-45 year olds have already done, or would expect to do, something to help their children onto the property ladder:

• 44% either already have or expect to have to help their child with a deposit
• 37% either already have or expect to have to help their child with the cost of moving
• 18% either already have or expect to have to be a guarantor on their child’s mortgage.
• 14% either already have or anticipate that they will contribute to the monthly payments of their child’s mortgage

This is also a marked shift in the sacrifices that the parents of generation rent made to get themselves on the property ladder compared to current homeowners aged 20-45. This generation of homeowners is far more likely than the preceding one to have lived with their parents for longer (31 per cent vs. 15 per cent) or borrowed money from their friends/family (23 per cent vs. 9 per cent) in order to pull together a deposit

These kinds of sacrifices can have real impact on the financial futures of the parents. Of those whose children have bought a home, 27 per cent dipped into their savings and 10 per cent gave their child an early inheritance to help them get on the ladder, with a third of those parents that have helped their children either concerned or very concerned that it may affect their financial future in later life/retirement.

Commenting, Craig McKinlay, mortgages director at Halifax, said: “For many buyers, parental support is now the fundamental first step onto the property ladder. For parents whose children are looking to buy, and the those first time buyers now wanting to own, real consideration needs to be given to set realistic timescales and ways in which this can be achieved without either party being overstretched of facing longer term financial difficulty as a result.”