Typically, 30% of first time buyers have financial help from their parents with the average helping hand sitting at 20% of their first homes deposit, says the research from The Equity Release Council.
It says that this suggests that over the last five years, UK parents have injected an average of £23.05 million into the housing market each month.
Grandparents are also keen to help their family get on the housing ladder and 6% of first time buyers received an average of 18% of their deposit from older relatives, which equates to £125 million over the last five years.
However, while 23% say parents are proud to support their children and 14% derive pleasure from seeing their families enjoy the money, it does raise some concerns. Indeed, 43% said it caused worries about whether parents were in a position to help financially and 36% felt it raised concerns around whether the children will ever be able to ‘survive financially on their own’.
In addition, 54% said that their parents providing financial support for children had a negative impact on their family. The most common issue that it caused was frustration as one child received more help than another and annoyance as ‘the parents should not have to keep helping’ according to 17% each. However, 15% worried that by providing financial help, their older relatives may lose money they need in later life.
Taking a closer look at the impact, 8% of children say their parents have delayed giving up work to help them financially, 10% feel they have used some of their retirement savings and 3% said their parents have remortgaged their home to help their children.
‘With the average first time buyer putting down a deposit of £27,000 to buy their home, it is unsurprising that people are looking to their parents for help. However, while the vast majority of parents and grandparents are likely to want to help, it is not always financially viable, especially if you have more than one child,’ said Andrea Rozario, director general of the Equity Release Council.
‘It is concerning that some people are delaying giving up work, using retirement savings or even remortgaging their homes to help their children financially. Not only can this decision cause ill feelings among family members but it may have a detrimental impact on the parent’s standard of living,’ she pointed out.
‘However, with the UK’s over 55s having a substantial amount of housing equity, it is possible to use equity release to take out some of the value of their homes so they can pass it on to the younger generation. People who think this may be an option should speak to a financial adviser who can help them to make the best choice for their individual circumstances,’ she added.
