Parents plug financial gap for first-time buyers
According to new research from Alliance & Leicester Mortgages’ (A&L) movingimproving index, the plight of first-time buyers is such that parents are giving their offspring an average of £21,314 to help them buy their first home.
The figure is £3,500 higher than the 2006 average of £17,677 and in part, A&L attributes this change to an increase in the expectation that parents should help fund their children’s future.
The average cost of a first-time buyer property stands at £162,055 and some new to home ownership are impeded by student loans which they have to balance with a mortgage and rising living costs.
In the A&L survey, 20% of parents said they had used their savings to help their children buy a home.
One-fifth intend to offer financial support when the time comes, and others are buying houses with the aim of renting them out to their children.
A&L is reminding parents that buying to let to children can not only help a son or daughter to leave home but can also provide financial security for parents too.
Set alongside evidence that provision for retirement income in the UK is being adversely affected by a growing trend for parents to make substantial donations to help their children buy property, the buy-to-let plan has its advantages.