Over half (52%) of parents who have provided money to help their children get on the property ladder will get nothing back on their investment – that’s according to research into the state of the ‘Bank of Mum and Dad’ by property portal FindaProperty.com.
FindaProperty.com asked people who have bought a property with their parents’ help in the past five years and over half said they won’t repay a single penny to them. The average first-time buyer in the past five years received £22,669 from their parents, its research found.
Nearly two-thirds (65%) of first-time buyers planning to pay back their parents said they are not planning to repay them with interest. Nearly a fifth (18%) of buyers said they plan to repay their parents in less than two years, but 12% said it would take more than five years
Sixty-one percent of first-time buyers said their parents had given them up to £20,000 to help them buy their home, with 32% getting more than £20,000. Incredibly, 11% of first-time buyers got more than £50,000 from their parents towards their home purchase.
FindaProperty.com’s survey found that 16% of people who bought a property in the past five years have had financial support from their parents. And a very similar amount of wannabe first-time buyers, 17%, expect to get help from the Bank of Mum and Dad in the next five years.
The research also found that first-time buyers need more support from the Bank of Mum and Dad than they originally expected. Before they bought their property, nearly half of first-time buyers (46%) thought they would need less than £5,000 from their parents to help with the purchase. But after the purchase only 22% receive up to this amount, with most buyers getting much more.
However it seems that parents understand the need to give their children financial support. When asked what the attitude of their parents was when they gave them money, 42% of first-time buyers said that their parents understood it was the only way they could afford to buy a property. Another 30% said their mum and dad saw it as part of being a parent, while 20% saw it as an investment in their child and 8% as an investment in the property.
Nigel Lewis, property analyst from FindaProperty.com, said: “Our research found that roughly the same proportion of first-time buyers today are relying on their parents to help them onto the property ladder as they have in recent years, but the cost of that help is growing steeply. Buyers assume they might only need a few thousand pounds from mum and dad, but quickly find they need tens of thousands instead.
“In the past couple of years many mortgage companies have increased the deposits they require, and banks have become less willing to make cheap loans available, so parents have taken up the slack and become an easy source of money – the advantage for their kids being that they have little expectation of ever seeing a return on their investment.”
FindaProperty.com is a leading property website with a comprehensive search facility for house-hunters looking for property to buy or rent.
The site also holds independent editorial on the housing market, as well as guides to different aspects of the buying, selling and renting processes. These contain local information about council tax rates, school tables, crime rates, comments from local residents and photo albums, giving a general feel for an area.
Launched in 1997, FindaProperty.com now publishes the details of over 750,000 properties from over 11,000 agents, attracting 4 million unique visitors and generating 74 million page impressions a month.
FindaProperty.com has tools to make home hunting easier including the ability to add notes to properties of interest, check out distances from properties to key places, and search recent property sold prices.
FindaProperty.com is recognised as a leading source of consistent and reliable UK housing market data.
For further information:
Citigate Dewe Rogerson
0207 282 2815