An estimated 10 million parents prepare to give children leg-up onto property ladder

New research* from Heartwood Wealth Management reveals that an estimated 5.5 million parents have provided financial support to help their children onto the property ladder, with an average contribution of £20,921 per child. This equates to an overall total figure of around £116 billion, or 4% of the UK’s total housing equity**.

Moreover, with house prices out of reach for most first time buyers, more parents are facing up to the fact that their children will need financial assistance to buy their own home. One in three UK parents, equivalent to approximately 10 million people, intends to help their children in this way, with an average contribution of £22,401 per child. They are collectively preparing to donate £223 billion in housing deposits to their children.

Helping children onto the property ladder is most prevalent amongst the wealthiest households nationwide***, where two thirds of parents have either given, or intend to give their children financial support towards home buying, with an average amount given of £29,765. There are over 150,000 UK parents who have already given their children more than £100,000 towards buying a home.

David Lough, chief executive of Heartwood Wealth Management, comments: "Given the size of the sums involved, it is vital that parents factor this into their financial plans, particularly as our research shows that those parents preparing to make this gesture on average expect to see just 5% of their outlay returned to them."

Of those who have provided financial support to help their children buy a home, the research shows that only one in ten is treating the gesture as a loan, expecting it to be repaid in full. Over two thirds (68%) have made the donation and expect none of it to be returned.

"A parent’s financial responsibility no longer stops after university," continued Lough. "A property can now cost up to 10 times a first time buyer’s early salary, rather than three times as it was a generation ago. With some lenders demanding deposits of 35%, mortgages simply cannot cover the gap, so parents are facing up to the fact that they will be making a sizeable contribution to the equity in their children’s homes."

"Typically parents face this burden just as they need to accelerate saving for their own longer retirement, so it is vital that their financial planning reflects this. Their fifties are becoming an increasingly anxious financial decade for today’s parents."

* Based on an independent online survey conducted by Canvasse Opinion from Experian on behalf of Heartwood Wealth Management . A total of 1503 responses were obtained across the UK amongst adults aged 18 and over between 29th February and 5th March 2008

** On 12th January 2008 Halifax estimated the value of housing equity in the UK to be £2.8 trillion. £116 billion is 4.14% of this figure

*** Those households which fall into Experian’s ‘Symbols of Success’ MOSAIC consumer classification Group A and are defined as ‘people whose lives are ‘successful’ by whatever yardsticks society commonly uses to measure success. These are people who have rewarding careers rather than jobs, who live in sought after locations, who drive the more modern and expensive cars and who indulge in the most exotic leisure pursuits. Most, though not all, appear to enjoy stable household arrangements.’

Leave a Reply

Your email address will not be published. Required fields are marked *