Half first-time buyers need help

Friday, 17 February 2006 12:00

Half the young first-time buyers in the UK need financial help from their parents to cover their deposits, new figures show.

However, much of the help could be coming from housing, as parents draw down money from their own home to help their children get onto the property ladder, research from the Council of Mortgage Lenders (CML) finds.

And this has become significantly more common in the last few years. A decade ago just one person in ten bought properties where the deposit was higher than their plausible savings - this figure now stands at 50 per cent.

"For some home-owners, helping out their children with a mortgage deposit may represent an efficient use of funds, in the light of low returns on alternative investments," said CML senior statistician James Tatch.

"For others, the assistance may not represent an investment decision so much as a case of the family 'pulling together' to enable the younger generation into home-ownership."

But Mr Tatch, author of the CML research, was less sure about the effects of this pattern.

"While older generations are able to raise funds from converted equity and other sources, the assisted route remains a viable option for many young first-time buyers with willing families," he said.

"But if for whatever reason these sources dry up, the importance of unassisted first-time buyers is likely to increase, and the affordability constraints they face will be brought into sharper focus."

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