How To Help Your Children Buy A Home

Published: 05/06/2018

All anecdotes suggest that 2018 has so far been a good year for first-time property buyers.

Why?

There can be many explanations.

But recent findings go to reveal at least one reason why.

Latest figures show that the ‘Bank of Mum and Dad’ has so far forked out a whopping £5.7 billion this year.

That’s right – in less than six months, parents have gifted their children almost £6 billion to help them onto the property ladder.

There is no denying that it is difficult, in today’s economic climate and with salaries remaining stagnant, for younger people to purchase a property of their own. As a result, many get trapped in a turbulent cycle of renting. With rents so high, it can be difficult to ever save for that house deposit!

It’s not so surprising then that many generous parents, grandparents and other relatives are extending a helping hand to the younger generations.

The research also shows that contributions by parents are highest in London, with £31,000 per transaction on average, and that equity release has increased slightly as a source of funding for loved ones’ home purchases, from 3% to 4%. However, nearly half of over 55s that are open to the idea of an equity release would put the money towards a loved one’s home purchase deposit, with 20% wanting to contribute to mortgage payments and other housing costs.

This is not the only reason why more FTBs than ever are expected to jump onto the property ladder this year.

It was recently announced that, almost 400,000 properties are about to enter the market. In short, this is due to tax changes. You can learn more about this here.

Many landlords (as in - a 10-year high, according to estimates!) are planning to reduce the volume of properties across their portfolios, which is being attributed to tax changes made by the Government in relation to buy to let properties.

To make renting fairer for tenants, the Government has introduced new policies that essential mean landlords need to pay more tax if they have multiple properties. Mortgage interest relief for higher and additional rate taxpayers has also been removed, a three percent surcharge on purchases of an additional property introduced, and upfront letting fees for tenants have been banned. In summary, it may now be more difficult for landlords to make the same level of profit from their property investments. This is not to say that being a landlord cannot still be extremely beneficial, but the private rental market is now a fairer playing field for both landlords and tenants and unfair profits are no longer possible at the sake of tenant’s well-being.

As such, a large number of landlords have decided to sell properties.

Naturally, many of these properties will be in desirable locations and, given summer is not the best time to sell, may at be extra affordable prices.

FTBs, get ready to view!

I’m interested in buying a property. What should I do next?

First, ask yourself some important questions.

It would be a good idea to ask yourself:

Can I really afford to buy a property?
Evaluate your finances, now and in the future, carefully and make a realistic decision. You may like to enlist the assistance of a financial advisor.
Is the property I’m considering a good investment for the future?
An apartment in the city might seem great now, but what about when you decide to start a family? Is there enough space? Will you be close to schools? And so forth.
Do you understand the entire process?
Purchasing a property is time-consuming and complex. It’s important to have a team of experts on your side - ranging from a fantastic real estate agent to an experienced and specialist solicitor or conveyancer.

Next, you’ll need some expert help.

Our service for First Time Buyers

Introducing #FirstMoments our dedicated service exclusively for First Time Buyers, you can read more about it by clicking here.

Any Property Questions?

Who are GWlegal?

GWlegal are a property solicitors based in Liverpool, specialising in buying or selling, remortgage, declaration of trust, bridging and buy-to-let landlords.

If you have a legal matter you wish to discuss don’t hesitate to get in touch. You can call us on 0345 373 3737 email us hello@gw.legal with your question.

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Content correct at time of publication.