A quarter of first time buyers need family help to move from rented accommodation

Sep 11th 2019

A recent report by KIS Finance has revealed that as more people struggle to get on the property ladder, 23.5% of Brits are reliant on help from their parents, or other family members, to fund the deposit to buy their first home.

The survey reveals how much longer individuals are having to wait before they can buy a property, often well above the average age of first-time buyers (34), according to the Office of National Statistics. Key findings:

•  23.5% of Brits have, or will, rely on financial help from members of their family to fund the deposit on their first home.

•  44.2% of 35-44 year-olds want to purchase a house but haven’t been able to yet. 17% of this group will be relying on help from family.

•  28.3% of 45-54 year-olds still haven’t been able to purchase their first home and 7.6% of these will also be relying on help from family if they are ever going to get on the property ladder.

Interactive map
The interactive map shows how long it would take to save an average house deposit in each region of the UK. The results are based on the average UK salary per age group, depending on whether you save 10% or 20% of your monthly income.

The report also looks at the potential reasons as to why so many prospective homeowners are having to rely on loans, gifts and inheritance from family to purchase their own home.

Housing is less affordable
Looking at the latest house prices-to-earnings ratio, on average, house prices are 7.8 times more than the UK average annual salary. This figure has risen steadily over the last 20 years from 3.5 in 1997.

Nationwide, there are huge differences. In the North West of England will cost, on average, 2.5 times the average UK annual salary, whilst in London this figure rises to as much as 44.5 times for those buying in areas like Kensington and Chelsea.

People are in the rental cycle for longer
In 2007 there were 2.8 million households in the private rental sector – by 2017, this figure had increased by 63% to 4.5 million. Tenants are getting older. The biggest increase is in the 45-54 year old age range living in rented property.

The combination of an increasing number of tenants and rent increases of 7.6% since 2015, has resulted in the long wait to get on the property ladder.

It’s also about the mortgage
In a further survey conducted by KIS Finance, declined mortgage applicants were asked what reasons they were given by the lender, as to why they were unsuccessful:

•  Income too low: 46.6%
•  Unable to prove sufficient income (self-employed/contract worker): 34.1%
•  Adverse credit history: 20.5%
•  Lack of employment security: 15.9%
•  Too many debts already: 13.6%
•  Taken out a payday loan in the past: 8%
•  Deposit was too small: 13.6%

Unsurprisingly, 18-24 year-olds represented the largest group of individuals who were declined a mortgage because of income (62.5%). The second largest group in this category is 55-64 year-olds (57.1%). Later on in life. people still struggle to afford their own home.

Other reasons we need family loans
It’s not just first homes. Respondents say they receive help from family to purchase a car or help cover its running costs (44.8%). The second most common reason is to cover the costs of starting a family (34.4%). This includes the initial costs (buying prams, cots clothes etc.), childcare and school fees. Around 22.4% of respondents have received financial help from family to cover day-to-day living expenses, including rent, bills and shortfalls in wages.

Read the full report.