New research: Helping children and grandchildren on to the property ladder

(IFA Magazine)

 

New research* from The Openwork Partnership shows nearly one in five parents and grandparents plan to use their home wealth to help children and grandchildren on to the property ladder in the next five years.

Its nationwide study found 17% are considering releasing equity from their homes to enable family to afford a house deposit – the equivalent of around four million people across the UK.

Family help is a further boost for first-time buyers who should benefit from the launch of the Government’s Mortgage Guarantee Scheme** in April which aims to increase the supply of 95% loan-to-value (LTV) loans from mortgage companies.

The Scheme, announced in last month’s Budget, is being launched in response to the reduction in 95% LTV mortgages with very few currently available meaning first-time buyers need to raise bigger deposits to get on the housing ladder.

The Openwork Partnership’s research found parents and grandparents are most likely to downsize and move to smaller houses to raise the cash to help family. Around 61% say they will consider downsizing while nearly a third (31%) would remortgage and 24% would consider equity release plans.

Mike Morrow, Chief Commercial Officer at The Openwork Partnership, said: “Rising house prices make it harder for first-time buyers to raise the deposit for a property purchase and the struggle is made even more challenging by the shortage of high LTV mortgages.

“The Government’s Mortgage Guarantee Scheme should help with the high LTV mortgages depending on how many mortgage companies decide to take advantage of it, but family support remains very important in helping people on to the housing market.

“It is understandable parents and grandparents want to help but they should think carefully about how they release money from their homes and take advice on the most appropriate ways to do so as well as any inheritance tax implications.”

The table below shows how many parents and grandparents around the country plan to use their homes to help children and grandchildren buy homes of their own. Nearly one in four in the East Midlands are considering releasing cash from their homes with around one in five Londoners and people in the West Midlands likely to follow suit.

REGION HOW MANY WILL RELEASE EQUITY TO HELP CHILDREN AND GRANDCHILDREN
East Midlands 24%
London 21%
West Midlands 20%
South East 16%
Wales 16%
North West 13%
Yorkshire & Humberside 11%
South West 8%
East Anglia 6%
Scotland 4%
Northern Ireland 4%
North East 0

 

* Research conducted among 1,280 adults aged 18-plus including 760 parents and grandparents using an online methodology by independent researchers Pure Profile in December 2020

** https://www.gov.uk/government/publications/the-mortgage-guarantee-scheme

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