Housing Boom Stretches Parents Budgets

November 1, 2006 By Matthew Paulson

As rising house prices become more and more prohibitive to first time homebuyers trying to get themselves onto the first rung of the property ladder it seems that a large amount of the financial burden is resting squarely on the shoulders of the parents of those looking to flee the nest.

According to a report by Alliance & Leicester Mortgages parents are paying on average £21,314 to help their kids buy that awkward first property (the average cost of which £162,055). With the continuous increase in house-prices and the high probability of considerable student debt it would seem that for a growing amount of people the only way of getting on the ladder is by seeking the help of their parents.

A fifth of the parents surveyed had already helped shoulder the financial burden of their children’s first home and another one in five plan to help out when the time comes. The report also shows that parents are willing to contribute more money than ever - the average amount has gone up £3,637 on last year’s average amount of £17,677.Apparenty modern-day parenting is an expensive business.

Why are today’s parents apparently so generous with their money? The report appears to indicate that guilt plays a significant part - more than one in three say they’d feel guilty if they couldn’t help out (incidentally dads experience this burden of guilt more than mothers with almost 50% of dads seeing it as their responsibility to help out the kids.)

Stephen Leonard, Director of Mortgages at A&L commented: “It has become increasingly common for parents to offer financial assistance to their children when they come to buy their first home. Rising house prices mean first time buyers have to find bigger deposits to secure their property, with many having to fork out for stamp duty as well. This means extra funding from parents can often make the difference between renting or being able to get on to that first rung of the property ladder.”

Interestingly there appears to be a disparity between the number of parents willing to help out their kids when it comes to buying a first home and the number of home buying children who are or have been prepared to ask for their parent’s fiscal aid (18%). One in ten was prepared to request their grandparents for assistance if their parents weren’t in a position to help.

Go to the Alliance and Leicester website for more information on A&L Mortgages.

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