Gifted deposits to first-time buyers down 5%

The number of first-time buyers and investors using gifted deposits has fallen by almost 5% and 3% respectively in the last two years, according to My Home Move research.

Related topics:  Mortgages
Rozi Jones
16th August 2017
first time buyer ftb buyer young couple house
"The average property deposit is now close to £60,000, so it’s likely that the Bank of Mum and Dad are stumping up the additional funds needed to help their children into bigger properties."

First-time buyers accounted for 7% of clients using a gifted deposits between June 2016 and July 2017, a decrease of 4.5% compared to the same period in 2014/2015.

Similarly, gifted deposits used by investors fell by 2.5%, accounting for 4.1% of all transactions.

88.9% of all those purchasing using a gifted deposit were second-steppers or middle-movers, an increase of 8.7% between 2014 and 2017.

CEO of My Home Move, Doug Crawford, said: “What is particularly interesting is the drop in gifted deposits to first-time buyers. With gifts to this group falling steadily, it does beg the question as to whether this is reflective of a drop in the number of first-time buyers entering the market, or whether there are other factors in play.”

“We already knew that the main beneficiaries of gifted deposits were people that were already on the property ladder, but the data seems to suggest that these second-steppers and middle-movers are in more and more need of help to make it onto the next step. As house prices have risen by almost 18% in the timeframe that was analysed, it may be that people are struggling to accumulate enough equity from the home that they are in now to raise a deposit on their new property. The average property deposit is now close to £60,000, so it’s likely that the Bank of Mum and Dad are stumping up the additional funds needed to help their children into bigger properties.

“Although the use of gifted deposits seems to have stabilised following the spike in transactions we saw around the time the SDLT changes came into force last year, gifted deposits still account for around 8% of all property transactions, suggesting that over 100,000 people still need help from parents or grandparents to obtain their dream property. It is clear that affordability is becoming a concern not just for first-time buyers, but for people on all steps of the property ladder. For now, it seems the Bank of Mum and Dad is still open for business, but with increasing house prices and stagnating wages, it’s unclear how much longer it will be open for.”

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