A survey sponsored by Shelter shows that half of parents expect their children would require an inheritance from them to buy their first home.
First time buyers have been struggling to find deposits to buy their first property and a survey from Shelter reveals 49% of parents believe their children will never own their own home without an inheritance or cash gift from them.
Currently one in six young people aged between 25 and 34 depend on an inheritance from their family to purchase their first home, says housing charity Shelter, with the number becoming homeowners falling from 59% in 2003 to 36% in 2014.
In contrast only one in twenty over the age of 55 must rely on an inheritance to buy their home.
House prices exceed wage increases
The rise in house prices has made it increasingly unaffordable to purchase a house for first time buyers and makes the next step for home movers more difficult.
Family members can help home movers where equity release buyers access wealth using a lifetime mortgage and give to a child or grandchild as an extra deposit to buy their home.
For buy-to-let landlords higher prices mean they will need larger deposits or charge higher rents to tenants to meet the lender’s minimum rental income requirements.
Lenders require buy-to-let landlords to have at least 125% more rental income than a notional mortgage interest, usually 5% to 6% of the mortgage amount.
A recent report from Rightmove shows UK property values have now reached a record high with an average of £286,133, surpassing the previous peak in June 2014.
Figures also show property prices in Greater London now average £594,585 and are almost 50% or £195,000 more than the average only five years ago.
Government failed to build homes
According to Campbell Robb, chief executive of Shelter, successive governments have failed to build enough affordable properties resulting in a shortage of new build homes.
Mr Robb has said, rather than pumping more money into schemes like Help to Buy politicians should instead build the affordable homes that are desperately needed.
He continued, ‘The failure of successive governments to build anywhere near enough affordable homes is leaving millions of young adults facing a lifetime of uncertainty’.
Young people will either have to continue in expensive and unstable private renting, or they will be stuck in their childhood bedrooms well into adulthood.
The government’s Help to Buy scheme has been very successful in allowing people, both first time buyers and home movers, to buy their properties with only a 5% deposit.
However, the lack of new build properties means prices continue to rise and eventually make it harder to afford a mortgage even with a Help to Buy scheme, especially in London without help from parents.
Without family help to upsize, the only option for remortgage buyers to stay in their existing home and continue saving more for a bigger deposit.
However, the lack of new build properties means prices continue to rise and eventually make it harder to afford a mortgage even with a Help to Buy scheme, especially in London.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, pay for care at home or even buy a more expensive home.
Learn more by using the property value tracker chart, mortgage monthly cost calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
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