The £20bn FTB burden

Recent research has revealed the wider impact of first-time buyers struggling to get onto the housing ladder.

According to the most recent First Time Buyer Index, 22% of first-time buyers are living with their parents. Published by Aldermore, the quarterly release indicated that over a quarter (26%) of those have stated that in order to save for a deposit, they will have to live with their family for an additional five years or more.  Given the figures indicate that 31% feel strongly that buying a home is currently unachievable for them, it’s doubtful how soon the situation will improve.

One of the main issues highlighted in the report was the extra cost for parents; £416 per month was the average additional cost of electricity bills, petrol and food and drink. Annually, this could amount to an extra £4,996. This could amount to around £24,979 where children live with parents for an extra five years.

On a national basis, this would mean struggling first-time buyers are costing their parents an additional £20.1 billion each year. This has led to a third of parents having to put saving for their retirement on hold.

In addition to finances, parents are also feeling the impact in an emotional respect. 31% of parents feel as if they don’t have the same level of freedom with their children living at home, whilst an additional 31% believe that the situation is having a negative impact on their parent-child relationship. 28% are eager for their child to make the move.

Children are also being impacted in an emotional sense, with 24% stating that they still feel like a child when having to live with their parents. Although they recognise that the living situation is a means to an end, 24% feel frustrated that they are having to reside in the family home.

In regard to governmental help, respondents to the study felt that more could be done to assist first-time buyers. 25% stated that growing house prices should be dealt with, whilst 10% stated that increasing the level of supply should be a priority. Whilst 12% believe that bank and building society lending criteria should be improved to help those trying to get onto the property ladder, 14% want the government to bring back the Help to Buy scheme.

Of those actually trying to buy their first home, 91% believe that getting on the property ladder is a challenge. The main obstacle cited is the ability to raise a deposit, with 35% feeling that it’s more of a problem than property price (26%). 22% of those looking to buy for the first time are intending to use family assistance to fund their deposit, although the number planning to use their own saving has grown this quarter; up from 18% to 23%.

Commenting on the report was Charles McDowell. The Commercial Director of Mortgages at Aldermore stated:“First time buyers have a notoriously difficult time getting on the property ladder.  Since saving an adequate deposit remains the biggest obstacle, more and more people have had to move back into the family home to boost their savings. Our report reveals just how difficult this can be to navigate, with real impact not just on parents finances but also on the relationship with their children and their own ability to save. Furthermore, as parents are less able to save for their retirement, more people will require help to unlock the value held within their property in later life. This is an intergenerational problem that goes beyond the simple view of the Bank of Mum and Dad.

“We believe strongly that first time buyers are the driving force of the property market but our Index reveals just how hard buying a first home really is and is likely to remain so for the foreseeable future. Low levels of confidence amongst this group will have ramifications further up the housing chain so it’s imperative that more support is offered.  We know that first time buyers are relying on the new government to provide much needed solutions but following the recent General Election, housing policy is likely to be reviewed again under the newly appointed housing minister, meaning it remains more uncertain than ever.

 

 

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