Most first-time buyers (FTBs) in the UK are still turning to family for help with a deposit, according to Adrian MacDiarmid from Barratt Redrow.
Research found that 87% of FTBs asked for financial support from their families, with the average deposit now standing at over £34,500.
More than 62% of FTBs bought with family money, mainly from parents, but support also came from grandparents, aunts, uncles and siblings.
Just over half of families gave £16,000 or more towards a house purchase.
Over three in five parents and grandparents inherited the money they gifted.
Most did not expect repayment, with two-thirds gifting money because they felt guilty about how difficult it is to get on the property ladder.
MacDiarmid said: “We’re continuing to see a significant number of first-time buyers turning to family for help getting onto the property ladder.
“With rising house prices and the increased cost of living, support from parents and other family members remains crucial for many.
“Our research found that not enough first-time buyers and their families are aware of schemes to help them, from Government, new build developers, and lenders.”
MacDiarmid added: “There are a wide range of schemes available to support first-time buyers, meaning family support isn’t the only route to homeownership.
“At Barratt Redrow, we’re focused on offering a mix of affordable homes and tailored support to help more people to take their first step onto the property ladder.”
MacDiarmid set out several tips for getting on the housing ladder without family support. He said first-time buyers may be able to borrow more than they think, as lenders offer enhanced affordability assessments to customers who can prove they can manage repayments.
For example, Nationwide’s Helping Hand mortgage offers up to six times income for longer-term fixed rates.
MacDiarmid advised talking to a broker to see what is available.
He said low deposit mortgages are also an option, with more lenders now offering mortgages requiring only a 5% deposit.
In some cases, lenders provide 100% mortgages, so no deposit is needed.
He suggested looking at the Government’s First Homes Scheme, which offers a discount of up to 50% on new build homes for those with incomes of £80,000 or less (£90,000 in London), with councils setting eligibility criteria like being a key worker or local resident.
He also said shared ownership schemes allow buyers to purchase a share of a property, typically between 25% and 75%, and pay discounted rent on the rest.
Buyers can buy more shares over time through staircasing.
Additionally, MacDiarmid suggested the Own New – Rate Reducer scheme, which is available on new build homes and could see mortgage interest rates as low as 2.2% for up to the first five years.
Developers in the scheme, including Barratt Redrow, may contribute up to 5% of the purchase price towards the move.
He also pointed to Skipton Building Society’s Track Record 100% mortgage, which is available to renters buying their first property, with no deposit needed.
MacDiarmid added that Barratt Redrow’s Key Worker Deposit Scheme offers a contribution towards the deposit for teachers, nurses, council workers and foster carers.
For every £20,000 spent on a home, the scheme provides £1,000 towards the deposit, up to £15,000.
On a £300,000 home, buyers qualify for the maximum contribution.
