Many first time buyers struggled to afford their first properties before the pandemic and now, with the increase in property prices and general costs of living, the Bank of Mum and Dad (BOMAD) yet again appears to be the 'bank of last resort'.
Additionally, Help to Buy schemes are coming to an end in March of next year, which will likely see more first time buyers turn to their parents for help. However, we have yet to see the effects of the scraping of affordability tests announced by the Bank of England on 1 August.
Property group, Savills, report that BOMAD gifts and loans will account for almost half of all first time buyer transactions over the next three years, although there are reports that BOMADs have peaked.
That is a phenomenal figure and where will mum and dad get the money from? Parents' savings are increasingly dwindling as they too struggle in the cost of living crisis. Are they now dipping into their retirement funds to help their children buy their first home?
It is increasingly difficult to save for a new property given the current economic climate, cost of living and salaries not keeping up with increasing rates of inflation. Parents often feel morally obliged to help their children get onto the property ladder. But at what cost? And what will the longer term implications be in raiding their pensions as I suspect is now often the case? Time will tell.
Martin Edwards is an experienced residential conveyancing solicitor, based in our Cardiff office, and is happy to assist with any enquiries.
In the three years to 2024, nearly half a million first time buyers (470,000), or almost one in two first time buyers, will get financial help from a parent or other family member