Older homeowners gift average £42,500 for house deposits in 2020

Older homeowners gifted an average £42,500 to younger relatives to help them get on or move up the property ladder in 2020, new data published by Key has revealed.

The figure is almost two-thirds of the average first-time buyer deposit, which stands at £57,278, according to recent findings from Lloyds.

Key suggested that helping younger family members was a major motivation for equity release customers in 2020, with £755m of the £3.4bn in property wealth released last year used for gifting.

The equity release adviser suggested the stamp duty holiday on all purchases up to £500,000, which is at present scheduled to end on 31 March 31, was a “major driver” for the gifting trend. Forty-three per cent of gifts were used for housing deposits while 26% were used for an early inheritance – some of which was possibly used for other types of property costs, Key stated.

Older homeowners in London (£102,826), the South East (£61,500) and Wales (£44,200) gifted the highest average amounts, while those in the North West (£23,467) and Yorkshire (£25,217) gifted the least. However, more modest house prices in these regions meant that first-time buyers still benefitted from 76% of the average deposit needed in Yorkshire (£33,313) and 67% of the average deposit required in the North West (£34,347).

In four areas – Wales, the East Midlands, Northern Ireland and the North East – the research revealed the average gift from property wealth was even higher than the average house deposit needed by a first-time buyer.

“Finding almost £60,000 to use as a deposit for your first home is tough – especially in the current economic environment – and therefore it’s not surprising that many younger people have looked to take advantage of the stamp duty holiday,” Key CEO, Will Hale, commented.

“In 2020, older homeowners released almost £755m of equity in order to help younger members of their family meet a range of costs including supporting them with an average of £42,500 to use for a house deposit.

“For many people, these gifts will have been the enabler to them buying their first home and is a perfect example of how intergenerational wealth transfer can deliver positive societal benefits.  The stamp duty holiday has certainly been a catalyst for more activity in this area but helping family is always a major motivation for older homeowners exploring their equity release options.

“That said, it is vitally important that homeowners get specialist advice if they do decide to use some of the value tied up in their home to help their families. Balancing generosity with their own financial security is vital and a good adviser will help them explore all their options.”

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