To think that parents "helping out" their kids to buy property, just keeps house prices high?

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So, a LOT of parents help their kids buy houses these days, as property is expensive.

But surely it's only expensive because people keep buying it at that price?

If these young adults can't afford a £30k deposit, they couldn't buy the houses, and prices might fall because of it?

Or not.

But still, it must be compounding the issue?

And also, maybe, people's expectations are 'too high'? Why would (say) a single 24yo need a 2 bed semi, when maybe a cheaper 1 bed flat would do? Maybe that's a different discussion though?

always buy the most expensive house you can afford

I'm not sure that's the best advice if buying in a toppy market with a small deposit & very low interest rates.

I do think young people should future proof though as much as possible though.

*Depending how long you plan on letting your offspring live rent and bill free at your home, you may well be subsiding them to similar amounts that others receive up-front in cash"
No because our mortgage is paid for. Most utilities would the same with I my slight I increase in gas and electricity. I wouldn't pay for the food.

So it would cost me next to nothing as opposed to give them the money.

As for 100% mortgage, yes, it helped many but how many lost their property and ended up in negative equity?

I got no help from my parents except being able to live rent free at home for a year to save up (I needed a £5000 deposit then) exh didn't get any help from his, even had to give his mum money in university holidays for board. We managed fine - we are in the process of divorce and have decided to set aside £50k each for our kids from the house sale for their deposits - we feel guilty enough about disrupting their lives and this we can afford to do so are (most amicable divorce in history!)

YABU - rental costs are often more than the equivalent mortgage so how else can someone keep paying rent and save for a deposit at the same time?

We had a nightmare buying our first flat, constantly out done by landlords. It seemed so unfair as they already had a lot of property to leverage the mortgage against & just needed to show the yield so had a much higher ceiling then we did.

@userbbb

always buy the most expensive house you can afford

I'm not sure that's the best advice if buying in a toppy market with a small deposit & very low interest rates.

I do think young people should future proof though as much as possible though.

Naturally it does also require one to use one’s brain, which might have gone over your head.

I can't give my dd anything. Luckily she has saved 42k in the last five years, 4 of which were away at uni.

@Bells3032

Live in London and not one person i know as bought without at least some parental support. prices are just too high. Average flat is nearly half a million with a 4 bed semi usually coming in well above a million. Most don't put down a 10% deposit though most have put down a 20-30% deposit. It's more that 5 times an single person's salary even at £50k will only get you £250k which means you need a min of £150k deposit to by a flat. Plus stamp duty (in the past anyway), fees, furnishings etc

Well this is complete rubbish. I also live in London and there are 4 bed houses round my area for under 500k. I’m currently looking at flats to buy around £200k. I earn under 50k and have had no help.

OP YANBU, of course it compounds the issue, but it’s not the cause - that’s foreign investors and corporate landlords and a lack of control on house prices

Well it’s a bit of a chicken egg situation. But if you don’t help out your own kids it won’t stop everyone else and they will be the ones that suffer.

@Beenaboutabit

Property is only worth what someone is willing to pay and so if parents and the government did not 'help to buy', prices would inevitably drop in places where property prices are far in excess of 4 x average earnings for that area.

So wrong.... If parents and government don't help young buyers, they are STUCK with either renting (with crooked landlords aplenty!) or living at home with their parents. My situation is the latter! 3rd kid on the way, living with inlaws! I'll tell you what: this just creates more animosity, so many people living together, desperate for some space and privacy.

And still the house prices will rise because of investors with multiple properties. It's the rich ones that would win

@MaskingForIt why would that have gone over my head? Do you think people who end up in negative equity haven't used their brains or someone who borrows 5x their salary & finds interest rates rise after their term has ended and are struggling didn't engage theirs? Many young people have only experienced ever rising house prices & low interest rates.

i guess a one bedroom flat is such a definite starter, whereas at least with 2 bedrooms you have more chance of staying longer, perhaps better resale value?

Around here (South East) house prices mean that a first time buyer needs to find at least £25-30k deposit for a one bedroom flat, assuming a 10% deposit. Renting a flat costs £800-£1000pcm. On an averagely decent salary, I fail to see how young people could pay both that rent and save that much cash in a reasonable time frame in order to (if they wish to go down the traditional route) have bought a flat, built up some equity and moved into a house in time to have children before they get too old.

I remain eternally grateful to my dad for predicting this issue and putting plans in place early to help his children. Mind you, he openly admits that he had it a lot easier - bought his first house at 23 with no deposit, his mortgage was never more than 20% of his income so he was able to both overpay and build up equity and invest large sums too.

Maybe things are different further away from London.

When does it become perceived as ok to receive money to buy a property?

Does my example pass the test? Elderly grandmother downsizes to a retirement flat. She has been a low earner all her life but her house in London has gained significant value. She sells it and releases a huge amount of money (for her). She gives some of it to my sibling and I. Sister saves hers and I used most of mine to contribute towards a house deposit.

Does it make it better because my partner and I had also saved a chunk of money ourselves?

I don't know why I should feel less proud at having bought a house because a kind family member helped us out, compared to if we'd just used our savings.

House prices were high before it was more common for parents to help. Parents helping is a consequence of high house prices, not the cause.

As more people go the uni route, they’re often not settled in jobs until their mid-late 20s. Rents are high, and wages low, so saving is very difficult for many. Especially saving the vast sums needed for a deposit now.

Many people can’t buy by themselves, they need a partner in order to afford it. At which point they may be thinking of starting a family (or already have one). So they’re not going to be looking for a one bed flat.

In addition, many of the flats and 2-up-2-downs have been bought by buy to let landlords. Where I live there are entire streets like this. Same with “fixer-uppers” - they’re bought by developers or similar who fix them then sell on for profit.

Ths problem is in the south east new households have been created at a faster rate than houses have been built. The resulting shortage manifests as:

• homeless housed in appalling conditions in b&b etc
• young people priced out of rental market moving home with parents or generally living in a poorer housing standard than in the recent past (sharing rooms, living in worse areas relative to the jobs they do).
• families priced out of houses living in overcrowded smaller property.

The thing is, as longer as there is this shortage, investors will always want to buy property, as the shortage means rents can be kept high and thus yields good even on high prices (especially with interest rates kept low).

The only really solution is massive building programs, and that will only ever happen by the state because the house building private sector wants prices high to make more profit.

I don't know why I should feel less proud at having bought a house because a kind family member helped us out, compared to if we'd just used our savings.

I don't think it's a question of pride. I had help & saved. However without the help I wouldn't have got on the ladder so soon & wouldn't be where I am now.

I think it’s a shame anyone should feel proud at buying a house tbh. It shouldn’t be an achievement, it should be an ordinary, accessible thing that everyone has the means to do. The perception and culture around home ownership doesn’t help.

good point

My dad gave me £1,000 to help buy a house and the rest was what we saved.

DH and I were able to buy because we applied for a joint mortgage and applied for a 5% deposit mortgage. Single friends who are looking to buy are not eligible for 5% deposit mortgages, when they were available. Our single friend needed a 30% deposit and needed help to get that (they received inheritance otherwise wouldn’t have been able to buy). Most of the people I know who have parental help have been single and have no other way of affording it otherwise. When you’re applying for a joint mortgage, it makes sense that you’re looking for a two or three bed. Possibly a house. We bought in 2017 at 27. We were looking for a 2/3 bed with a garden, knowing what plans we had for our life. Our single friend would also like to meet someone and have children, so was looking for a home to last for 5 years, rather than incurring costs all over again if he meets someone.

Whilst we allow multiple homes to be purchased for investment, that is always going to drive the price up.

And also, maybe, people's expectations are 'too high'? Why would (say) a single 24yo need a 2 bed semi, when maybe a cheaper 1 bed flat would do? Maybe that's a different discussion though?

The price difference between a one bed flat and a 2 bed semi isn't that much, and is you take in consideration a) the costs of moving form 1 bed flat to 2 bed house (solicitors fees, estate agents fees, stamp duty, moving costs) it is certainly better to stretch to the 2 bed. Plus you can rent out the second room.

House prices are what they are. They are now based on a double income household where as previously they were based on a single income household.

I think it’s a shame anyone should feel proud at buying a house tbh. It shouldn’t be an achievement, it should be an ordinary, accessible thing that everyone has the means to do.

You could say that about anything though - passing exams, getting married, having children... Should we not be proud of those things either?

Let’s say that parents stop helping their children out. So the children can’t buy houses. Do you think the sellers will drop their prices? No.

Ok maybe a few will, because they need to sell for one reason or another. But those who don’t absolutely need to sell, won’t. They’ll just sit tight until they get the price they want. All that will happen is the housing market will stagnate. Prices only really fall when there are lots of forced sellers who have no choice but to sell for much less than they paid.

@grey12, no offense meant at all, but having 3 children is always going to make it harder to save for a deposit.

All the people I know who managed to save for a deposit and get on the ladder without hrlp did do before having children.

As soon as a child comes into a family, it's either one ft income or high childcare costs that limits the ability to save.

should you feel ashamed for renting rather than buying?