Soaring house prices and sky-high mortgage rates are making it nearly impossible for first-time buyers to get on the property ladder. Now, more than ever, they’re relying on the generosity of family to make their homeownership dreams a reality.

A new report from Savills shows that 57% of first-time buyers got financial help from family in 2023 – that’s the highest number in over a decade! This means over half of all first-time buyers needed a cash injection from the Bank of Mum and Dad just to afford their first home.

This increase in reliance on family comes as no surprise. Despite government schemes designed to help, like stamp duty breaks, first-time buyers are being squeezed from all sides. Mortgage interest rates have gone through the roof in recent years, and house prices just keep climbing. While there’s been a glimmer of hope with interest rates starting to ease, they’re still a far cry from the more affordable rates of a decade ago.

The Bank of Mum and Dad has effectively become a lender of last resort, dishing out an estimated £9.4 billion to desperate first-time buyers in 2023 alone – double the amount lent just four years ago! Experts predict this trend will continue, with another £9.3 billion expected to change hands each year for the next three years. That’s nearly £30 billion gifted or loaned by families!

So why are first-time buyers struggling so much?

• Tougher mortgage rules: Lenders have tightened their belts since the pandemic, making it harder to borrow large sums. This hits first-time buyers especially hard, as they often need to borrow a higher percentage of the property’s value.
• Sky-high rents: Rents across the UK have gone through the roof, making it even harder for first-time buyers to save for a deposit. With average rents in London now exceeding £2,100 per month, saving for a deposit can feel like an impossible dream.
• Shortage of rental properties: The number of landlords selling up has increased, meaning there are fewer properties available to rent. This increased competition pushes rents up even further, adding to the burden on hopeful first-time buyers.

What’s the solution?

The Labour party has pledged to give first-time buyers priority access to new-build homes if they come to power. They’ve also promised to introduce a “Freedom to Buy” scheme to help secure mortgages with lower deposits. Whether these measures will be enough to turn the tide for struggling first-time buyers remains to be seen.