Young Scots receive on average more than £20,000 from their parents to help buy a home, new research shows.
As house prices continue to rise faster than wages, the Scottish ‘bank of mum and dad’ is making “significant financial sacrifices” to help young people get on the housing ladder.
But family support in Scotland is among the lowest in the UK, with buyers down south receiving up to £10,000 more from their families, according to the report from Legal & General and the Centre for Economics and Business Research (Cebr).
In Scotland, the ‘Bank of Family’, as it is now called, contributes £20,700 on average towards buying a house. While the biggest contribution in the UK came from the East of England region, with families on average coughing up £32,100 to help their loved ones buy. This is, surprisingly, more than the average Londoner, who receives around £30,000 from relatives towards an average house price to the tune of half a million pounds.
The findings, however, do not reflect house prices in each region. People in the West Midlands received the lowest family contribution towards their house purchase, with an average of £19,800. This is despite house prices costing considerably more than in Scotland – at £246,765 on average.
Kevin Roberts, managing director at Legal & General Mortgage Services, said: “Up and down the country, the Bank of Family is making significant financial sacrifices to help family members onto the housing ladder. Support is concentrated in urban and southern areas, where house prices are the highest, but is prevalent across the UK. While a brilliant lifeline for those able to draw on it, many people will not have access to such generosity and this widespread support is indicative of deep, underlying affordability issues affecting the UK.”
Those living in cities and towns are more likely to rely on family support to buy a home – and they need to borrow more than people in rural areas, the report found. Families are estimated to gift £5.7 billion towards urban home purchases in 2023, accounting for 70 per cent of the value of Bank of Family support.
Meanwhile, the survey also found many buyers are not seeking professional advice when purchasing a home, with just 39 per cent of borrowers seeking guidance from a mortgage broker or professional adviser. And, the report found, women (46 per cent) are more likely to seek professional advice than men (30 per cent), who relied more on friends for help.
Kevin Roberts, managing director at Legal & General Mortgage Services, said: “The Bank of Family has not only become a major lender – the ninth largest in the UK if it were a formal entity – but also a significant source of financial advice, with less than 40 per cent of financial aid recipients seeking professional guidance before their transactions.
“The gender dynamics at play are also fascinating. Women are far more likely to speak to a professional adviser than men. In comparison, men are much more likely to depend on advice from friends than women. In such a challenging economic climate, buyers must not overlook the insights that an adviser can bring to even the most complex of property transactions. Failing to do so could prove a very expensive mistake later down the line.”
It comes amid a rise in mortgage costs due to repeated interest rate hikes, with the average monthly payments in Scotland now higher than the average rent, according to Scottish estate agent Rettie & Co. In its summer report, it said first-time buyers “will find market conditions increasingly challenging”.
The year-on-year rise in average house prices in Scotland has slowed from two per cent earlier this year to 0.1 per cent in July, according to the latest ONS figures. While in England the average house price is currently £309,000, with house price rises also slowing from 3.7 per cent earlier in the year to 0.6 per cent in July.