The Oakham Bank of Mum and Dad lent £1.97m last year

 

My analysis has shown that up to the end of the last quarter, Oakham first time buyers purchased 146 properties. With wages rising at 2.8%, unemployment at a low rate of 4.2% (down from 4.6% from a year earlier and the joint lowest since 1975), national GDP rising at 1.87% and inflation at 2.3%, tied in with indifferent house price growth (compared to a few years ago), this has given first time buyers a chance to get a foot hold on the Rutland property market.

Over the last year, the average purchase price of an Oakham first time buyer property has been £190,200 and the average deposit was £30,812. Furthermore, my calculations show Oakham parents on average contributed £13,480 of that £30,812 figure. “The Bank of Mum and Dad” is for countless 20 something’s, perceived to be the only way they will ever be able to afford their first home. In fact, Oakham parents put up a substantial £1.97m in the last 12 months to help their children to purchase their first home with help in raising the deposit.

With mortgage rates at all-time lows, few 20 something’s would struggle to make mortgage repayments, but it is the requirement of the deposit which is the issue, although where parents and grandparents are helping out where they can, it does little to address the real problems of the housing market, whether for renting or buying their first home.

If you think about it, as a country we have been fortunate that the older generation who control the biggest share of the nation’s wealth are so plentiful to those following after. We need to remember, though, that this generosity is
 a sign of the issues of the British housing shortage, not its solution.

Note that in a previous paragraph, I used the word PERCEIVED… Granted, the average first time buyer deposit is 16.1%, but that is an average. Did you know 95% mortgages returned to first time buyers in late 2009 and have been available ever since? Also, many mortgage lenders and building societies now offer 100% mortgages (i.e. no deposit) at 2.75% fixed for 3 years. The perception is you need 15%, 20% even a 25% deposit to be a first-time buyer – you don’t! You don’t need any deposit, but (there is always a but!)...

Over the last decade, many tenants have upgraded into homes that they (or any generation before them) could never historically have afforded as a first time buyer. The British housing market has started to change - renting is now seen as a choice with many young (and increasing older) people are becoming more at ease with the flexibility offered by private renting a property rather than being tied to home ownership. Oakham landlords will continue to see growth in sector, and today’s tenants will become homeowners in 20 years’ time – when they will inherit the wealth of their parent’s home.