The introduction of the stamp duty holiday has invigorated the housing market. The opportunity to save up to £15,000 appeals to most buyers. It is no surprise to learn many people, couples and families who planned on buying a home in the next few years are keen to capitalise on the current benefit.
Of course, while the stamp duty saving lowers the overall cost of buying property, there is still a lot of money involved with the process. This means many would-be buyers need to seek assistance, and a recent study by the Legal & General suggests the “Bank of Mum and Dad” will play an instrumental part in the property market in 2020 and 2021.
Parental support is crucial in the housing market
The study found close to one in four property purchases in 2020 will feature significant support from a parent or guardian. In 2019, the level of support stood at 19% of all property purchases, and in 2020, it is expected 23% of all homes will be bought with family support.
Overall, the “Bank of Mum and Dad” is expected to play a part in 175,000 property purchases. This represents a collective value of £50.3bn. The average level of support provided for each property stands at £20,000.
With the total amount of money lent in the housing market this year expected to fall from £6.3 bn last year to £3.5 bn in 2020, many buyers require additional support.
Covid-19 has also impacted this level of activity in housing market
It is also important to state the impact of COVID-19 has led to an increase in this level of support in my market. With many lenders removing or significantly reducing support for borrowers who intended to use a small deposit, extra help is very welcome.
The Legal & General study found 15% of family members who were willing to support loved ones are now looking to provide more money than they would have done before the pandemic. One in five respondents said they have increased their contribution by least 50%.
How vendors should react to this change in the market
As a vendor, you might think the funding process a buyer opts for has no impact on you. This isn’t the case. If more parents and guardians are supporting property purchases, it is likely they will have a bigger say on the buying decision.
Therefore, if you can present your property to the buyer who will move in, while offering benefits to the parents or guardians, you will enhance your chances of receiving an offer.
Be sure to accentuate functional and secure benefits. While these are important for all prospective buyers, it is no exaggeration to say parents or guardians will place a greater degree of importance on these features.
Nigel Wilson, chief executive of Legal & General, said: “Generous parents, grandparents, family members and friends are gifting thousands towards deposits, with the ‘Bank of Mum and Dad’ outpacing even stamp duty cuts as a driver of renewed housing market activity.”
If you would like to arrange an appointment to help you negotiate the local housing market, please contact Stones Residential today by calling us on 020 7483 0685 or emailing belsizepark@stonesresidential.co.uk.
