KIS Bridging Loans
 
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Our recent survey has revealed that as more people struggle to get on the property ladder, 23.5% of Britons are reliant on help from their parents or other family members to be able to put down a deposit on their first home.
Percentage of people who did, or will, rely on help from family to fund the deposit on their first home

In this report we will be taking a look at the reasons why so many prospective homeowners are needing to rely on gifts, loans and inheritance from family to boost their finances in order to get on the property ladder.

The age of first-time buyers is increasing

According to the ONS (Office for National Statistics), in 2017, over half of first-time buyers were aged 34 or above.

This is a significant increase from before the last recession in 2007, when the average age was 28.[1] However, our data shows that some people are having to wait far beyond this age before having the funds available to put down a house deposit.

A staggering 44.2% of the 35-44 year-olds who took part in our survey are planning to purchase their first home but haven’t been able to yet. 17% of this age group have stated that they will still need help from family to put the deposit together.

More significantly, 28.3% of 45-54 year-olds are still waiting to purchase their first home and 7.6% of this group will be relying on financial help from family to make this happen.

Percentage of people who are planning to purchase their first home but haven't been able to yet

So why is it taking people so much longer to get on the property ladder and how is this having an impact on people’s finances?

Housing is becoming less affordable

Taking a look at the latest house price to earnings ratio, on average, we can now be expected to have to spend 7.8 times our annual income to purchase a home in England. This figure has been on a steadily upward trend over the last 20 years, rising from just 3.5 in 1997.[2]

Looking across the country, there are huge regional differences. Buying a house in the North West of England will cost, on average, 2.5 times the average national annual salary, whilst in London this figure rises to as much as 44.5 times for those buying in areas like Kensington and Chelsea.[2]

With housing becoming continuously less affordable over such a long period of time, this is having a big impact on peoples' ability to buy their first home.

Ratio of average house price to average annual earnings in England

How long does it take to save for a mortgage deposit?

In the interactive map below, you can see how long it would take to save an average deposit in each region of the UK based on average house prices.[5] [6] [7] We’ve looked at the time it will take, based on the average UK salary per age group[4], depending on whether you save 10% or 20% of your monthly income.

map1 map2
Scotland
Average House Price:£150,825
Average Deposit (20%):£30,165
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-218 Years, 8 Months
22-296 Years, 1 Month
30-394 Years, 10 Months
40-494 Years, 6 Months
50-594 Years, 11 Months
60+5 Years, 8 Months
AgeTime
18-2117 Years, 4 Months
22-2912 Years, 2 Months
30-399 Years, 8 Month
40-499 Years, 1 Month
50-599 Years, 10 Months
60+11 Years, 4 Months
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
14.1%
Those reliant on family
to cover living expenses
14.8%
Those planning to never
buy their own home
10.1%
Northern Ireland
Average House Price:£134,811
Average Deposit (20%):£26,962
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-217 Years, 9 Months
22-295 Years, 5 Months
30-394 Years, 4 Months
40-494 Years
50-594 Years, 5 Months
60+5 Years, 1 Month
AgeTime
18-2115 Years, 6 Months
22-2910 Years, 10 Months
30-398 Years, 7 Months
40-498 Years, 1 Month
50-598 Years, 10 Months
60+10 Years, 1 Month
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
8.2%
Those reliant on family
to cover living expenses
22.4%
Those planning to never
buy their own home
8.2%
London
Average House Price:£471,504
Average Deposit (20%):£94,300
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-2127 Years, 1 Month
22-2919 Years
30-3915 Years, 1 Month
40-4914 Years, 2 Months
50-5915 Years, 4 Months
60+17 Years, 8 Months
AgeTime
18-2154 Years, 2 Months
22-2938 Years
30-3930 Years, 1 Month
40-4928 Years, 4 Months
50-5930 Years, 8 Months
60+35 Years, 4 Months
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
30.7%
Those reliant on family
to cover living expenses
28.3%
Those planning to never
buy their own home
6.8%
North West
Average House Price:£161,891
Average Deposit (20%):£32,378
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-219 Years, 4 Months
22-296 Years, 6 Months
30-395 Years, 2 Months
40-494 Years, 11 Months
50-595 Years, 3 Months
60+6 Years, 1 Month
AgeTime
18-2118 Years, 7 Months
22-2913 Years
30-3910 Years, 4 Months
40-499 Years, 10 Months
50-5910 Years, 6 Months
60+12 Years, 2 Months
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
19.2%
Those reliant on family
to cover living expenses
23.5%
Those planning to never
buy their own home
11.5%
North East
Average House Price:£130,888
Average Deposit (20%):£26,177
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-217 Years, 6 Months
22-295 Years, 3 Months
30-394 Years, 2 Months
40-493 Years, 11 Months
50-594 Years, 3 Months
60+4 Years, 11 Months
AgeTime
18-2115 Years
22-2910 Years, 6 Months
30-398 Years, 4 Months
40-497 Years, 10 Months
50-598 Years, 6 Months
60+9 Years, 10 Months
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
20.8%
Those reliant on family
to cover living expenses
22.6%
Those planning to never
buy their own home
6.6%
Yorkshire & Humber
Average House Price:£161,443
Average Deposit (20%):£32,288
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-219 Years, 3 Months
22-296 Years, 6 Months
30-395 Years, 2 Months
40-494 Years, 10 Months
50-595 Years, 3 Months
60+6 Years, 1 Month
AgeTime
18-2118 Years, 7 Months
22-2913 Years
30-3910 Years, 4 Months
40-499 Years, 8 Months
50-5910 Years, 6 Months
60+12 Years, 1 Month
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
24%
Those reliant on family
to cover living expenses
25.5%
Those planning to never
buy their own home
6.4%
East Midlands
Average House Price:£192,682
Average Deposit (20%):£38,536
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-2111 Years, 1 Month
22-297 Years, 10 Months
30-396 Years, 2 Month
40-495 Years, 10 Months
50-596 Years, 3 Months
60+7 Years, 3 Months
AgeTime
18-2122 Years, 2 Month
22-2915 Years, 6 Months
30-3912 Years, 4 Months
40-4911 Years, 6 Months
50-5912 Years, 6 Months
60+14 Years, 6 Months
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
20.5%
Those reliant on family
to cover living expenses
15.9%
Those planning to never
buy their own home
7.9%
East of England
Average House Price:£289,436
Average Deposit (20%):£57,887
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-2116 Years, 8 Months
22-2911 Years, 8 Months
30-399 Years, 3 Months
40-498 Years, 8 Months
50-599 Years, 5 Months
60+10 Years, 11 Months
AgeTime
18-2133 Years, 4 Months
22-2923 Years, 4 Months
30-3918 Years, 6 Months
40-4917 Years, 4 Months
50-5918 Years, 10 Months
60+21 Years, 10 Months
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
20.3%
Those reliant on family
to cover living expenses
21.5%
Those planning to never
buy their own home
8.9%
South East
Average House Price:£318,727
Average Deposit (20%):£63,745
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-2118 Years, 4 Months
22-2912 Years, 10 Months
30-3910 Years, 2 Months
40-499 Years, 7 Months
50-5910 Years, 5 Months
60+12 Years
AgeTime
18-2136 Years, 7 Months
22-2925 Years, 8 Months
30-3920 Years, 4 Months
40-4919 Years, 2 Months
50-5920 Years, 10 Months
60+23 Years, 11 Months
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
22.3%
Those reliant on family
to cover living expenses
19.1%
Those planning to never
buy their own home
9.6%
South West
Average House Price:£253,410
Average Deposit (20%):£50,682
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-2114 Years, 7 Months
22-2910 Years, 2 Months
30-398 Years, 1 Month
40-497 Years, 7 Months
50-598 Years, 2 Months
60+9 Years, 6 Months
AgeTime
18-2129 Years, 1 Months
22-2920 Years, 4 Months
30-3916 Years, 2 Months
40-4915 Years, 2 Months
50-5916 Years, 5 Months
60+19 Years
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
37.9%
Those reliant on family
to cover living expenses
24.2%
Those planning to never
buy their own home
6.1%
West Midlands
Average House Price:£195,498
Average Deposit (20%):£39,099
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-2111 Years, 2 Months
22-297 Years, 10 Months
30-396 Years, 3 Months
40-495 Years, 11 Months
50-596 Years, 4 Months
60+7 Years, 4 Months
AgeTime
18-2122 Years, 5 Months
22-2915 Years, 8 Months
30-3912 Years, 6 Months
40-4911 Years, 10 Months
50-5912 Years, 8 Months
60+14 Years, 8 Months
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
20.9%
Those reliant on family
to cover living expenses
14.1%
Those planning to never
buy their own home
5.6%
Wales
Average House Price:£163,902
Average Deposit (20%):£32,780
Time taken to save a deposit *
20% of Income10% of Income
AgeTime
18-219 Years, 5 Months
22-296 Years, 7 Months
30-395 Years, 3 Months
40-494 Years, 11 Months
50-595 Years, 4 Months
60+6 Years, 2 Months
AgeTime
18-2118 Years, 10 Months
22-2913 Years, 2 Months
30-3910 Years, 6 Months
40-499 Years, 10 Months
50-5910 Years, 8 Months
60+12 Years, 4 Months
Other Regional Statistics **
Those reliant on family
to fund deposit on first home
23.8%
Those reliant on family
to cover living expenses
19.8%
Those planning to never
buy their own home
11.1%

* This data is based on ONS' UK median full-time gross weekly earnings (April 2018)[4], broken down by age group. The data shows the length of time it would take an individual to save for an average house deposit if the individual were to stay on that income for the full duration and saved either 20% or 10% of their earnings per month.

** This data is from KIS Finance’s survey with The Leadership Factor.

Ireland Scotland North West North East Yorkshire and the Humber East Midlands West Midlands Wales London South West South East East of England Scotland Ireland North West North East Yorkshire and the Humber East Midlands London East of England South East South West West Midlands Wales

Prospective homeowners are getting stuck in the renting cycle for longer

In 2007 there were 2.8 million households in the private rental sector. This number has grown by an average of 200,000 properties per year to reach a whopping 4.5 million in 2017.[8]

The graph below shows the percentage of people living in private rental properties, split by age group. What’s surprising to see is that rental households are actually getting older, with the biggest increase being the number of 45-54 year-olds living in rented property.

Unsurprisingly, 16-24 year-olds are still the largest group living in the private rental sector, although, this group has seen the biggest decrease in numbers over the past decade as more young adults are opting to live at home with their parents for longer. The number of young adults living at home between the ages of 18 and 34 has increased, with the largest jump being the number of 24 year olds, which has risen by 12% since 1997.[1]

With the overall number of people living in rented accommodation increasing and rental prices having gone up by a whopping 7.7% in the four years since 2015[9], it’s clear that this may be a contributing factor as to why so many people are needing help from family to get on the property ladder.

Percentage of people living in the private rental sector, 2007-2017

It's not just finding the deposit, it's getting the mortgage too

In the wake of the last recession, mortgage lenders have significantly tightened their lending criteria, making it all the more difficult for first time buyers to get a mortgage, even if they have been able to scrape the deposit together.

With concerns about avoiding bad debts, new rules have been introduced which require borrowers to prove that they can still afford their mortgage, even if the interest rate was to rise by 3% above the variable rate at the end of their introductory offer. This level of ‘stress testing’ means that some first time buyers are struggling to prove that they can afford the size of mortgage that they need to buy their own home.

The amount that they can borrow has also been hit by a tightening up on the loan to value criteria that lenders will allow. In 2007, 14.1% of new mortgages were for loans of over 90%, with 5.6% being for over 95% of the property’s value. But by 2019 this figure has reduced to only 4.5% for loans over 90% and a tiny 0.2% of mortgages were for over 95% of the property’s value. This means that borrowers are having to find larger deposits than ever before to make up for this shortfall in lending.[10]

With total gross mortgage advances in the UK falling by 34% from 2007 to 2018 it’s not surprising that many are struggling to get the finance that they need.[10]

Our survey asked those who have applied for a mortgage, but were declined, the reasons they were given as to why their application wasn't accepted. The results are displayed in the graph below.

Reasons for unsuccessful mortgage applications

As you can see, the majority of declined applications are caused by issues surrounding income - the largest percentage being applicants having too low an income altogether, and the second being those with an inability to prove sufficient income due to being self-employed or a contract worker.

When we broke this data down by age group, unsurprisingly 18-24 years-olds represented the largest group who have been declined a mortgage based on low income, with 62.5% having been turned down. However, the second largest group in this category is 55-64 year-olds where 57.1% of those who were declined a mortgage reported that this was due to income related issues.

Percentage of unsuccessful mortgage applicants who were declined due to income related issues - split by age group

It's not just homes people are reliant on help to purchase

It’s not just first homes that Brits are needing help to purchase – a massive 44.8% of our respondents said they have received help from family members to purchase a car and to cover its running costs (maintenance, insurance etc).

The second most common reason for a family loan was to cover the costs of having children – initial costs of having a baby (buying prams, cots, clothes etc), childcare and school fees etc.- with 34.4% of respondents having said they have received financial help for these reasons.

More worryingly, 22.4% of respondents said that they have had to receive help from family to cover general day to day living expenses, including rent, bills and shortfalls in wages.

This data shows that it's not just big purchases and financial commitments that people are struggling to make, but actually some are needing help just to make ends meet.

Other reasons people have needed financial help

With it not looking like it will become any easier for people to get that first foot on the property ladder anytime soon, it looks like people will have to continue relying on help from family and friends to buy their first home.

Sources of data

All figures, unless otherwise stated are from The Leadership Factor – total sample size was 2,002. Fieldwork was undertaken between 17th June 2019 and 24th June 2019. The survey was carried out online. View The Leadership Factor report here.

Other data sources

  1. First time buyer age, ONS
  2. Housing affordability ratios, ONS 2018
  3. Housing affordability ratios, ONS 1997 - 2016
  4. Average UK salary per age group, ONS
  5. House prices, England and Wales
  6. House prices, Scotland
  7. House prices, Northern Ireland
  8. Rental sector household increases, ONS
  9. Rental prices increase, ONS
  10. Mortgage lending data, FCA

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