How much would you expect a first-time buyer to need as a deposit for a house these days? A new report has found that the average amount put down in Wales is £32,663, a sum which is well below those paid in large parts of the UK.
The study was carried out by Key, a firm specialising in equity release, later life mortgages and other related services. It also investigated how family members are helping those younger than them to get on the property ladder – and how their generosity varies by region.
So how does Wales stack up for people looking to buy their first property?
How average first-time buyer deposits compare across the UK
It will come as no surprise to many that property in Wales still offers great value. The average first-time buyer deposit is among the cheapest anywhere in the UK, beaten only by Northern Ireland and the North East of England.
At the other end of the scale, the average deposit in London last year was a staggering £130,357. Outside of the English capital, first-time deposits were highest in the South East, the South West and East Anglia, at £64,910, £51,397 and £51,126 respectively.
Are Welsh families the most generous?
Key’s report also found that older family members had gifted large amounts of money to help first-time buyers out with a deposit or other associated costs. Equity release customers donated £755 million of the £3.4 billion released in property wealth in 2020.
Interestingly, the average gift made by relatives in Wales of £44,208 was the highest in comparison to the average first-time buyer deposit, coming in at 135% of the amount needing to be covered.
Family members in Northern Ireland, the North East and the East Midlands also gifted above the average first-time buyer deposit.
How family members can help with house deposits
It’s common for older family members to give younger relatives a leg up at this stage in their lives – and there are several ways to do it.
Gifting, whether through equity release or spare savings, is one route available. Parents or grandparents can be required to prove that a gift came from them and that they’ll have no legal interest in the property.
Some lenders have also recently placed limits on how much of a first-time buyer’s deposit can come from their parents. It’s worth looking into inheritance tax implications around gifting too.
There are various mortgage options if family members don’t have enough spare cash to give away or lend. These range from guarantor mortgages, which are effectively secured against the family member’s savings or property, to joint mortgages, which share responsibility for payments.
In any case, if you’re considering helping out a first-time buyer, it’s best to research your options carefully. And encourage them to move to Wales!
