Bank of mum and dad still important in Scotland

Almost one in six of second steppers in Scotland is considering asking their family to help finance their next step up on the housing ladder.

The research from Bank of Scotland suggests that one of the main challenges facing prospective buyers is a shortfall or lack of a deposit – nearly a third (31%) of those questioned said that this was preventing them from taking the second step on the property ladder. It follows a recent report from the bank suggesting that over two thirds (65 per cent) of second steppers in Scotland have wanted to climb up the ladder in the last year but have been unable to do so.

Key results from the report include:
* The majority of second steppers in Scotland will be hoping to use savings (64%) or equity in their current property (65%) to fund the move to their second property
* 14% are also considering going back to their family to ask for financial support
* 46% of first-time buyers in Scotland received help from someone for the deposit on their first property and almost 90% asked for support from their parents

The average loan first-time buyers in Scotland received from family or friends for their first home purchase was almost £13,000 and many are now looking for a further £10,000 to help them move up the ladder.

According to the reprot, the additional capital needed by second steppers in Scotland to trade up currently stands at an average of £18,462, more than double the £8,597 that was required 10 years ago. Two thirds of current first-time buyers are living in flats (68%) or terraced houses (14%). Over half hope their next move will be to a three bedroom house.

The average price for a semi-detached house currently stands at £125,029. This means that those looking to make this move face a 17% premium to trade up, before adding on the cost of moving or the fact that there may be an equity shortfall in their current property.

“We already know that second steppers in Scotland face a number of tough challenges,” said Laurence Mann, head of mortgages, Bank of Scotland, “and in many ways have been the hardest hit by the subdued housing market, so it is unsurprising that they are struggling to fund the gap needed to trade up to their preferred second home.

“Parents have long been helping to fund their children’s first home, but many are now having to provide further support as they move up the ladder. This indicates that these customers still need attention and support. To achieve a sustainable housing market we need to see movement throughout the market. If second steppers get stuck on the first rung, movement at the bottom half of the ladder comes to a standstill.”

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