Can you help your children get on the housing ladder?

With ever rising house prices there can be no doubt that many of “Generation Z” will struggle to get their foot on the first rung of the housing ladder.

Equity Release activity neared pre pandemic levels during April – June this year and is fast becoming a popular means to provide children with a living legacy and potentially still leave them some inheritance. Drawdown lifetime mortgages remained the most common type of new plan although many clients also took out lump sums.

David Burrowes, Chairman of the Equity Release Council, comments: “Judging by these latest figures, the equity release market is showing signs of stability and durability as the option to access property wealth opens doors for thousands of people to pursue their financial goals. “We were accustomed to more than 20,000 new or returning customers releasing equity each quarter in the two years before Covid-19 struck. We’re now seeing activity levels steadily returning back to that status quo, with some existing customers returning to make withdrawals that were put on hold last year. The gradual recovery suggests people are carefully weighing up their circumstances and long-term needs, helped by specialist financial and legal advice, with speculation about a spike of activity during the pandemic so far proving unfounded. The steady recovery has been helped by confidence in the wider property market, where house price gains over the last year have given many homeowners more equity at their disposal. Equity release has become a socially important means for one generation to help another, as well as meeting later life financial needs. June’s Stamp Duty deadline will have prompted some older homeowners to pass on a ‘living inheritance’ so that younger family members can climb the property ladder.”

Carmen MacIver, the partner who oversees the Equity Release Department at Caesar & Howie, Solicitors & Estate Agents comments “It’s really encouraging to see confidence return to the Equity Release market in the second quarter of this year.

Over my many years in this field I have heard all sorts of unusual stories from clients as to how their funds will be used. It’s interesting to hear from the ERC that homeowner parents are drawing down equity as a gift to their children which will assist with their first house purchase. I have to say that has largely not been my experience with clients so far. The funds are more likely to be used to pay off existing mortgages or perhaps for long distance holidays abroad and or alterations to the home. Obviously the pandemic certainly has had a detrimental effect on holidays abroad and home alterations so I can see why drawing down equity to help children buy their first property has become a viable option for people. It will be interesting to see if that becomes more common in future.”

Caesar & Howie are members of the Equity Release Council.

Solicitors for Older People Scotland – Looking After Generations