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8 min read

A first-time buyer deposit in half the time, OneFamily reveals a quicker route on to the housing ladder

Posted in: Research

  • One in four people aged 20-34 now live with their parents, according to official statistics
  • Around half of parents allow their grown-up children to live rent free (45%)
  • Savers under 35 currently put away an average of £194 a month, the highest of any age group
  • By staying at home, investing just a third of what they would have paid in rent into a Lifetime ISA, young people could buy a property five years quicker than average

The number of young people (aged 20-34) living with parents has increased significantly over the last 20 years as the cost of renting continues to rise[i]. However, research from OneFamily has found that keen savers could use their parents’ generosity and the lower living costs to become homeowners in just four years using a Lifetime ISA[ii].

Since 1997, the number of young people (aged 20-34) living with their parents has increased significantly; from 2.7 million (21%) in 1996 to 3.4 million (26%) in 2017. This rise in young people living at home is likely driven by the high cost of living and larger than ever property deposits. The average young renting household (age 25-34) can expect to spend £911 a month on bills including rent, utilities and groceries[iii]. Assuming this is contributed to by two incomes, young people could reduce their costs by around £450 by staying in their family home a little bit longer. According to OneFamily research nearly half (45%) of parents with children over 18 who live at home do not charge them rentiv.

For young people saving towards their own home, the money saved by living with parents could allow them to halve the length of time they spend saving. The average property price for first-time buyers is £204,140iv. Assuming a 10% deposit, a first-time buyer would need to save approximately £20,500.

According to OneFamily research the average monthly saving by millennials is £194v, putting this aside each month would take someone nearly nine years to reach the £20,500 deposit. With the potential saving that comes with living in their parent’s home, a young saver could increase their monthly savings by just a third of their outlay on rent and add £140 extra to their savings each month. This would take them to their full allowance into an investment Lifetime ISA – £4,000 a year or £333 a month. By doing this they could reach the average first-time buyer deposit in just four years with the help of both the £1,000 yearly Government bonus and an average level of growth of 5%vi.

Nici Audhlam-Gardiner, Managing Director of Lifetime ISAs at OneFamily commented:

“It is common for families to support each other in a variety of ways and as the average cost of living has risen, people are increasingly looking to their loved ones for financial assistance. While the average parent or twenty-something may not relish the thought of sharing a living space, the potential saving that comes with parental support could drastically cut the amount of time that a young person needs to become a homeowner in their own right. Families willing and able to sacrifice their space for a few short years could reap the benefit.

“Whatever your living situation, if you are under 40 and saving for your first home, a Lifetime ISA is a great way to help you get on the housing ladder faster than you otherwise would be able to through the benefit of its unique £1,000 yearly Government bonus and investment returns. Savers should also be aware that the Lifetime ISA can be used for a property deposit, unlike the Help to Buy ISA as funds saved in these can’t be accessed until after completion. The Lifetime ISA has recently been subject to speculation but these figures go to show how effective the can be for first time savers.”

To find out more about OneFamily’s Lifetime ISA visit: onefamily.com/lifetime-isa/

[i] ONS, Young adults aged 15-34 living with their parents by age and sex, UK, 1996 to 2017
[ii] This is based on the understanding that millennials are saving £194 a month. If they have additional savings from living at home they could save a full Lifetime ISA allowance on a monthly basis i.e. £333 or £4,000 a year. With a unique Government bonus and assumed 5% growth this would see the saver reach a 10% deposit on the average cost of an FTB home within 4 years
[iii] Rent, utilities and groceries figure calculated using ONS: Inflation and price indices, ONS: Family spending in the UK series and ONS: Detailed household expenditure by age of household reference person
[IV] Research conducted by Opinium Research between 26 May and 30 May 2017 with a nationally representative sample size of 2,018 parents and grandparents
[V] Opinium Research conducted online interviews among a nationally representative panel of 2,009 UK adults between the 18 and 21 May 2018.
[VI] A young person saving £194 a month would reach a £20.5k deposit in 8 years. If save a full Lifetime ISA allowance on a monthly basis i.e. £333 or £4,000 a year, with a unique Government bonus and assumed 5% growth this would see the saver reach a £20.5k within 4 years