Grandparents have used money tied up in their homes to gift almost £1 million a day to younger family members for house deposits during the stamp duty holiday.
Since the tax break started on July 8 last year, ‘the bank of Gran and Grandad’ has given away £323.9 million using equity release.
An equity release mortgage for the over-55s has no monthly repayments and is paid off by the sale of your house when you die or move into care.
Deposit gifts: Since the start of the stamp duty holiday on July 8, ‘the bank of gran and grandad’ has given away £323.9m using equity release, a mortgage for the over-55s
According to broker Key, the average size of the deposit gifted is more than £50,000.
Since Chancellor Rishi Sunak scrapped stamp duty on the first £500,000 of a property price, giving buyers the chance to save up to £15,000 until June 30, the market has gone into overdrive.
More than 700,000 homes are currently sold subject to contract, the highest number recorded by Rightmove in a decade.
As buyers rush to beat the deadline, and demand outweighs supply, house prices have soared 10 per cent in one year, according to Nationwide.
House deposit gifts peaked in September last year at £40.6 million and hit a low of £13.16 million in February, as the original stamp duty deadline of March 31 approached. It was then extended to June 30.
Will Hale, chief executive at Key, says: ‘With the stamp duty holiday giving people an unprecedented opportunity to get on the property ladder, the bank of Gran and Grandad has stepped up to help finance it.’
He says it is important, however, that the grandparents’ living inheritance does not make them financially vulnerable in retirement.
Legal & General this week also reported a 134 per cent year-on-year rise in inquiries, from January to June, from borrowers looking to unlock equity for home improvements.
Sara McLeish, chief executive of Legal & General financial advice, says: ‘We’ve spent more time in our homes than ever before in the past year, leading to a rise in home improvements to make them as comfortable as possible.’
