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New property ladder hope for future generations

CHILDREN TURNING 18 in 2029 could be entitled to £29,214 according to an analysis of the Government's Individual Savings Account Statistics report (produced in April of this year) by property developers Strata.

The lump sum of almost £30,000, which could be used as a deposit on a property, could be available for those who pay into a Junior ISA, providing rates stay close to what they are now. Junior ISAs are savings accounts that can be opened on behalf of a child by parents or family members to save money on the child’s behalf, which they then gain access to on their 18th birthday.

Data from Office for National Statistics reveals the average annual savings into Junior ISAs between November 2011 and 2016 and have been used to make predictions on the future of first time buyer behaviour.

According to the data, the average annual saving for accounts opened between 2011-12 is £1,623. Assuming the accounts opened in 2011 were opened at the child’s birth, by 2029 their savings pot will be a significant £29,214.

This research is evidence that Junior ISAs could reduce the need for substantial support from the 'Bank of Mum and Dad' later in life.

Gemma Smith, Sales Director at Strata said:

“Young people can choose to spend their trust fund on anything they desire but in the current climate and the plight of millennials who struggle to get a foot on the property ladder, first home deposits seem like a rational and likely investment.

“Currently young people are asking their parents for support in the form of a lump sum towards their deposit or legal fees which has caused an increase in equity release lending but to put the property market in better health it would be beneficial for families to save smaller amounts for the child over a longer period of time.”

According to the spring 2017 Equity Release Market Report from the Equity Release Council, equity release lending grew by 34% between 2015 and 2016, whilst the average annual savings into Junior ISAs between 2011 and 2016 has decreased from £29,214 to £22,464.

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