Builder now gives Bank of Mom and Dad £2,000 for the first house.

Builder now gives Bank of Mom and Dad £2,000 for the first house.

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Property developers Persimmon Homes and its subsidiary Charles Church are introducing a new initiative called the “Bank of Mum and Dad” scheme. Under this scheme, parents or family members who contribute at least five percent of the sale price towards their child’s first property purchase will receive a cash incentive of £2,000. On average, Persimmon properties sell for £277,000, requiring parents to contribute around £14,000 to receive the cash gift. Charles Church properties, which average £418,000, would require a contribution of about £21,000 for the incentive.

This scheme is part of various initiatives launched by property developers and the Government to encourage first-time homebuyers. Unlike other programs, this scheme is unique in incentivizing parents to assist their children in purchasing a property. Typically, parents offer assistance with deposits, but this scheme offers an additional financial incentive. However, critics argue that most buyers would prefer a discount off the property price rather than parents receiving the cash gift.

The £2,000 cash gift is not deducted from the house price, which means it does not affect the recorded selling price of the property. This scheme is available across all Persimmon Homes and Charles Church sites. As the cost of homeownership has become increasingly challenging for first-time buyers due to rising interest rates, developers are introducing innovative ways to attract buyers and facilitate property purchases.

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