One in four first-time homebuyers buys a home with money from their family
The first Nestenn Observatory report on real estate trends puts a number on a practice that everyone is familiar with but doesn't measure: 26.1% of first-time homebuyers received financial assistance from their families, averaging 45,000 euros.
This isn’t just a minor detail in a financing plan. Buyers who receive assistance purchase their homes, on average, nearly ten years earlier than others. That means ten fewer years of rent, ten fewer loan payments, and the opportunity to build real estate equity at an age when they still have the borrowing capacity to start over.
Of all the homebuyers surveyed, 16.6% reported receiving financial support from their families. The gap between the two groups is stark: 26.1% among first-time buyers, compared with 12.4% among those who have already purchased a home. This support comes into play precisely where financing falls short—namely, the down payment.
A gift in half of all cases
The form this solidarity takes is of interest to tax experts as much as to bankers. More than half of the assistance—52.6%—comes in the form of gifts. Family loans come next at 24.7%, followed by inheritances or advances on inheritances at 19.6%. The amounts involved are not just a matter of helping out: one-third of recipients receive between 20,000 and 50,000 euros, 14.4% between 50,000 and 100,000 euros, and 10.3% more than 100,000 euros. About a quarter, or 25.8%, received less than 20,000 euros.
“Real estate thus remains a very family-oriented matter: behind the financing of a home, there are also considerations of solidarity and intergenerational transfer,” observes Delphine Rouxel, president and co-founder of the Nestenn Group. These gifts draw on the tax exemption available between parents and children, which is not replenished until fifteen years have passed. Few families give this much thought when they sign the check.
It’s worth noting this, as the mechanism is not widely known. Each parent can give 100,000 euros to each child tax-free, and this exemption is not replenished until fifteen full years have passed. A gift of 45,000 euros made at age 60 therefore ties up part of the allowance until the donor reaches age 75. This is not a major issue for a modest estate, but it is much more problematic for a family that had planned to spread out the transfer of assets over time.
The choice of legal structure is just as important. A gift must be reported and accounted for tax purposes. A family loan, on the other hand, must be repaid; if it is not, both the tax authorities and the co-heirs may reclassify it when the estate is settled. Finally, an advance on an inheritance requires that the amount be added to the estate’s total assets—with all the disputes that this is bound to cause among siblings twenty years down the road.
Family money doesn’t buy the ideal home
Financial assistance shortens the timeline, but it doesn’t eliminate the need to make trade-offs. Nearly one in two buyers—49.7%—say they accepted at least one compromise regarding the property they purchased, and that proportion rises to 53.4% among first-time homebuyers. The most common compromise relates to the condition of the home and any needed repairs, cited by 35.1% of them. Next comes price, with 28.2% of buyers having compromised or exceeded their budget, followed by location at 25.1%.
On the other side of the transaction, the study shows that the capital generated by a sale is not automatically reinvested in real estate. While 37% of sellers use it primarily to purchase a primary residence, 13.6% save or invest it, and 8.2% use it to provide cash to their loved ones. Among sellers aged 55 and older, these two uses rise to 18.9% and 15.5%, respectively.
For those who lend rather than give, it’s worth reviewing a few precautions. A family loan should be formalized in writing, with a repayment schedule—even if it’s interest-free—and reported to the tax authorities if it exceeds a certain amount. Without a written record, the amount risks being reclassified as a disguised gift, subject to the corresponding taxes and inclusion in the estate. This is precisely the kind of issue that no one discusses when signing the preliminary agreement, but which resurfaces fifteen years later at the notary’s office.
One generation sells so the next can buy. The French real estate market is increasingly functioning as a closed loop between parents and children, and those whose parents don’t own homes face a ten-year delay.
