THOSE who are thinking about buying a first home in London may want to turn the page. The following statistics may upset them. Last week the Council of Mortgage Lenders (CML) published figures showing that the average deposit paid by first-time buyers in London was £31,100 last year. The average across the UK is £18,000 — more than three times higher than in 1996.

Another set of figures, this time from Moneynet, showed that a Londoner on an average wage would have had to find a £15,000 deposit on an average- priced home in 1997. Today, if the old lending multiple of 3.5 times income is applied, that same Londoner would need a deposit of £81,650. Depressed yet? There’s more.

Bradford & Bingley’s autumn home report claims that the cost of first-time buyer homes has risen by 36 per cent this year alone.

It states: “The gap between national average earnings (about £23,000 gross) and the annual salary required to buy the average first-time buyer home (£31,000) is becoming increasingly cavernous.”

Because first-time buyers do not have salaries large enough to borrow the amounts they need, they are having to find ever-larger deposits to fill that cavernous gap. Few twenty or thirtysomethings have savings of more than £30,000 so these first-time buyers have to beg and borrow to raise deposits.

“The question is, where does the money come from?” David Hylton, controller of residential credit at Nationwide, asks. “Are first-time buyers getting windfalls from parents or are they borrowing money elsewhere and not declaring it?” David Hollingworth, of London & Country Mortgages, says: “The vast majority seek help from parents or other family members.” Anecdotal evidence suggests that what many parents are doing is drawing against the equity in their own homes to fund their offspring’s investments.

Because house prices have risen so strongly over the past decade, many family homes are now extremely valuable assets, so they are exploited. CML figures show that homeowners last year borrowed almost £26 billion against the value of their property, nearly double the previous year’s figure. So long as the parents live for at least seven years after the money has been given to their children, there are no inheritance tax implications.

However, if that money is lent, rather than given, to the children, the situation becomes more complex. If, for example, the loan is structured formally so that the child repays a certain amount each month, the mortgage lender will need to be informed, because the lender might consider this a debt like any other.

Mortgage experts say that there is a great deal of confusion among first-time buyers about deposits. Mr Hylton says that many buyers assume that they can simply borrow a deposit — by taking out a personal loan, for example. They do not realise that this will be taken into account when the lender calculates how much it is prepared to offer.

Some borrowers might not tell the lender that they have other debts, although this is likely to be discovered when credit reference searches are made. Anyone whose parents are neither rich nor sufficiently generous to stump up the cash for a deposit has limited options.

“It is becoming more common for people to buy with friends,” Mr Hollingworth adds. Pooling resources with other first-time buyers may be the only way to get a foot on the property ladder, but it is a much more complicated enterprise than simply taking a loan from mum and dad. “There are more dangers associated with buying together,” he points out. “What happens when you decide to sell, for example?”

There are other complications, too. If four friends want to buy a home together, the lender will not offer three or four times their four incomes. Different banks have different rules but most will offer about 2.5 times the two largest incomes — plus the sum of the others.

In addition to sorting out the finer financial difficulties, friends will also need to draw up a detailed legal agreement. Falling out over which flatmate fails to take out the rubbish will pale into insignificance when you consider the possibility of the titanic rows that could erupt over ownership of a £500,000 home.

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