The Bank of Mum and Dad remains a major force in the housing market but is beginning to run out of money.
The Bank of Mum and Dad remains a major force in the housing market but is beginning to run out of money.
Analysis published today by Legal & General and the Centre for Economics and Business Research (Cebr) forecast 27% of buyers will have help from friends or family in 2018 a slight increase on the 25% who were given support in 2017.
Property purchases supported by the Bank of Mum and Dad have risen by £4.2 billion since 2016 and now accounts for £81.7 billion of lending.
But the research also revealed parents were providing smaller sums of money to help their sons and daughters get onto the property ladder.
This year the average contribution received from the Bank of Mum and Dad will fall from £21,600 in 2017 to £18,000, the report forecast.
Nigel Wilson, group chief executive at Legal & General said it was clear households were ‘feeling the pinch’. He added: “The Bank of Mum and Dad is a vital plank in the housing market, but this year the supply of funds is being squeezed.
“This is not a positive trend – nor is it sustainable or fair for our parents and young people to remain co-dependent when it comes to housing purchases.”
According to the research, under 35s are the most likely to benefit from financial assistance from Mum and Dad when buying a home but those in the 45 to 55 age group are starting to catch up.
Legal & General’s figures show nearly three in five under-35s received money from family and friends to buy a property, one five of 45 to 55 year olds had parental support while 8% of over 55s were using the Bank of Mum and Dad.
Wilson added: “The fact that in 2018, one in four housing transactions in the UK will be dependent on the Bank of Mum and Dad, while hard-pressed parents are finding it more difficult to provide the funds to help their family with deposits, will further exacerbate the UK’s housing crisis.
“We need more homes for the young, old and families alike. Legal& General is playing its part by announcing an initiative to deliver thousands of new affordable homes.”
Equity release, the study revealed, was also being used on more occasions as a source of funding for loved ones’ home purchases – rising from 3% to 4%.
Legal & General said nearly half of over 55s who were open to the idea of equity release would put money towards a family member’s deposit, and 20% would want to contribute to mortgage payments and other housing costs.
