More than half of homeowners aged under 35 have received financial help from parents and grandparents to get on the housing ladder, new research reveals.
High prices make buying property unaffordable for many young people, shutting out those whose families can’t afford to help, and piling pressure on older generations who may raid retirement and rainy day funds to subsidise deposits.
Some 56 per cent of under-35s who own property received financial help from older family members, and 71 per cent of them couldn’t have bought their home without this support, according to the study by Legal & General.
Property help: One out of two homeowners aged under 35 were bankrolled by older family generations
They received £19,000 on average, and absent this assistance would have had to delay their purchases by four years on average, the financial service giant found.
House prices have experienced a mini-boom since the initial Covid-19 lockdown was lifted this year, defying forecasts that a pandemic recession would deliver a severe shock to the property market.
Meanwhile, lenders have pulled most deals aimed at buyers with small deposits, prompting Prime Minister Boris Johnson to announce plans to launch state-backed 95 per cent mortgages.
However, it remains unclear how his promise at last week’s Tory Party conference would work in practice. Find out what help could be on offer here.
L&G surveyed nearly 2,000 recent and prospective homebuyers and more than 500 parents and grandparents of children aged 16-plus for its research.
This found 21 per cent of young owners who got help were handed more than £30,000 towards their purchase.
Help for homebuyers: Prime Minister Boris Johnson announced plans to launch state-backed 95 per cent mortgages
Meanwhile, 30 per cent said they expected to pay at least some of the money back.
L&G research also found:
– Some 33 per cent of all people looking to buy property in the next five years plan on getting financial help from family or friends.
– Bank of Mum and Dad ‘lenders’ will play an active role in 73,160 property purchases among those aged under 35 in 2020
– In total in 2020, under-35s will receive £1.36billion from family members, helping them buy £18.11bn worth of property
– Financial support for purchases by over-35s account for an even bigger £2.14billion, probably because they are buying larger or more expensive homes
– Nearly 74 per cent of those who have taken an income hit during the pandemic say they are no less willing to help loved ones buy property.
Nigel Wilson, chief executive of Legal & General, says: ‘The Bank of Mum and Dad’s role in Britain’s housing market is ubiquitous.
‘Across the UK, parents, grandparents, family and friends are digging into their pockets to help young, hopeful buyers and even growing families to make their housing plans a reality.
Worried about your retirement fund?
Older generations who subsidise home deposits for offspring may be endangering their own finances in later life.
Read a 10-step guide to sorting your pension here.
‘These generous lenders are often funding most or all of the deposit buyers need to step onto or up the ladder.
“But while the Bank of Mum and Dad is playing a clear and present role for many buyers, it remains a symptom of a broken housing market.
‘Thousands of people simply don’t have a Bank of Mum and Dad to rely on. For those that do, generous family members are still having to draw on retirement savings and rainy day funds even as the country experiences its most significant economic challenge since the Second World War.
‘We must address the UK’s ongoing housing crisis. Only then will we be able to tackle the issue of affordability.
‘Britain’s housing sector is a critical engine behind the country’s economic growth and we need a strong property market now more than ever to drive the economic recovery from CovidD-19.’