The financial services group, Legal & General, has published new forecasts on the financial support provided to home buyers by the Bank of Mum and Dad (BOMAD), based on research by the Centre for Economics and Business Research.
According to the research, the average value of parental financial support for house buying has reduced by 17% in the last year, from £22,000 to £18,000. Despite parents “feeling the pinchâ€, over one in four house buyers will receive help from friends and family in 2018.
In 2018, 316,600 house purchasers will receive financial assistance from their parents. Nearly half will be Londoners, and 60% will be under the age of 35.
The support will enable the purchase of property valued at £81.7 billion.
Legal & General’s group chief executive, Nigel Wilson, warned that although “households are feeling the pinch†the number of transactions underpinned by parents was continuing to grow. He questioned the ‘fairness’ for parents and children to “remain so co-dependent†when purchasing property.
The number of children being helped in 2017 effectively made parents the ninth largest lender in the UK – similar to the level of lending from Clydesdale Bank and the Yorkshire Building Society.
Currently, 63% of Britain’s housing wealth is owned by those aged 55 or more, and property in the ownership of those aged over 85 is worth more than the housing wealth of everyone under 35.
Some might consider the issue to be a problem of intergenerational inequality. If younger generations are finding it more difficult to get on the housing ladder than their parents did, but they will benefit from a more generous inheritance as a result of their parents’ good fortune, surely ‘gifting’ the money early could be seen as an alternative to inheritance?
Perhaps, but this also suggests that the issue of where people live is increasingly influenced by their family and social background, rather than their own achievements.
SH/LCB