More buyers in London receive help from their parents to buy a home than in any other region, with residents of the capital also having the highest parental contributions – almost £31,000 per transaction on average.
Young people across the UK are set to increase their reliance on their parents to buy house, with the the “Bank of Mum and Dad” set to reach nearly £6bn this year, according to research released by Legal & General and the Centre for Economics and Business Research (Cebr).
The so-called Bank of Mum and Dad will be the equivalent of a £5.7bn mortgage lender in 2018, according to the research.
Family-supported lending remains a major force in the UK housing market, the firm said, with 27 per cent of buyers set to receive help from friends or family in 2018, up from 25 per cent in 2017.
This year, the Bank of Mum and Dad will help 316,600 relatives buy a home – up from 298,300 in 2017.
The value of Bank of Mum and Dad-supported property purchases in 2018 will rise to £81.7bn, according to the research, representing a five per cent increase since 2016.
However, parents are providing smaller sums, with the average contribution declining from £21,600 in 2017 to £18,000 in 2018.
Nigel Wilson, group chief executive at Legal & General, said: “The fact that in 2018, 1 in 4 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.”
Under 35s are the most likely to receive parental assistance, with nearly 3 in 5 receiving money from family and friends to buy a property, according to the research.
By comparison, just eight per cent of over 55s receiving family assistance to buy a home. However, 20 per cent of homeowners aged between 45 and 55 are now relying on family help to buy a home.
“The volume of transactions depending on Bank of Mum and Dad funding keeps on growing, even as parents find it harder to provide as much money for the deposit,” said Wilson.
“Bank of Mum and Dad funding is a vital plank in the housing market, but this year the supply of funds is being squeezed.”
Source: City A.M.