Figures from Legal & General released this week suggest young home buyers are growing increasingly reliant on their parents to help them get onto the property ladder. “Bank of Mum and Dad” will help fund one in four property purchases this year – but is starting to feel the pinch, according to new research.
Parents are parting with thousands of pounds to help their children get on the property ladder, but they can’t afford to lend as much as they used to. Parents will help 316,600 loved ones buy a home – an increase from 298,300 in 2017, according to projections.
• Parental contributions are highest in London and lowest in Scotland
• Buyers in London (41%) receive more help from the Bank of Mum and Dad than in any other area
• Under-35s are most likely to receive help from their parents
• Older home buyers also rely on the Bank of Mum and Dad, with 20% of those aged between 45 and 55 receiving help
The report said that whilst parents remain a major lender, they are handing over less cash.
The amounts being handed over are falling with the average amount they are expected to contribute towards a property purchase expected to fall from £21,600 in 2017 to £18,000 this year.
The average parental contribution this year comes in at £18,000, down £4,000 on the past 12 months, according to Legal & General.
Buyers in the Northeast have seen the average family contribution plummet by £12,200 in the past 12 months.
In London, more than 40% of buyers had financial help from family to invest in property. In London, the average family contribution now comes in at £30,600 – up from £29,400 in 2017.
Legal & General chief executive Nigel Wilson told the BBC, “People are feeling a bit of a pinch around the economy and therefore we’re seeing pretty much a national trend outside of London for less to be given.”