Research from Legal & General and the Centre for Economics and Business Research (Cebr) has found that the “Bank of Mum and Dad” will this year support youngsters to the tune of around £6.5 billion, lending to first-time-buyer offspring to get on the property ladder.
What was not so well understood before is that around 9% of renters also rely on their mums and dads to help fund their rent payments. Legal & General recon that the “Bank of Mum and Dad” will fund around £2.3 billion of rental payments in 2017 involving nearly 460,000 landlords’ properties.
These figures mean that around £9billion pounds this year will be passed down the generations, helping youngsters either pay their rent or get onto the housing ladder.
The L&G research also found that around 10% of renters had also had help from their parents towards finding the rental deposit, 6% had helped with moving expenses and 5% helped with letting fees.
Dan Batterton, fund manager for Build to Rent at LGIM Real Assets had said:
“It is a real challenge for young people who are reliant on parental handouts just to make the rent. The intergenerational inequality that creates the demand for the Bank of Mum and Dad funding continues to widen and now it’s affecting renters too.
“The lack of affordable housing, low wage growth relative to inflation and burdens of student debt mean that many kids can’t even rent somewhere without significant contributions from their family. Parents want to help their kids get on in life, and the Bank of Mum and Dad is a testament to their generosity, but it is also a symptom of our broken housing market.
“The UK is experiencing a supply-side crisis in the rental sector. We need more professional, affordable tenures and more choice for renters. We need to build more homes for the young, old and families alike, more quickly and cost effectively. Renters are currently facing not only expensive rental payments but moving costs, agent fees and deposits which are reducing flexibility, something that should be a benefit of renting,” Mr Batterton added.
With this help from mum and dad most concentrated in the more expensive parts of the country, particularly London and the south east, it indicates, with house prices as high as they are, landlords will increasingly need to look beyond young tenants to their parents to support them in the rental market.