Many would-be first-time house buyers, like me, know how dispiritingly tough it is to save for a deposit. I imagine very few people would turn down a financial hand up, should one become available.
A new study reveals that the so-called Bank of Mum and Dad are on course to invest £6.5 billion helping their children get a foot on the UK property ladder this year – a large enough sum to be considered the nation’s ninth-largest lender.
The research from Legal & General (L&G) and economics consultancy Cebr estimates the amount exceeds the £5 billion shelled out by parents last year. The average amount made available for deposits has risen from over £17,000 last year to almost £22,000, while the average parental contribution in London is just under £30,000.
Around 2 in 5 homeowners in London (39%) receive some help from the Bank of Mum and Dad.
That so much money continues to be made available is a mark of how astonishingly well the baby boomer generation have done from Britain’s long property boom. It is also a reminder of how house prices have long soared past typical earnings, with young adults struggling to get anywhere near the sums required to match older people in the market.
It is a symptom of our broken housing market
Nigel Wilson, the chief executive of L&G, is convinced “intergenerational inequality” has become a major problem. “This is not a good thing, nor is it sustainable or equitable for our parents (the lenders) or young people (the borrowers),” he said.
