Help to buy homes from ‘Bank of Family’ rises
A record number of people are getting help from family members to enable them to buy a property, a study suggests.
Financial support from the “Bank of Family” is expected to help with 318,400 house purchases this year, according to Legal & General.
Almost half of all homes bought by those under the age of 55 will have been done so with the help of parents, grandparents or other relations.
But L&G said those without such support risk being “locked out” of the market.
The financial services group has been tracking financial support from families for homebuying for the past seven years, and it says that in 2023 more buyers than ever are relying on relatives’ help for a deposit.
L&G used to refer to the support as the “Bank of Mum and Dad”, but has changed this to the “Bank of Family” as it said the term more accurately reflects the contributions from other relatives, such as grandparents, and the diversity of modern families.
Its research found that the average amount given by families is expected to hit £25,600 this year, with total lending set to reach £8.1bn. In 2016, when it first carried out the research, total lending was £5.3bn.
L&G said that house prices have been growing at a much faster pace than wages, and with the cost of living crisis and rising interest rates, it is becoming increasingly hard to get on the property ladder without family support.
“Whilst the majority are mums and dads helping out, also grandparents, aunts and uncles and even friends of the family are helping out as well… in ever increasing amounts of generosity,” Bernie Hickman, chief executive of Legal & General Retail told the BBC’s Today programme.
He added that families are also giving much more non-financial support.
“It’s much more common now for adult children to be living at home rent-free while they’re saving for a deposit, or parents and grandparents providing free childcare so that younger family members can actually save up for that deposit.”
One-in-five of those surveyed by L&G said that without family support, they would have to delay their home purchase by more than five years, while one-in-10 said they would not be able to buy a home at all.
“Family wealth is increasingly becoming a prerequisite for homeownership, effectively locking some groups out of the housing market for years while they save for deposits, or even altogether,” said Mr Hickman.