First-time buyers rely on Bank of Mum and Dad for £2 billion a year
24 July 2013
Parents are paying out £2 billion every year to help their children get on the housing ladder, as more and more young people are priced out of a home of their own.
New analysis by NatCen Social Research for Shelter shows that the pressure on parents to help their children out with the money for a deposit is rising.
Since 2009, more than a quarter (27%) of UK first-time buyers relied on help from their parents to raise a deposit – up from a fifth (17%) in the previous four years.
The average contribution from parents who helped their children was £17,000 – more than half of the average deposit of £28,000. That means that parents are contributing around £2 billion to the housing market each year. This is almost double the amount that the Government spends on building affordable homes.
Shelter is warning that unless the Government takes action to address this country’s affordable homes shortage, the Bank of Mum and Dad is going to reach breaking point. 1 in 5 parents are eating into their retirement pot to help fund children’s deposits, and a quarter are cutting back on their own spending.
For young families who can’t rely on financial help from their parents, the average time spent saving up for a deposit is now over a decade. Unless something changes, then even those who could have relied on their parents in the past will begin to find that high house prices mean this parental assistance might not be enough.
Shelter argues that building more affordable homes is the way to tackle this crisis. This wouldn’t just help young people hoping to get on the housing ladder; it would also ease pressure on the overheated rental market and bring down housing costs for struggling families.
Campbell Robb, Shelter’s Chief Executive, said: ‘The fact that the Bank of Mum and Dad has to play such a central role in our housing market shows just how desperate the situation has become for a generation that’s priced out of a home of their own.
‘Something is seriously wrong when people who work hard and save each month still have no hope of buying a home without significant financial support from their parents. And while parents want to help their children to get a start in life, with the growing squeeze on family budgets the reality is that the majority can’t afford to.
‘Unless the Government starts building the affordable homes we so urgently need, having a home to call their own will be a distant dream for the next generation.’