More first-time buyers than ever before are relying on financial help from parents, new research from the Social Mobility Commission (SMC) suggests.
According to the advisory public body, the ‘Bank of Mum and Dad’ is used by 34 per cent of first-time buyers – whether it is in the form of a loan or a cash gift – and this figure also includes financial help from other family members.
In 2010/11 the figure was noticeably lower, with 20 per cent of first-time buyers needing either cash or a loan from their parents. However, a rise in house prices and fall in the availability of affordable housing has meant many young Britons struggle to get onto the property ladder nowadays, although there are a number of government schemes such as the Help to Buy ISA which aim to address this.
Last year, Legal and General found that parents were lending £17,500 on average to their children to help them afford to buy a house, equating to a total of £5bn annually.
Researchers at Anglia Ruskin University and the University of Cambridge also discovered that in 2015, only 31 per cent of 25 to 29 year-olds owned their own properties, well below the percentage recorded in 1990 when 63 per cent owned their own properties.
Dr Paul Sanderson, from Anglia Ruskin University and SMC report author, said: “Affordability problems mean that parents and other family members have a critical role in assisting their children to buy their first home, either by means of a gift of money or a soft loan.”