Recent research from Legal & General has found that whilst parents continue to lend or give money to children or grandchildren to get on the property ladder, they are feeling the pinch themselves with the average contribution going down by 17% this year to £18,000. A significant number of people are now finding themselves worse off financially as a result of making the gift. Nevertheless, more than one in four buyers still expect to receive help from family or friends.
Despite the amount being lent or given dropping to £5.7bn this year compared to £6.5bn last year, the so-called Bank of Mum and Dad was still a ‘prime mover’ in the housing market.
Key findings from the research were:
- In total, 27% of homebuyers will get assistance – up from 25% in 2017. Almost 317,000 housing transactions this year will rely on at least some parental help
- Parents and grandparents will lend £5.7 billion in 2018, helping more than a quarter of new home buyers (27%). The average amount has dropped from £21,600 in 2017 to £18,000 in 2018
- 17% of parents and grandparents accept a lower standard of living to allow their children and grandchildren to get on the property ladder
- Whilst nearly three in five people under the age of 35 get help from parents, one in five homeowners aged between 45 and 55 also now require support from their elderly parents to purchase property
- The highest average contribution is £31,000 in London, with the lowest being £11,000 in Scotland.
You may have already helped a family member with a property purchase, or be considering doing so in the future. If that’s the case, it’s important that you give any money you put aside the opportunity to grow at least at the rate of house-price inflation – but with house price inflation varying across the country, it is difficult to know just how much these savings have to grow by to hold their value.
Investment Marketing Team