According to the report, 27% of buyers will receive help from friends or family, a rise of 2% when compared to the previous year. This year, the Bank of Mum and Dad will help 316,600 loved ones buy a home - up from 298,000 in 2017.
The value of parent-supported property purchases in 2018 will rise to £81.7bn, representing a £4.2bn or 5% increase since 2016.
However, parents are providing smaller sums - the average parental contribution will decline from £21,600 in 2017 to £18,000 in 2018. Total lending has reduced from its height at £6.5bn in 2017 to £5.7bn in 2018. This is, however, still an overall increase against £5bn of lending in 2016.
Nigel Wilson, Group Chief Executive at Legal & General, said: “The Bank of Mum and Dad remains a prime mover in the UK housing market, and will lend the best part of £6bn to buyers this year, with over 315,000 transactions being underpinned by parental help.
However, it’s clear that households are feeling the pinch, as BoMaD contributions have reduced by an average of 17% from nearly £22,000 to a still very generous £18,000. The fact that in 2018, 1 in 4 housing transactions in the UK will be dependent on the Bank of Mum and Dad, while hard-pressed parents are finding it more difficult to provide the funds to help their family with deposits, will further exacerbate the UK’s housing crisis.
We need to build more homes for the young, old and families alike – more quickly and cost effectively. Legal & General is playing its part by announcing an initiative to build thousands of new affordable homes.”
The research also shows that contributions by parents are highest in London, with £31,000 per transaction on average, and that equity release has increased slightly as a source of funding for loved ones’ home purchases, from 3% to 4%. However, nearly half of over 55s that are open to the idea of an equity release would put the money towards a loved one’s home purchase deposit, with 20% wanting to contribute to mortgage payments and other housing costs.
Nigel concludes: “The volume of transactions depending on Bank of Mum and Dad funding keeps on growing, even as parents find it harder to provide as much money for the deposit. BoMaD funding is a vital plank in the housing market, but this year the supply of funds is being squeezed. This is not a positive trend - nor is it sustainable or fair for our parents (the lenders) and young people (the borrowers) to remain so co-dependent when it comes to housing purchases.
We need to take action to fix the housing market and open up affordability for all. Institutions like Legal & General are making a positive difference in the supply of affordable residential housing as well as the towns and cities in which the homes are built. Jobs, infrastructure and economic growth are needed to create thriving communities where people can afford to buy.”
