According to research from Legal & General and economics consultancy Cebr, this year ‘bank of mum and dad’ will lend more than £6.5bn to allow their children to get on the property ladder. With first-time buyers struggling more and more to afford homes on their own, the predicted sum is 30% higher than what was loaned in 2016, meaning that parents will be involved in more than 25% of UK property transactions, equal to about £75bn.
With the figure amounting to almost that of the ninth-biggest mortgage lender in the country, this is a clear indication of how the housing market is failing the younger generation. With 79% of the funding going to people under 30, London and the south-west of England are the areas that registered the largest average parental contribution per transaction, while Wales had the lowest.
Although parents generosity is admirable and understandable, the growing funding is neither sustainable nor equitable for both lenders and borrowers.
Now more than ever there’s the necessity to build homes faster and in a more cost effective way, with new properties targeted not only to young adults, but to families and the older generation too.