Family members supporting nearly half of purchases
The Bank of Family is set to give £8.1 billion to homebuyers this year, supporting 47% of all homes purchased by buyers under the age of 55, property group Legal & General has forecast.
Financial support from family members, is expected to help fund 318,400 housing transactions in 2023, more than any year since L&G started tracking family lending in 2016.
The average amount of Bank of Family money given is expected to hit £25,600 this year.
Bernie Hickman, chief executive, Legal & General Retail, said: “Family wealth is increasingly becoming a prerequisite for homeownership, effectively locking some groups out of the housing market for years while they save for deposits, or even altogether.
“While family gifting has always played a prominent role in the UK housing market, our study shows that the value of those contributions has risen by more than a quarter on pre pandemic levels.
“An increasing reliance on family members isn’t only an issue for those seeking to buy – it is important to acknowledge the financial strain it can place on the giver, particularly if they are undertaking this commitment without financial advice.
“By dipping into savings and pensions, family members may be compromising on their own retirement incomes. A housing system which relies too heavily on gifted deposits not only perpetuates inequality today, but could create risks for the older generations of the future.”
The majority of recent or prospective Bank of Family recipients said they would have to delay their home purchase without financial help from loved ones.
More than one in five (21%) say they would have to delay their purchase by more than five years and one in 10 first-time buyers would not be able to buy a home without assistance from the Bank of Family.
Bank of Family keeps London buyers afloat
Bank of Family support is highly regional, as over two-thirds (67%) of all homeowners in London receiving parental support to purchase their homes. Recipients in London received £30,200 on average to support their transaction, only beaten by those in the East of England who received an average of £32,100.
However, elsewhere aspiring buyers are less reliant on the Bank of Family. In the East Midlands and West Midlands, people received the least on average from friends and family, at £20,000 and £19,800 in each region, respectively.
Hickman added: “Our latest Bank of Family research shows just how the high cost of housing, particularly in London and other major cities, continue to shape the UK. There are clear differences between urban and rural areas, and the lack of affordable housing in some areas is a legacy that will impact many peoples’ lives for years to come.
“As an organisation, we’re committed to improving the UK’s housing market and making sure as many people as possible have a fair opportunity to control their own future.
“This includes a £32bn investment in UK towns and cities and a commitment to increase the UK’s affordable housing by 20%. We’re also investing heavily in innovative new routes to homeownership, as we’ve shown with our support for Generation Home.
“Gifting a deposit is an incredibly kind and generous thing for those who can afford it, but it shouldn’t be a necessary part of the homebuying process.”