Research reveals the Bank of Mum and Dad helps out on the UK rental sector

It is well known that first time buyers in the UK turn to the banks of mum and dad to help them onto the housing ladder but now new research reveals how much they help out with rent too.

It suggests that the Bank of Mum and Dad will fund £2.3 billion of rental payments in 2017 and now helps 9% of renters across the UK with their financial commitments to their landlords on nearly 460,000 properties.

Previous research from Legal & General and the Centre for Economics and Business Research (Cebr) found that the Bank of Mum and Dad will support £6.5 billion of lending to first time buyers to get on the property ladder this.

It means that overall in 2017 he Bank of Mum and Dad will fund some £8.8billion helping children to either rent or buy a home.

Legal & General has been tracking the role of the Bank of Mum and Dad for some years but this is the first time we’ve looked at its role in the rental market and the results are concerning, according to Dan Batterton, fund manager for Build to Rent at LGIM Real Assets.

‘It is a real challenge for young people who are reliant on parental handouts just to make the rent. The intergenerational inequality that creates the demand for the Bank of Mum and Dad funding continues to widen and now it’s affecting renters too,’ he said.

‘The lack of affordable housing, low wage growth relative to inflation and burdens of student debt mean that many kids can’t even rent somewhere without significant contributions from their family. Parents want to help their kids get on in life, and the Bank of Mum and Dad is a testament to their generosity, but it is also a symptom of our broken housing market,’ he pointed out.

‘The UK is experiencing a supply-side crisis in the rental sector. We need more professional, affordable tenures and more choice for renters. We need to build more homes for the young, old and families alike, more quickly and cost effectively. Renters are currently facing not only expensive rental payments but moving costs, agent fees and deposits which are reducing flexibility, something that should be a benefit of renting,’ he added.

The research also found that 10% of renters have had help from their parents towards their rental deposit, 6% helped with moving expenses and 5% helped with letting agent fees.

The report suggests that with 64% of renters having moved at least once in the past five years and home ownership levels under pressure, it is expected that the Bank of Mum and Dad will play an increasingly important role in the private rented sector.

Help is highest in London and the East of England with the Bank of Mum and Dad responsible for £626 million and £604 million in these areas respectively. It also funds £175 million of rental payments in the North West and £369 million in Yorkshire and the Humber.