While more parents are lending, it seems however that the actual sums involved are decreasing – the average ‘Bank of of Mum and Dad’ 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.
The value of Bank of Mum and Dad-supported property purchases in 2018 will rise to £81.7 billion, representing a £4.2 billion or 5% increase since 2016. This is particularly true in London, where family members and friends typically lend almost £31,000 per transaction on average. More buyers in London (41%) are likely to receive ‘Bank of Mum and Dad’ contributions than in any other region.
Nigel Wilson, Group Chief Executive at Legal & General, expressed concerns that the increasing pressures on hard-pressed parents could exacerbate the UK’s Housing Crisis:
“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.
“It’s clear that households are feeling the pinch, as (bank of mum and dad) contributions have reduced by an average of 17 per cent 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.
Gareth John, Managing Director of Estate Agent Software AgentPro said the results were lower than he expected.
“Our Estate Agent clients tell us that parental support of some kind in increasingly involved in many of their transactions, especially for first time buyers, so while the figure is high I’m surprised it isn’t even higher. Our clients, like many in the property sector, believe that the current Government are not doing enough to support the UK’s ‘broken’ housing market. Our clients would like to see more Government support for the sector, because the Bank of Mum and Dad is not a bottomless pit and not everyone is fortunate enough to be able to rely on their families to get on the housing ladder.”