A recent report, carried out by Legal and General and Centre for Economic Business Research (Cebr), has found that parents are struggling to help their children acquire property and it is making them feel financially vulnerable.
Astonishingly, The Bank of Mum and Dad are loaning an average £18,000 of their hard-earned savings to their children, who are struggling to gain a foot hold on the property ladder.
Of these parents, 17% will find that lending their children money will see them considerably worse off, with an additional 4% being forced to postpone their retirement so that they are able to fund the loan.
Furthermore, 27% of grandparents and parents over the age of 55, have found that their standard of living has deteriorated because they have lent money to their younger family members.
Despite these figures, the compulsion to help our children is stronger than ever. The results indicate that older members of the family will look to find a multitude of ways to find the necessary money to help fund their children’s property aspirations.
44,000 housing transactions were completely or partially funded by The Bank of Mum and Dad using equity release in their own property to fund their children.
Similarly, thousands of loving parents have sacrificed their pension pots to provide the funds for their children. In 2018 alone, over 50,000 transactions have been helped by people taking lump sums from their pensions to support housing deposits.
Paula Higgins, chief executive, HomeOwners Alliance, says: “If further proof was needed that the housing crisis will have far-ranging ramifications then this is it. The fact that some parents are postponing retirement to help their grown-up children onto the housing ladder shows how far the ripple effect of the broken housing market goes. Not to mention the fact that this acceptance and reliance we have on parents to provide financial support means those people whose parents are unable to do so are left out in the cold.
“Our 2018 HomeOwners Survey found the market is failing at every level and this L&G survey is just further proof of that.”
In a time when an ageing population should be considering the ways their assets and capital can help to fund their retirement, we are in the broken position where this money must help in propping up the property market and support the young.
Now that the Government’s summer holiday is at its end, they should be looking for strategic ways to help support both young first-time buyers and the increasingly anxious and reluctant Bank of Mum and Dad.
Have you found more first-time buyers reliant on parental support? Are you concerned that increasing house prices and stagnant wages will create an unassailable and unaffordable property gap? What should the government do to help ease this potential crisis?