‘Bank of Mum and Dad’ shells out £2bn a year on house deposits
Since 2009, more than a quarter of UK first-time buyers have relied on help from their parents to raise a deposit – up from a fifth in the previous four years, according to a new report from Shelter.
The average contribution from parents who have helped their children was £17,000 – more than half of the average deposit of £28,000.
Shelter says that this means that parents are contributing around £2bn to the housing market each year. This is almost double the amount that the Government spends on building affordable homes.
The housing charity is warning that unless the Government takes action to address this country’s affordable homes shortage, the Bank of Mum and Dad is going to reach breaking point.
A fifth of parents are eating into their retirement pot to help fund children’s deposits, and a quarter are cutting back on their own spending.
Campbell Robb, Shelter’s chief executive, said: “The fact that the Bank of Mum and Dad has to play such a central role in our housing market shows just how desperate the situation has become for a generation that’s priced out of a home of their own.
“Something is seriously wrong when people who work hard and save each month still have no hope of buying a home without significant financial support from their parents.
“And while parents want to help their children to get a start in life, with the growing squeeze on family budgets the reality is that the majority can’t afford to.
“Unless the Government starts building the affordable homes we so urgently need, having a home to call their own will be a distant dream for the next generation.”
For young families who can’t rely on financial help from their parents, the average time spent saving up for a deposit is now over a decade.
Shelter argues that building more affordable homes is the way to tackle this crisis, as soon getting parental help will not be enough to cover a desposit in a rising house price market.
This wouldn’t just help young people hoping to get on the housing ladder; it would also ease pressure on the overheated rental market and bring down housing costs for struggling families.
The Government has introduced housing schemes NewBuy and Help to Buy in order to get more people on the housing ladder.