The ‘Bank of Family’ to fund record number of property deals in 2023
Financial support from family members or the Bank of Family is expected to help finance 318,400 housing transactions this year, a major financial services company has found.
Analysis from Legal and General and the Centre for Economics and Business Research has revealed that this is the highest number of property purchases backed by family gifting since Legal and General began tracking family lending in 2016.
The term ‘Bank of Family’ has replaced what used to be known as ‘Bank of Mum and Dad’. This new term represents the diversity of modern family structures.
Over the past seven years, the amount of financial support that families have given, and the number of home purchases, that it has funded has ballooned. Also the financial help that families have agreed to hand over to prospective homebuyers has dramatically grown since taking a dip in the Covid-19 lockdowns. The average amount of money handed over by Bank of Family is expected to reach £25,600 per loan this year, and the total value of lending is set to climb to £8.1bn. This is an increase in value by 50% when compared to figures from 2020.
Meanwhile, the total value of properties bought with Bank of Family assistance is predicted to hit £124.6 billion this year.
No family bank, no home
The data highlights the increased level of reliance on family members to get on the property ladder. The majority of those who are to benefit from support from the Bank of Family, said that without the financial backing of family members they would have to delay buying a home. One in five said that they would be forced to put off buying a house for five years While one in ten of those surveyed who are first-time buyers said that without any help from family members they would not have the means to purchase a property at all.
Younger buyers most reliant on family support
The research found that this year the Bank of Family will provide support for almost half (47%) of house purchases where the buyers are under the age of 55. Meanwhile, 58% of the support goes to first-time buyers, as many struggle to save the necessary deposits for a house.
Legal and General’s data showed that for 77% of buyers receiving family assistance, at least a portion of their funding was put towards a deposit
Regional disparities were found over family support for buying properties. London is where the most parental help has been needed to buy a first home, reflecting the higher cost of property in the capital. Over two thirds of homeowners said that they required the support of family members to buy their homes. Bank of Family recipients in London received £30,200 on average.
Aspiring buyers were less reliant on family support elsewhere. In the East Midlands and West Midlands potential buyers received the least on average from friends and family, at £20,000 and £19,800 respectively. The family gifting patterns in the report highlighted the regional variances in house prices and affordability, alongside income and wealth inequality across the UK.
High cost of housing shapes the UK
Bernie Hickman, CEO of Legal and General Retail said: “Our latest Bank of Family research shows just how the high cost of housing, particularly in London and other major cities, continues 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.
He added: “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 home buying process.”