ResidentialOct 12 2020

Half of buyers under 35 receive help from bank of Mum and Dad

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Half of buyers under 35 receive help from bank of Mum and Dad
Credit: Gareth Fuller/PA Wire

More than half (56 per cent) of recent buyers under the age of 35 have received a financial gift to help them step onto the housing ladder, according to Legal & General.

Research from the provider found the bank of Mum and Dad (BoMaD) was lending £19,000 on average to first-time buyers under the age of 35, with a fifth (21 per cent) saying they received more than £30,000.

It also found three in 10 first-time buyers expect to pay back at least some contributions from BoMaD.

Seven in 10 new homeowners (71 per cent) of all ages said they would have been unlikely to buy without financial support from family or friends, and would have had to delay their plans by an average of four years.

It comes as a solicitor has warned about potential disagreements over whether BoMaD funds were intended as a gift or a loan to be repaid.

L&G had analysed responses from 1,985 recent or prospective homebuyers and 522 grandparents or parents given in early August.

Nigel Wilson, CEO at Legal & General said: “[While] the Bank of Mum and Dad is playing a clear and present role for many buyers, it remains a symptom of a broken housing market. Thousands of people simply don’t have a Bank of Mum and Dad to rely on.

“For those that do, generous family members are still having to draw on retirement savings and rainy day funds even as the country experiences its most significant economic challenge since the Second World War.”

Commenting on the research, Will Hale, CEO of equity release adviser Key, said he had seen almost a quarter of equity release customers in the first half of the year use some of their funds to gift money to family.

Mr Hale also said: “To a large extent the Bank of Mum and Dad is filling the gap left by high street mortgage lenders, many of whom have stopped offering high loan-to-value deals and/or have tightened criteria.”

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