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Handouts from Mum and Dad to help their children buy a home are nothing new – but this year they are set to top a record £9.2 billion across the UK, according to new research.
Financial gifts from parents and grandparents to their younger family members will rise again in 2024, up from £8.1 billion last year, Legal & General estimated.
The research lays bare the challenges facing young homebuyers looking to get on the property ladder, L&G said, particularly for those who do not have family wealth.
Almost a quarter of families are using property wealth to help younger generations onto the property ladder, but this option isn’t available for everyone— Bernie Hickman
The majority of recent or prospective recipients of financial help said they would have to delay their home purchase without it.
One in five said they would have to delay their purchase by more than five years, while one in 10 first-time buyers would not be able to buy at all.
The research was based on a survey with more than 2,500 recent homebuyers, and combined with forecasts from the Centre for Economics and Business Research (Cebr).
Bernie Hickman, chief executive of Legal & General Retail, said: “This research shows that families across the generations are facing tough decisions as they try to balance the aspirations of today, with the needs of tomorrow.
“We need to look at what could help all generations achieve better financial security, enabling them to build savings and assets today, and sustain their financial adequacy through their later years too.
“Almost a quarter of families are using property wealth to help younger generations onto the property ladder, but this option isn’t available for everyone.”
With family contributions becoming increasingly essential for property purchases, more relatives are now being called upon to support aspiring homebuyers.
Of the 335,000 property purchases the Bank of Family supports, 204,000 are funded with assistance from parents, 42,000 are bought with funds from grandparents, and 88,900 from other family members or friends.
Families are also looking for other ways to help loved ones save for a house.
More than a third of relatives have welcomed adult family members to live with them rent-free, for example.
L&G estimated that buyers save an average of £32,600 when living with family members, which they can put towards their deposit.
A further 39% said they are open to providing similar support to their adult children in the future.
As well as saving on living expenses, young people are having to make tough choices to build a deposit, including cutting back on pension saving.
For recent and prospective homeowners, one in seven have paused, stopped, reduced or have never saved into a pension in order to prioritise buying a home. This increases to one in five for first-time buyers.
Mr Hickman continued: “When people are making difficult and complex choices like these, understanding all the options, and what the long-term impact of choices might be, is really vital.”
“We and other providers have lots of education tools and resources available,” he said, pointing to L&G’s young person-aimed podcast called A Little Bit Richer.
He added: “This is also where getting professional advice can be very valuable; an adviser can help you understand all your options.”
