The “bank of mum and dad”, where homebuyers rely on their parents to get a foot on the property ladder, has long been a key part of the UK housing market.
But continued pressure on budgets means other relatives including siblings are now being recruited to the cause, and this newly named “bank of family” is forecast to help finance a record number of house buys this year.
Two reports published on Monday show that ongoing housing affordability problems mean those who want to buy a home are turning to parents, grandparents and, increasingly, siblings to help raise the deposit. Although house prices have started to dip, rising mortgage rates have made monthly payments more expensive and may be behind the rise in the number of buyers seeking family help.
Legal & General said relatives were expected to support 318,400 UK property purchases in 2023, including 47% of all those involving buyers under the age of 55. Its research, based on separate surveys of buyers and parents and grandparents, found that £8.1bn would be handed to homebuyers by family members this year, with an average of £25,600 going towards each transaction. A majority – 186,700 homes – have been bought or are expected to be bought with assistance from parents, 39,800 will be bought with funds from grandparents and 91,900 with funds from other family or friends.
Not all the help involves giving money directly: while 77% of buyers received money towards a deposit, others lived with parents or other family members while saving up.
The value of financial support has ballooned in recent years, except for a dip during Covid lockdowns, and Legal & General said it expected family contributions to climb to £10bn by 2025.
Separate research by the property firm Hamptons found that while parents were still the most likely to help out first-time buyers, other family members were increasingly offering support.
This year it said 32% of first-time buyers had received family support with a deposit, with 72% getting the money from their parents, according to its analysis of mortgages granted by Skipton building society. This was down from 80% in 2018. After this, siblings were most likely to have helped out, accounting for 11% of cases of assistance, compared with 6% six years ago.
Aneisha Beveridge, the head of research at Hamptons, questioned whether the bank of mum and dad was starting to run dry. “As home ownership rates decline through the generations, younger parents today are less likely to be homeowners than their predecessors, which reduces their ability to withdraw equity from their home to pass on to children,” she said. “Rather, first-time buyers are increasingly leaning towards other family members to boost their deposits.”
She said brothers and sisters were also putting their hands in their pockets to assist. “They are highly likely to already be homeowners who want to help their younger siblings take their first step on to the property ladder,” she said.
The figures highlight how difficult buying a home has become for those who are not able to turn to family for help. More than one in five first-time buyers told Legal & General they would have to delay their purchase by more than five years without assistance, while one in 10 said they would not be able to buy at all.
Bernie Hickman, the chief executive of Legal & General Retail, said: “Family wealth is increasingly becoming a prerequisite for home ownership, effectively locking some groups out of the housing market for years while they save for deposits, or even altogether.”
He said it was “important to acknowledge the financial strain it can place on the giver”, particularly if they did not take advice for before making the gift.
“By dipping into savings and pensions, family members may be compromising on their own retirement incomes,” Hickman said. “A housing system which relies too heavily on gifted deposits not only perpetuates inequality today, but could create risks for the older generations of the future.”
