Bank of Mum and Dad pays out £2 billion to fund their children's property dreams
1 in 5 parents say they are using their own retirement savings to fund children’s deposits
Alex Johnson has been part of The Independent's online team since 2007. He has been writing about microarchitecture on his internationally-acclaimed Shedworking blog since 2006 and is the author of Shedworking: The Alternative Workplace Revolution. His latest book is Bookshelf, published by Thames & Hudson.
Wednesday 31 July 2013
Parents are spending around £2 billion a year to help their children get a foothold on the property ladder, according to a report from Shelter.
According to the housing charity, since 2009 27 per cent of UK first time buyers have relied on financial support from parents to raise a deposit, compared to less than a fifth (17 per cent) in the previous four years.
The average contribution from parents who helped their children was £17,000, equivalent to more than half of the average £28,000 deposit.
But Shelter's research also suggests that parents are finding this extra funding an increasing problem iwth 1 in 5 parents say they are eating into their retirement pot to help fund children’s deposits and a quarter are cutting back on their own spending.
Last month Shelter revealed that a couple would need to save an average of 12 years to have enough for a deposit on a home, rising to 30 years for a single person in London.
Campbell Robb, chief executive of Shelter, 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. From young families priced out of homeownership, right through to those at the sharp end who are struggling to pay for their homes, all those affected by our broken housing system need the government to get on a grip on this problem once and for all."
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