Parents are bank rolling the next generation of homeowners with an average contribution of £17,000 towards their children's property
Generous parents who want to assist their children get on the property ladder are stumping up the cash for the next generation of homeowners.
New research from NatCen Social Research for housing charity Shelter shows that over a quarter of first-time buyers have been assisted by financial help from their parents.
Since 2009, 27% of UK first-time buyers needed help from parents to get a foot on the ladder – and that’s up from 17% in the previous four years.
When parents are able to offer assistance to the cash-strapped younger generation, the average contribution is £17,000, which is more than half the average deposit needed of £28,000.
This means that parents are contributing around £2 billion a year to the housing market.
However Shelter is warning that one in five parents are using up retirement funds in order to help their children, as well cutting back on their spending.
‘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,’ says Shelter Chief Executive Campbell Robb.
‘Something is wrong when people who save each month still have no hope of buying a home without significant financial support from their parents. Unless the government starts building the affordable homes we urgently need, having a home to call their own will be a distant dream for the next generation.’
However, the government argues that measures are already in place that will relieve pressure on the housing situation over the next few years.
‘Shelter’s report fails to take into account the 170,000 new affordable homes we’ll have built by 2015,’ says Housing Minister Mark Prisk.
‘On top of this, our Help to Buy scheme enables people to buy newly built homes with just a fraction of the deposit they would normally require.’