29 Aug Bank Of Mum And Dad
BANK OF MUM AND DAD
We all know how hard it is to get on the housing ladder, with first-time buyers turning to the bank of mum and dad to help them achieve this goal. New research carried out has revealed they are helping their offspring get on the rental market too.
This is helping the commercial property industry with £2.3 billion of rental payments coming from the bank of mum and dad in 2017 which equates to 9% of renters across the UK, which is roughly 460,000 properties with financial commitments.
Research done prior to the most recent research carried out by Centre for Economics and Business Research found that Bank of Mum and Dad will provide £6.5 billion of lending to help their offspring buy a house quicker.
The total outgoing for the bank of Mum and Dad will fork out over £8.5 billion helping their kids buy a house quicker or get on the rental market.
Legal & General have been tracking the role of the Bank of Mum and Dad for some years in regards to the helping their kids buy a house faster than it would usually take them to save up the deposit. This is the first time they have looked at the role in the rental market and the results are concerning, according to Christopher Dezeeuw, Head of Rentals for Home House Buyers.
‘In recent years it has been a real challenge for young people that are reliant on their parents to make up the rent. The difficulty of getting onto the property ladder is getting harder with house prices rocketing even with the government help to buy schemes and low-interest rates, these difficulties have now spread to the rental market too’ Chris said.
‘ The lack of affordable housing, with wages relatively stagnant and the level of student debt these kids, are having to take on they are even struggling to rent somewhere without help from mum and Dad. Mum and Dad will always want to help their kids in life and the bank of mum and dad is a testament to their generosity and is also the symptom of a broken housing market.’
‘The UK housing market is having a supply crisis in the rental sector. We need more affordable, professional tenures and a lot more choice for renters. Renters are facing not only expensive rents but moving costs, agent fees and deposits, which is basically dead money. We need to be building more affordable homes for young professionals and families.’ he added.
The report also suggests that the bank of Mum and Dad will play an increasingly important role with in the private rental sector for the foreseeable future. With increasing pressure on home ownership, this generation of children will rely on mum and dad to buy a house.
The level of help is highest in London where property prices are at their most expensive with the bank of Mum and Dad responsible for £626 million in deposits and rental help. It also helps fund £175 million in renatla payments in the North West and £364 million in Yorkshire and Humberside.
This is great news for the commercial property sector with rental deposits helped to be funded by the bank of Mum and Dad means rents will keep rising as long as people are bailed out by their parents.