Around a quarter of all house buyers in the UK in 2016 needed top-up funding to buy from the so-called Bank of Mum and Dad (Bomad). That’s the finding of research carried out by Legal & General, which reveals that an incredible £5 billion was handed out to buyers from parents, other family members and friends.
That total is expected to top £6bn in 2017, says Legal & General. Most of those receiving the cash help from Bomad are millennials, those under the age of 30 (89 percent), while Bomad will help power property deals worth an estimated £75bn this year alone.
Those figures put Bomad among the top 10 lenders in the UK, equivalent to a mortgage lender such as Yorkshire Building Society.
The research, carried by Legal & General with the Centre for Economics and Business Research (Cebr), confirms that this avenue of funding is one of the most important right now for young buyers.
A testament to parental generosity
However, Nigel Wilson, Legal & General’s chief executive, warned that this sort of lending is unsustainable while he described the UK’s housing market as “broken”.
He said: “Younger people today don’t have the same opportunities that the baby boomers had, including affordable housing, defined benefit pensions and free university education.
“Parents want to help their kids get on in life, and the bank of mum and dad is a testament to their generosity, but it is also a symptom of our broken housing market.
“The UK is experiencing a supply-side crisis in housing – we are simply not building enough houses. We need to build more homes for the young, old and families alike, more quickly and cost effectively.”
The reliance on Bomad reflects in many ways the current state of the UK housing market, where a shortage of property has been compounded by salaries failing to keep pace with the rise in house prices. However, the desire to get on the property ladder remains strong for generation rent.
A helping hand from Homeward Legal
For those who have their finance in place and have found the property they want to buy, Homeward Legal can take the strain out of the legal side of things. Our seven-day operation, staffed by our friendly and professional sales team, will help you access a nationwide panel of solicitors and conveyancers and ensure the lines of communication stay open with you at all times.
Call 0800 038 6699 now for one super-fast, no-obligation quote or click here. And our “no completion, no fee” guarantee will give you peace of mind that if your transaction is not completed, you won’t lose a penny.