First time buyers helped by the Bank of Mum and Dad receiving £23k each

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UK parents helping their children with a deposit to get onto the property ladder give an average of £23,000, new research by housing charity Shelter shows.

In a sign of the increasing strain being put on the Bank of Mum and Dad, the YouGov poll also found that a fifth of parents that had helped their children onto the housing ladder used savings set aside for retirement or elderly care. According to the survey, over one in four (27%) had to cut back on their own day to day spending to do so.

But offering such big cash sums isn’t possible for the majority of parents, who are feeling financially squeezed themselves. The research shows that 61% of parents in the North West are unable to save any money for their children’s future, and so unlikely to be able to help their children to buy a home even if they wanted to.

Additional research by the charity found that 70% of properties for sale in the North West are unaffordable for the average working family looking to buy their first home, even assuming that they were able to save an 18% deposit – the average size deposit for a first-time buyer.

The charity is warning that, unless politicians commit to building more affordable homes, young people and families who can’t rely on help from their parents will find that a home of their own becomes an ever more distant dream.

Norman Bainbridge helped both his daughter and son with the deposits for their first homes.

Norman says: “Without financial help our children would never have been able to afford their own places. With house prices rising all the time and rent eating up most of their income it would have taken them decades to save.

“It’s horrendous for any young person trying to get their own home today. People wanting to live in the place they have grown up in are having to move out because there’s no affordable housing, and the cost of renting is so expensive. Renting can be very unstable too; my daughter didn’t want to start a family without the security of a home of her own, so without our help with the deposit I wouldn’t now have my beautiful granddaughter.

“I was happy to help my children, but it has meant that the nest egg we’d saved for retirement has plummeted. We’ve had to raid our savings, but at least we were lucky enough to have savings to dip into – many don’t have this option.”

Campbell Robb, Shelter’s chief executive, said: “When parents are having to hand over such vast sums of money to help their children afford a stable home, it is yet another sign that the housing market is spinning out of control. And the reality is that most parents could only dream of giving their children £23,000 to help them onto the housing ladder.

“A whole generation of young people are working hard and saving hard, but our desperate shortage of affordable homes still leaves them priced out. Instead they have to choose between becoming part of the ‘clipped wing generation’ stuck living in their childhood bedrooms, or ‘generation rent’ paying out dead money to landlords.

“A pay-out from the Bank of Mum and Dad can’t be the next generation’s only chance of affording a home of their own. Parents understandably want to help their kids to get a start in life, but with many feeling the squeeze themselves this is only an option for a lucky few.

“Schemes like Help to Buy might be heralded as the solution, but in reality risk making the problem worse by inflating house prices further. Instead, politicians need to give back hope to all those left priced out by building the affordable homes they are crying out for.

“From a new generation of part rent part buy homes, to encouraging smaller builders back into the market, it is possible to turn the tide on the housing shortage, but only with the right innovation, investment and political will. It’s time for politicians from all parties to turn their talk into action.”