Bank of Mum and Dad to spend £2.3bn on rent
According to a report published by Legal & General and the Centre for Economics and Business Research, the Bank of Mum and Dad will help 9% of the renting population in the UK living in 460,000 properties.
Previous research carried out by L&G/CEBR revealed that parents will support £6.5bn in mortgage lending to first-time buyers in 2017, making a grand total of £8.8bn in funding for buying or renting property from the Bank of Mum and Dad.
Dan Batterton, fund manager, build to rent at LGIM Real Assets, said: “Legal & General has been tracking the role of The Bank of Mum and Dad for some years now – but this is the first time we’ve looked at its role in the rental market and the results are concerning. It is a real challenge for young people who are reliant on parental handouts just to make the rent. The intergenerational inequality that creates the demand for BoMaD funding continues to widen and now it’s affecting renters too. The lack of affordable housing, low wage growth relative to inflation and burdens of student debt mean that many kids can’t even rent somewhere without significant contributions from their family. 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 the rental sector. We need more professional, affordable tenures and more choice for renters. We need to build more homes for the young, old and families alike – more quickly and cost effectively. Renters are currently facing not only expensive rental payments but moving costs, agent fees and deposits which are reducing flexibility – something that should be a benefit of renting.”