First-time Buyers
Bank of Mum and Dad gifts £17bn a year
Much of the money gifted from parents is used to buy property, but there is a striking inequality around who benefits
£17 billion is gifted or loaned informally each year, almost all from parents to their adult children, said the Institute for Fiscal Studies.
And this huge transfer of wealth from the Bank of Mum and Dad is mainly used by children to help buy a house.
The research institute added that these transfers are very unequally spread across society.
Who gives what?
Most transfers come from parents aged over 50 to children in their late 20s and early 30s. Around 30% of young adults receive at least one substantial transfer (of £500 or more) over any eight-year period.
Unsurprisingly, these gifts increase inequality among the younger generation.
The children of university-educated homeowning parents receive around six times more in wealth transfers during their 20s and early 30s than the children of renters. White young adults are three times more likely to receive a substantial gift than Pakistani or Bangladeshi young adults.
Those in the highest-income fifth of young adults are over three times more likely to receive a transfer than those in the lowest-income fifth, said the IFS. The amounts received by the highest-income fifth are 26 times bigger than those received by the lowest-income fifth.
Help to buy a home
Half of the value of gifts received from the Bank of Mum and Dad is used for property purchase or improvement, the study found. Those using transfers for this purpose received over £20,000, on average.
Bee Boileau, research economist and author of the report, said: “Substantial intergenerational transfers happen when people – particularly those with richer parents – are in early adulthood and are buying their first home or getting married.
“While these transfers are important assistance for some, they are very unequally spread. The children of university-educated homeowning parents receive around six times more in wealth transfers during their 20s and early 30s than the children of renters, while white young adults are three times more likely to receive a substantial gift than Pakistani or Bangladeshi young adults.”
