About one third of first-time buyers have help from family or friends, according to a survey released by the Family Building Society in conjunction with the London School of Economics.

Around 92 per cent of respondents said that the beneficiaries were their children, followed at some distance by grandchildren and parents at about three per cent each.

Over 50 per cent of respondents revealed that they had helped a family member by providing money for some or all of the deposit, while a further one-fifth gave lump sums that were used to cover stamp duty or legal costs.

Other types of support, including acting as guarantor for a mortgage or taking out a joint mortgage, were less reported, standing at around ten per cent.

The most popular source of funds for family assistance was savings, standing at 70 per cent, followed by inheritance, chosen by 14 per cent.

Some eight per cent said they had used funds from a pension, equity release or remortgaging their own home, all of which could potentially be detrimental to donors’ long-term financial position.

The figures revealed that only 23 per cent opted for gifting money to their children, while 77 per cent of customers offered money to a family member as a loan. Two-thirds of customers said they expected repayment on the loan as and when their child could afford it, rather than agreeing a fixed repayment schedule.

Half under 30

According to the report, 19 per cent of the properties acquired with help were in London, compared to 13 per cent of the UK population living in London, and 24 per cent in the South East, compared to 14 per cent of the UK population living in the region.

Across the survey, the median parental contribution was £30,000, while the mean was much higher standing at £59,200. Mean contributions have more than doubled in the last two decades, from the £31,300 reported by respondents who provided help in the 1990s to £68,700 for contributions since 2010.

The survey results indicated that help is targeted at a relatively young age group. About half of those who received help with the down payment were under 30.

Most respondents had given help more than once, either to the same relative twice or, more commonly, to more than one relative or child. Of those respondents who had given assistance more than once, about 88 per cent had helped more than one beneficiary, while 12 per cent had helped the same child twice.

Mixed feelings

According to the survey, most respondents were pleased to be able to help, although about half thought it unfair that they should have to.

Before providing financial help, 8 per cent of customers took financial advice to help with the deposit, while 14 per cent to help with mortgage payments.

On the other hand, 14 per cent of customers took legal advice to help with the deposit, while around 12 per cent to help with mortgage payments.

Overall, most of the respondents were not greatly worried about how a loan or gift would impact their circumstances. Some 7 per cent strongly agreed that they were concerned about the future effect on their finances, while a further 17 per cent agreed.

Even so, many parents were concerned to ensure that they maintained control over the resources to pay for care for themselves if necessary in later life.

Indeed, two more general policy concerns raised across the survey were that the Bank of Mum and Dad might be further worsening wealth and housing inequality into future generations and that helping younger people with housing costs might leave some parents financially vulnerable.

This suggested the need for better signposted financial advice, especially for older people.

Future plans

Looking ahead, over-55 parents may be the last that can afford to give generous help to their children, said Kath Scanlon, assistant professorial research fellow at London School of Economics.

She added: “We recommend ensuring that incentives with respect to the wealth of older people are better aligned across the social care system, inheritance tax and stamp duty. Also, it is essential to understand whether this transfer is a loan or a gift, as in the first case repayment arrangements are required.”

However, about half of the survey respondents said it was likely that they would help a relative buy a home in the future.

Some 11 per cent said they were not likely to help in coming years. Most of these, about two-thirds, said it was because no more help was needed , but 20 per cent were worried about their own finances.