More Customers At The Bank Of Mum And Dad

‘The Bank of Mum and Dad’ is a phrase which has become common in our everyday language and culture over the past few years. A key aspect of our work at Structural Engineers Reports is to write reports for homebuyers and this can mean being involved at this momentous life event – the placing of the foot on the first rung of that famous ‘property ladder’. But how easy is it for young people these days to make it to this point without financial help from their parents or other relatives?

The introduction of the ‘Help to Buy ISA’ in 2015 has gone some way to assist young people to save for a deposit but the ‘Really Moving’ website states that on average £8 billion a year is spent by parents helping their children to buy a home, or in acting as guarantors to boost the amount that can be borrowed for a first time purchase. Legal and General conducted a survey this year which placed the Bank of Mum and Dad as the 10^th highest ‘mortgage lender’ with the average amount lent being £24,100, an increase of £6000.

It would seem wise for parents to consider whether this money is indeed a gift or a loan, and legal advice may be sought in order that all parties know where they stand. For parents, being fair to all offspring can be a minefield, as can providing funds for a young couple only to see the relationship break down. Gifts of high value will also potentially have tax implications. Whether it is even right for young people to rely on the older generation for this type of financial support raises fundamental questions about our society, culture and family relationships. Some parents may feel under pressure to provide funds they can’t really afford, using money from pensions which could lead to hardship or higher demand on the state for their care needs in later life. And what of the young people who simply don’t have the Bank of Mum and Dad to rely on at all? Will this result in an ever-widening gap between the ‘haves and have nots’? For better or worse, one fifth of those surveyed who had, or would help out, said they felt it was a ‘personal responsibility’ but, on a more positive note, the L&G survey concludes that in the majority of cases, the inter-generational support had brought families closer together.