(Bloomberg) -- U.K. home buyers will receive 6.5 billion pounds ($8.4 billion) of assistance from family and friends this year, making the “Bank of Mum and Dad” equivalent in size to the country's ninth-largest mortgage lender, according to Legal & General Group Plc.
Family financial help to get people onto the housing ladder will average 21,600 pounds this year, up from 17,500 pounds in 2016, and 42 percent of prospective homeowners will receive such assistance, L&G said in a report. Rather than reflecting parents' generosity, the jump in family lending is a sign of Britain's “broken” property market, the research shows.
“The growing role of the Bank of Mum and Dad in supporting young people to get onto the housing ladder signifies that the U.K. property market is simply not building enough homes,” Bill Hughes, head of real assets for L&G's investment-management unit, said in the report. “This is not sustainable. As an industry, we need to work together to fix the housing market.”
Low wage growth and a slowdown in building have put property increasingly out of the reach of prospective home buyers in the U.K., even with the rate of house-price inflation starting to slow. The problem is particularly acute for young people, with almost four fifths of Bank of Mum and Dad assistance going to those under 30, according to the L&G report, which is based on a survey whose results were analyzed by the Centre for Economics and Business Research consultancy.
Families in the southwest of England give the most, with assistance averaging 30,000 pounds, even more than London, at 29,400 pounds, L&G estimates. Those in Wales provide the least, at 12,500 pounds. More than three quarters of the financial assistance goes toward deposits, with just 4 percent spent solely on mortgage repayments, the research shows.
To contact the reporter on this story: Jack Sidders in London at jsidders@bloomberg.net.
To contact the editors responsible for this story: Neil Callanan at ncallanan@bloomberg.net, Paul Armstrong, Ross Larsen
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