An interesting new report has revealed that ‘the Bank of Mum and Dad’ is to fund 2.3bn of rental payments during 2017.
Research from Legal & General and Cebr suggests that the Bank of Mum and Dad will pay out £415 each time a rental payment is made.
Data from the report shows show 9% of renters have financial assistance from their parents.
Previous research from Legal & General and Cebr suggested that the Bank of Mum and Dad will support £6.5bn of lending to first-time buyers, in order to help them get onto the ladder.
This means that the Bank of Mum and Dad will fund some £8.8bn during 2017, to help children either rent or buy a property.
Dan Batterton, Fund Manager, Build to Rent at LGIM Real Assets, noted: ‘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.’
£2.3bn of rental payments to be funded by bank of Mum and Dad
‘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.
Concluding, Mr Batterton said: ‘The Build to Rent sector is only going to become more important in the UK’s housing mix. We need to be able to offer young people a good selection of affordable options for rental properties – either for the long term or as a step to buying their own home. Institutions like Legal & General can regenerate not just residential housing, but the towns and cities in which the homes are built. Infrastructure, jobs and local economic growth are all key to creating thriving communities where people want to live.’