Bank of Mum and Dad in Crisis
A report, released by the charity Shelter, claims that more than six out of ten parents are unable to contribute towards a deposit that would allow their children to get on the property ladder.
The report also shows that, of those parents who are able to offer their children a lump sum from the Bank of Mum and Dad, a quarter had to cut back on their outgoings in order to do so. Even more worryingly, one in every five people who help their children by helping to pay part or all of the deposit on their first home are being forced to raid savings they had set aside for retirement or elderly care.
For those who are able to help their offspring onto the property ladder, the average cost of doing so is an eye watering £23,000.
Campbell Robb, Shelter’s chief executive, said:
“When parents are having to hand over such vast sums of money to help their children afford a stable home, it is yet another sign that the housing market is spinning out of control. And the reality is that most parents could only dream of giving their children £23,000 to help them on to the housing ladder.
A whole generation of young people are working hard and saving hard, but our desperate shortage of affordable homes still leaves them priced out. Instead they have to choose between becoming part of the “clipped wing generation”, stuck living in their childhood bedrooms, or “generation rent”, paying out dead money to landlords.
A pay-out from the Bank of Mum and Dad can’t be the next generation’s only chance of affording a home of their own.”
Schemes like Help to Buy might be heralded as the solution, but in reality risk making the problem worse by inflating house prices further. Instead, politicians need to give back hope to all those left priced out by building the affordable homes they are crying out for.
A similar investigation into the influence of the Bank of Mum and Dad on the property market, conducted by Shelter last year, found that over £2bn of the money pumped into the economy last year came from parents helping out their offspring.
That same report found that parents helping their children onto the housing ladder paid out an average of £17,000 to do so in 2013. The increased costs reflect the spiralling housing prices that have characterised the housing markets in a number of areas as of late.
The problem is that, with so many people raiding the savings they have set aside for their future, and the cost of helping children onto the property ladder increasing exponentially, we may very well be approaching perfect storm conditions in the next few years.
As the Shelter report puts it:
“The housing shortage is our national crisis, fuelled by decade after decade of politicians failing to build the homes we need. It’s put the Bank of Mum and Dad in crisis. And it’s left parents crying out for action.”
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