Financial support from family members, the ‘Bank of Family’, is expected to help fund 318,400 housing transactions in 2023, research has suggested.
according to (Cebr).
Research and forecasts from Legal & General and the Centre for Economics and Business Research, found that this is the highest number of property purchases family gifting has ever supported since L&G began tracking family lending in 2016.
In previous years L&G logged this lending as the ‘Bank of Mum and Dad’, but this year the business will be referring to the research as the ‘Bank of Family’, as the term more accurately reflects the contribution of other members and modern family structures.
The value of financial support families give, and the number of home purchases this helps fund, have both ballooned over the past seven years.
Following a dip in lending during the Covid-19 lockdowns, the financial support offered by families resumed its growth.
The average amount of Bank of Family money given is expected to hit £25,600 this year, while total lending is expected to climb to £8.1bn in 2023, up 50 per cent on 2020.
The total value of properties bought with Bank of Family assistance is predicted to reach £124.6bn this year.
Bernie Hickman, CEO, Legal & General Retail, said: “Family wealth is increasingly becoming a prerequisite for homeownership, effectively locking some groups out of the housing market for years while they save for deposits, or even altogether.
“While family gifting has always played a prominent role in the UK housing market, our study shows that the value of those contributions has risen by more than a quarter on pre pandemic levels.”
The research found that family contributions are set to climb to £10bn by 2025.
The majority of recent or prospective Bank of Family recipients said they would have to delay their home purchase without financial help from loved ones.
More than one in five (21 per cent) said they would have to delay their purchase by more than five years and one in 10 first-time buyers would not be able to buy a home without assistance from the Bank of Family.
Hickman said: “An increasing reliance on family members isn’t only an issue for those seeking to buy – it is important to acknowledge the financial strain it can place on the giver, particularly if they are undertaking this commitment without financial advice.
“By dipping into savings and pensions, family members may be compromising on their own retirement incomes.
“A housing system which relies too heavily on gifted deposits not only perpetuates inequality today, but could create risks for the older generations of the future.”
Younger buyers and first-time buyers
In 2023, the Bank of Family will provide support for almost half (47 per cent) of house purchasers under the age of 55, and a majority (58 per cent) of financial support from the Bank of Family currently goes to first-time buyers.
Legal & General’s research found that 77 per cent of buyers receiving family assistance directed at least a portion of their funding towards a deposit.
