One in five parents and grandparents have helped family members get on the home ownership ladder.
FAMILY SUPPORT IN property purchases has reached unprecedented levels as many parents and grandparents leverage their property wealth to assist younger generations. This shift is primarily driven by the escalating cost of home ownership, making it increasingly challenging for many young people to purchase their first home independently. The traditional notion of property as a long-term investment is evolving, as families are now more inclined to use this asset to provide immediate financial assistance.
This trend highlights the socio-economic pressures and rising costs of home ownership, which have made it easier for young people to enter the property market with external support. Recent research indicates that one in five (19%) family benefactors utilise their property assets by downsizing, releasing equity, or remortgaging to provide essential financial support[1].
BANK OF FAMILY GROWING TREND
The ‘Bank of Family’ is emerging as a significant force in the property market. Predictions suggest that by 2024, 42% of homes purchased by those under 55 will be facilitated through family financial support. This trend underscores the vital role of familial contributions in helping younger generations achieve home ownership. As housing prices continue to rise, the reliance on family gifting is set to increase, with parental and grandparental gifts expected to reach £11.3 billion by 2026.
METHODS OF FINANCIAL SUPPORT
Families are adopting various strategies to support their loved ones. A notable 19% choose to downsize, releasing equity to aid younger family members. Meanwhile, 8% opt for equity release, a financial product allowing homeowners to access the equity in their property while retaining residence. Around 4% are turning to remortgaging to unlock funds. Data shows that 9% have already utilised equity release for financial gifting in the first half of the year, demonstrating the growing popularity of this option.
LONG-TERM FINANCIAL IMPLICATIONS
Despite the complexity of these financial manoeuvres, a substantial 74% of those making significant gifts proceed without professional financial advice. This lack of guidance can pose risks, as products like lifetime mortgages involve long-term financial implications if not managed properly. Professional advice ensures that decisions remain sustainable and do not negatively impact the benefactor’s financial health.
VALUE OF PROPERTY WEALTH
Property wealth remains one of the most significant assets for families across the UK, providing a solid foundation for financial support. Therefore, it is unsurprising that many are leveraging this wealth to assist younger family members in purchasing homes. However, seeking professional advice is paramount to maintaining benefactors’ financial stability over the long term and making informed decisions that benefit both the giver and the receiver.
UNDERSTANDING THE ECONOMIC IMPLICATIONS
The trend of family support in property purchases reflects broader economic dynamics, including stagnant wages, rising living costs, and strict mortgage requirements, which collectively challenge younger generations to secure home financing independently. As family contributions become integral to the property purchasing process, improved financial education and access to professional advice are crucial for effectively navigating these complexities.
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Source data: [1] Bank of Family Methodology: The Bank of Family research was compiled using primary survey data as well as existing data sources relating to the housing market. The survey work was carried out by YouGov. For the survey of borrowers, the total sample size was 2,506 adults who have purchased a home in the past five years or are considering purchasing a home in the next five years. For the lenders survey, the total sample size was 2,017 adults aged 55+ with children or grandchildren aged 16+. Fieldwork for both surveys was undertaken between 26th June and 2nd July 2024. In order to arrive at the overall value of the Bank of Family (in terms of the value of lending), we used data from the survey to obtain the share of transactions supported and the average value of the assistance. This was then scaled up using Centre for Economics and Business Research (Cebr) forecasts for total property transactions. The underlying data for property transactions come from HMRC and are published as National Statistics.
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. AS WITH ALL INSURANCE POLICIES, CONDITIONS AND EXCLUSIONS MAY APPLY. YOUR BUY-TO-LET PROPERTY MAY BE REPOSSESSED OR A RECEIVER OF RENT APPOINTED IF YOU DO NOT KEEP UP PAYMENTS ON YOUR MORTGAGE. MOST BUY-TO-LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (FCA). EQUITY RELEASE MAY INVOLVE A HOME REVERSION PLAN OR LIFETIME MORTGAGE WHICH IS SECURED AGAINST YOUR PROPERTY. TO UNDERSTAND THE FEATURES AND RISKS ASK FOR A PERSONALISED ILLUSTRATION. EQUITY RELEASE REQUIRES PAYING OFF ANY EXISTING MORTGAGE. ANY MONEY RELEASED, PLUS ACCRUED INTEREST, TO BE REPAID UPON DEATH OR MOVING INTO LONG-TERM CARE. EQUITY RELEASE WILL AFFECT POTENTIAL INHERITANCE AND YOUR ENTITLEMENT TO MEANS-TESTED BENEFITS BOTH NOW AND IN THE FUTURE.
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