Help from the bank of mum and dad

Help from the bank of mum and dad

A new report from the Centre for Economics and Business Research, says that as many as a fifth of house sales would not have gone through without the buyers receiving some financial help from their parents.

The report, commissioned by HSBC, comes in the same week as the Lib Dem leader Nick Clegg suggested at his party’s conference, that parents should be able to use some of their pension to assist their children making their first property purchase. The report looks at the contributions made by parents since 2008 and has revealed that, as lenders have started tightening their mortgage rules, parents have had to provide more help.

The figures show that spending from parents has risen from £4bn in 2008 to £5.3bn in 2011, meaning that the percentage of homes that would not have been purchased without this financial assistance has risen from 13% to 19%. The results came from 1,000 first-time buyers who were interviewed by the CEBR over the past year.

The study also showed the value of the help given to the different age groups and found that those first-time buyers aged between 18 and 26 received an average of £19,000 from their parents, while older buyers got an average of over £42,000, thought to be because, at that age, their relatives would be more elderly and more likely to have accumulated savings.

The majority of those questioned said they had gone to their family for help because of the problems they had getting a mortgage, while just 15% said it was because they had wanted to buy a bigger property or move to a better area.