In today’s challenging housing market, many aspiring homebuyers are turning to their family for financial support. The Bank of Family, as it is often referred to, plays a crucial role in helping individuals and families achieve their dreams of homeownership. According to property group Legal & General, the Bank of Family is set to provide a staggering £8.1 billion to homebuyers this year alone, supporting 47% of all homes purchased by buyers under the age of 55.
The Rise of Family Lending
Financial support from family members is expected to fund an impressive 318,400 housing transactions in 2023, marking the highest number since Legal & General started tracking family lending in 2016. This figure highlights the increasing reliance on family wealth as a prerequisite for homeownership. As the cost of housing continues to rise, many individuals and families find themselves locked out of the market for years while they save for deposits or struggle to enter altogether.
The average amount of Bank of Family money given is projected to reach £25,600 this year1. This substantial sum can make all the difference for aspiring homebuyers, enabling them to bridge the gap between their savings and the required deposit. However, it is important to acknowledge the potential strain this places on the giver, particularly if they are undertaking this commitment without financial advice.
The Impact On Homebuyers
For many recent or prospective homebuyers, the Bank of Family is a lifeline that allows them to fulfill their homeownership dreams. Without this financial assistance, they would face significant delays in their home purchase or, in some cases, be unable to buy altogether. Over 20% of individuals relying on family support state that they would have to delay their purchase by more than five years, while one in ten first-time buyers would be unable to enter the property market without the Bank of Family’s assistance.
This reliance on family support is highly regional, with London leading the way. In the capital, over two-thirds (67%) of all homeowners receive parental support to purchase their homes. On average, recipients in London receive £30,200 from the Bank of Family, making it one of the highest regions for financial assistance. The East of England closely follows, with an average amount of £32,100 received by homebuyers.
However, in other regions like the East Midlands and West Midlands, aspiring buyers are less reliant on the Bank of Family. Individuals in these areas receive the least amount of financial support from friends and family, with averages of £20,000 and £19,800, respectively. These regional disparities highlight the varying affordability and housing market conditions across the UK.
Conclusion
The Bank of Family plays a vital role in supporting homebuyers in the UK property market. As the cost of housing continues to rise, many aspiring buyers rely on financial assistance from their loved ones to bridge the gap between their savings and the required deposit. While this support is invaluable for those trying to enter the market, it also highlights the need for a more equitable housing system that does not perpetuate inequality or put strain on the givers.
Legal & General’s research underscores the regional disparities in family lending, with London and the East of England being the most reliant on the Bank of Family. Efforts to tackle the housing crisis and increase affordable housing options are essential to ensure that homeownership is accessible to all individuals and families, regardless of their financial background.