40% of young home-buyers get help from Bank of Mum and Dad

Nearly a third of potential first-time buyers (31%) anticipate financial help from their parents, according to new research commissioned by the Council of Mortgage Lenders. But even more (35%) say that they would need financial help to be able to enter the housing market.

Among all of those who are already home-owners, 23% say that their parents helped them. But for younger, more recent buyers, the figure is much larger. 39% of those aged under 30 had received help, and more than 40% of those who have entered the market since 2004.

The survey provides clear evidence that financial help is more prevalent in London than anywhere else. 32% of all London home-owners said their parents had helped them. Home-owners in Scotland were the least likely to have received handouts from the bank of Mum and Dad, with only 16% having received parental help.

A number of interesting findings can be drawn from the research:

• There has always been some degree of financial help from parents and relatives, but it has become much more common in recent years and among younger households.
  
• Parental help tends to exert a significant influence on when the first home is bought, and particularly for recent young buyers. Three quarters of those under 25 (76%) say they would not have been able to buy without financial help.
  
• Of those who are not currently home-owners, 38% expect to be within five years, with higher figures in the younger age groups. 57% of under 30s expected to buy within five years, and these younger respondents were also much more likely than others to anticipate financial help from parents.
  
• Young people are probably under-estimating the difficulty of entering the housing market. For those currently aged 18-24 to fulfil their 5-year home-ownership aspirations would mean them achieving a much greater rate of home-ownership (58%) than their current 25-29 counterparts have done (43%).
  
• At the individual level, there is a clear mismatch between the help that people need and the help they anticipate getting. Among those who believe they would need financial help to become home-owners, only 62% anticipate they will get it and 28% expect that they won’t.

Commenting on the research, CML head of research Bob Pannell said:

“We were intrigued last year to find that, while around 8 out of 10 people believed it had never been harder for first-time buyers to enter the market and that action was needed, only 8% of them felt that parents should do more to help. Our new research helps to explain why. Over the past few years, parents have already been providing significant help to younger home-buyers, and there is uncertainty about whether they can do even more.”