Now Bank of Mum and Dad pays the rent

THE Bank of Mum and Dad is often called upon for help with buying a property.

But now parents are having to assist their children in the rental market too, experts have found.

Research shows that parents will fund £2.3billion for rent for their offspring in 2017 – paying out £415 for each rental payment on average.

The Bank of Mum and Dad now helps 9 per cent of renters across the UK with their financial commitments to their landlords on nearly 460,000 properties, research from Legal & General revealed.

Unsurprisingly, the parents’ payments to the rental sector are highest in London and the South East, lending £626million and £604million in these areas respectively.

Mothers and fathers will also fund £175million of rental pay- ments in the North West and £369million in Yorkshire and the Humber this year.

The research, conducted with Centre for Economics & Business Research also found that some parents helped with other rental costs, such as moving expenses and letting agent fees.

Their offspring are often part of an age group known as ‘generation rent’, as rising numbers of young people have seen their hopes of home ownership fade from view. Dan Batterton, of Legal & General, said: ‘Legal & General has been tracking the role of The Bank of Mum and Dad for some years now – but this is the first time we’ve looked at its role in the rental market and the results are concerning.

‘It is a real challenge for young people who are reliant on parental hand-outs just to make the rent.’

He added: ‘The intergenerational inequality that creates the demand for Bank of Mum and Dad funding continues to widen and now it’s affecting renters too.’

Mr Batterton said the rental sector was experiencing a ‘crisis’ in supply, and blamed the lack of affordable housing, low wage growth relative to inflation and burdens of student debt.

He said: ‘Parents want to help their kids get on in life, and the Bank of Mum and Dad is a testament to their generosity, but it is also a symptom of our broken housing market’.

The insurance firm previously reported that parents now help fund one in four house purchases.

This year, the Bank of Mum and Dad will hand over more than £6.5billion to help 300,000 children get on the property ladder.

It means parents are effectively the UK’s ninth biggest mortgage lender, on a par with Yorkshire Building Society.

Their numbers come as official figures show that home ownership has fallen to a 30-year low.

Just 62.9 per cent of the adult population now own their own home – the lowest proportion since 1985 and eight percentage points down on its peak in 2003. The figures, in the English Housing Survey, also show that the proportion of households who privately rent is now more than double the level it was in 1992.

The 19.9 per cent figure for private rentals in 2015/16 was up from 19 per cent the previous year.

This sharp upward trend is a recent phenomenon, after decades in which it hovered around the 10 per cent mark.

The total number of privately renting households has swollen by around a million since 2010, to hit a post-1980 high of 4.5million.

‘Symptom of broken market’