Parents still asked for financial, and practical, help

Kirsty Mcluckie on the Bank of Mum and Dad

hen called to name the largest lending institutions of the UK, most people wouldn’t think to look close to home, but the Bank of Mum and Dad (BOMAD) will be the equivalent of a £5.7 billion mortgage lender this year, according to forecasts from financial services group Legal & General and economics consultancy Cebr.

BOMAD remains a major force in the UK housing market with 27 per cent of buyers receiving help from friends or family, up from 25 per cent last year.

This year, BOMAD will help 316,600 loved ones buy a home – up from 298,300 in 2017.

However, parents are providing smaller sums – the average BOMAD contribution will decline from £21,600 in 2017 to £18,000 in 2018.

Nigel Wilson, group chief executive at Legal & General, says: “The Bank of Mum and Dad remains a prime mover in the UK housing market, and will lend the best part of £6bn to buyers this year, with over 315,000 transactions being underpinned by parental help.

“However, it’s clear that households are feeling the pinch, as BOMAD contributions have reduced.

“The fact that in 2018, one in four housing transactions in the UK will be dependent on BOMAD, while hardpressed parents are finding it more difficult to provide the funds to help their family with deposits, will further exacerbate the UK’S housing crisis.”

BOMAD contributions are understandably highest in London at almost £31,000 per transaction.

They are lowest in Scotland at just under £11,000.

Under 35s are most likely to receive BOMAD assistance, with nearly three in five receiving money from family and friends to buy a property.

Even homeowners aged between 45 and 55 are now relying on BOMAD, with one in five receiving assistance from their parents.

Wilson says: “This is not a positive trend – nor is it sustainable or fair for our parents and young people to remain so co-dependent when it comes to housing purchases.

“We need to take action to fix the housing market and open up affordability for all.

“Jobs, infrastructure and economic growth are needed to create thriving communities where people can afford to buy.”

Meanwhile another survey this week reveals that even after we have bought a property, British householders rely on their parents for help.

A third of homeowners and renters don’t feel confident tackling home maintenance tasks, and 15 per cent say they can’t even change a light bulb, while 40 per cent don’t know how to bleed a radiator. And so who do we ask? Parents, rather than the internet or professional tradespeople, are the most trusted source of help for all age groups up to 55.

Presumably, after that age, it is not that parents’ advice is untrustworthy, it is just there are fewer parents of over 55s around to ask.

For many who responded to the survey, the reaction to not knowing how to do a task is simply to wait for a family member to come and do it for them.

Perhaps the best solution for this is for hard-pressed parents to take a leaf out of the banks’ books and stiffen up their lending criteria.

Any offer of financial help to buy a home comes with the stipulation that the new homeowner has to undergo training in household maintenance.