First-time buyers: banking on mum and dad
What is the greatest gift you can give your children, asked Judith Woods in The Daily Telegraph. Self-belief and resilience? “Roots and wings?” A puppy and skiing lessons? Today it seems that the greatest – “and increasingly mandatory” – benefit we can pass on to the next generation is “their very own modest rung on the property ladder”. Last week we learnt that British parents will lend or give more than £6.5bn this year to help their children buy homes – up from £5bn in 2016. According to Legal & General, the “Bank of Mum and Dad” will provide a similar amount to that lent by the UK’S ninth-biggest lender, Yorkshire Building Society. Bomad – it’s now big enough to have its own acronym – will be involved in more than a quarter of all house purchases this year.
Parents have given their children a leg-up since time immemorial, said Rowan Moore in The Observer. But today, thanks to sky-high house prices, the extent of it has become “pernicious”. It makes a mockery of the idea that Britain is “a country of opportunity, that talent and hard work will see you rewarded”: it has created a new class division between those who are lucky enough to have property-owning parents and grandparents, and those who aren’t. It also has a “toxic influence” on families, encouraging children to see their parents as “huge piggy banks”, and raising the prospect of Jane Austen-style “dynastic calculations and considerations of fortune”.
The old have always been richer than the young, said Merryn Somerset Webb in the FT. They have had longer to earn and inherit and save – and to benefit from the “miracles” of compound interest. But now “generational wealth inequality” has reached worrying levels. The over-85s hold more housing wealth than everyone under 35. It is well known that the underlying problem in the housing market is supply, said The Guardian. “Last year, the number of affordable homes slumped to a 24-year low.” Home ownership among 25- to 29-year-olds has halved since 1990. The housing crisis is “so daunting” that politicians have been slow to face it. But they must do so, if the whole idea of a “propertyowning democracy” is not to become a travesty.