Record numbers need help from parents to buy property

New research shows record numbers rely on “bank of Mum and Dad” to get on the property ladder.

According to new research for the Social Mobility Commission, more than a third of homebuyers in England depend on loans from their families to help them buy a home.

With access to the latest data available, from 2013-2014, researchers found 34% of buyers needed cash or a loan from their parents, compared to just 20% in 2010/2011.

A further 10% of buyers relied on inherited wealth, the research found.

The Social Mobility Commission was set up in 2010 and advises the government on social mobility issues in England.

Dr Paul Sanderson, the report author from Anglia Ruskin University, said: “Affordability problems mean that parents and other family members have a critical role in assisting their children to buy their first home, either by means of a gift of money or a soft loan.”

Insurance company Legal and General have previously highlighted the issue, saying that a quarter of all mortgages in the UK last year were part-funded by parents, with the average amount given £17,500.

The research also showed that in 1990, as many as 63% of 25-29 year-olds owned their own properties. By 2015, that proportion had fallen to 31%.

A survey by Savills in December found that just 20% of 25-year-olds own a house or flat.

According to the Land Registry, the average cost of a home bought by a first-time buyer in England and Wales is now just under £200,000.

Alan Milburn, a former Labour health Secretary and now Chair of the Social Mobility Commission, said: “Home ownership helps unlock high levels of social mobility, but it is in free-fall among young families.

“The way the housing market is operating is exacerbating inequality and impeding social mobility.”

Mr Milburn welcomed the government’s recognition of the problem.

Under the Starter Homes Programme, buyers aged between 23 and 40 will be able to buy homes at 20% discount to the market value. The programme will start in 30 areas of England and will apply to homes up to 250,000 in value, or £450,000 in London.

The government also wants councils to develop more specific housing plans which encourage small developers to build more houses, and to allow more vertical building in urban areas.

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