New stats revealed
Legal & General and Cebr (Centre for Economics & Business Research) have today published a new report on the role the Bank of Mum and Dad plays in helping their children in the rental market.
The research shows the Bank of Mum and Dad will fund £2.3 billion of rental payments in 2017, paying out on average £415 every time a rental payment is made. 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.
Previous Legal & General/Cebr research showing the Bank of Mum and Dad will support £6.5billion of lending to first time buyers to get on the property ladder this year means the Bank of Mum and Dad will fund some £8.8billion in 2017 helping children to either rent or buy a home.
Dan Batterton, Fund Manager, Build to Rent at LGIM Real Assets, 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 handouts just to make the rent. The intergenerational inequality that creates the demand for BoMaD funding continues to widen and now it’s affecting renters too. The lack of affordable housing, low wage growth relative to inflation and burdens of student debt mean that many kids can’t even rent somewhere without significant contributions from their family. 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 UK is experiencing a supply-side crisis in the rental sector. We need more professional, affordable tenures and more choice for renters. We need to build more homes for the young, old and families alike – more quickly and cost effectively. Renters are currently facing not only expensive rental payments but moving costs, agent fees and deposits which are reducing flexibility – something that should be a benefit of renting.
“Legal & General is playing its part by building and financing thousands of new homes for rent, professionalising the experience for tenants, so that they can be assured of quality, transparency and surety of tenure. By controlling all aspects of design and service, and taking advantage of economies of scale, we can deliver better value for money and more choice for our occupiers. This includes favourable all-in costs, through significantly reduced energy costs, no letting fees, and a number of free services.”