<\/p>\n
New research shows that the Bank of Mum and Dad will be a driving force behind the recovery of Britain\u2019s housing market as buyers struggle with the economic impact of COVID-19[1]. Nearly one in four housing transactions (23%) will have been backed by the Bank of Mum and Dad in 2020, with a quarter (24%) of borrowers now more reliant on financial support from family and friends.<\/p>\n
Total property transactions<\/strong> The figures reflect the effective closure of the housing market under the COVID-19 induced lockdown and a wider collapse in purchases reported by HM Revenue & Customs, with total property transactions similarly falling by nearly half in Q2 2020. Despite this, the Bank of Mum and Dad will still be involved in 175,000 housing transactions, with an estimated transaction value of \u00a350.3bn, this year.<\/p>\n Make sure you can afford it<\/strong> If you do decide to act as the Bank of Mum and Dad, it\u2019s important to make sure you can afford it. If you\u2019re using your pension and savings to help out, consider what impact that will have on your own retirement. It\u2019s also important to make sure it\u2019s clear whether the money is a gift or a loan, as this will have different tax implications. If your child is moving in with a partner, you may want a say in how the rights to the property will be held should the relationship break down at some point.<\/p>\n Facing the economic implications <\/strong> The\u00a0figures come\u00a0as buyers face the economic implications of the pandemic\u00a0and\u00a0a restriction in the choice of high loan-to-value\u00a0(LTV)\u00a0mortgages on which many buyers\u00a0(especially first-time buyers)\u00a0rely.\u00a0Data from Moneyfacts has shown a fall in the number of 90% LTV mortgages on the market which allow people to buy with just a 10% deposit.<\/p>\n Property market activity<\/strong> If \u2018Build, Build, Build\u2019 is how we will recover from COVID-19, then the Bank of Mum and Dad will be centre stage once more.\u00a0 Generous parents, grandparents, family members and friends are gifting thousands towards deposits, with the Bank of Mum and Dad outpacing even the Stamp Duty cuts designed to stimulate property market activity.<\/p>\n Uncertain economic future<\/strong> While the Bank of Mum and Dad is helping those lucky enough to have their backing, a generation of hopeful buyers without the support of the Bank of Mum and Dad could find themselves locked out of the housing market.<\/p>\n Source data:<\/strong> PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.\t\t<\/p>\n","protected":false},"excerpt":{"rendered":" Make sure you can afford it and understand any tax implications Parents have always supported their children in lots of different ways. These days, growing numbers of parents see their adult children struggling to build up enough in savings to put down the deposit on a house or to afford to move up from a… Read more »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"_links":{"self":[{"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=\/wp\/v2\/posts\/3221"}],"collection":[{"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3221"}],"version-history":[{"count":0,"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=\/wp\/v2\/posts\/3221\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3221"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3221"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3221"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nMirroring the impact of the lockdown on the UK housing market, it is forecast that the Bank of Mum and Dad will lend \u00a33.5bn to loved ones this year \u2013 which is almost half the \u00a36.3bn that parents, grandparents, other family and friends lent in 2019. As a result it will lead to the funding of 85,000 fewer home purchases.<\/p>\n
\nThe Bank of Mum and Dad is set to be a key element in the driving force behind the housing sector\u2019s recovery, as thousands of buyers press ahead with their plans to buy. Last year, 19% of\u00a0all home\u00a0purchases were funded wholly or partly by the Bank of Mum and Dad.\u00a0In 2020 that figure is set to rise to nearly a quarter (23%).\u00a0Of those who\u2019ve\u00a0bought recently and received support from family and friends, 65% said it would have been\u00a0\u2018unlikely\u2019\u00a0without help from\u00a0the Bank of Mum and Dad.<\/p>\n
\nOne\u00a0in five (19%)\u00a0expect they would\u00a0have had to delay their purchase by more than five years\u00a0without\u00a0Bank of Mum and Dad\u00a0support,\u00a0and a\u00a0further 14% said they never would have been able to buy without\u00a0the help of family or friends.<\/p>\n
\nDespite the\u00a0Stamp\u00a0Duty holiday\u00a0for purchases under \u00a3500,000, just 8% of\u00a0would-be purchasers\u00a0say they are less reliant on family or friends for financial support\u00a0as a result of\u00a0the policy measures introduced to mitigate\u00a0the effects of the coronavirus crisis.\u00a0Only\u00a012% have brought forward their plans to buy\u00a0since the start of the pandemic.<\/p>\n
\nFor years buyers have been faced with a limited supply of affordable homes. A challenge which is now being compounded by COVID-19. Not only are buyers facing an uncertain economic future, but changes by lenders in the wake of the pandemic have restricted the low-deposit mortgage options on which many young people rely to make their first step.<\/p>\n
\n[1] https:\/\/www.legalandgeneral.com\/bank-of-mum-and-dad\/<\/em><\/p>\n