One in five parents and grandparents have helped family members get on the home ownership ladder
Family support in property purchases has reached unprecedented levels as many parents and grandparents leverage their property wealth to assist younger
generations. This shift is primarily driven by the escalating cost of home ownership,
making it increasingly challenging for many young people to purchase their first home independently. The traditional notion of property as a long-term investment is evolving, as families are now more inclined to use this asset to provide
immediate financial assistance.
This trend highlights the socio-economic pressures and rising costs of home ownership,
which have made it easier for young people to enter the property market with external
support.Recent research indicates that one in five (19%) family benefactors utilise their property assets by downsizing, releasing equity, or remortgaging to provide essential financial support*.
BANK OF FAMILY GROWING TREND
The ‘Bank of Family’ is emerging as a significant force in the property market. Predictions suggest that by 2024, 42% of homes purchased by those under 55 will be facilitated through
family financial support.
This trend underscores the vital role of familial contributions in helping younger generations achieve home ownership. As housing prices continue to rise, the reliance on
family gifting is set to increase, with parental and grandparental gifts expected to
reach £11.3 billion by 2026.
METHODS OF FINANCIAL SUPPORT
Families are adopting various strategies to support their loved ones. A notable 19% choose
to downsize, releasing equity to aid younger family members. Meanwhile, 8% opt for equity
release, a financial product allowing homeowners to access the equity in their property
while retaining residence.
Around 4% are turning to remortgaging to unlock funds. Data shows that 9% have already utilised equity release for financial gifting in the first half of the year, demonstrating the growing popularity of this option.
LONG-TERM FINANCIAL IMPLICATIONS
Despite the complexity of these financial manoeuvres, a substantial 74% of those making significant gifts proceed without professional financial advice. This lack of guidance can pose risks, as products like lifetime mortgages involve long-term financial implications if not managed properly.
Professional advice ensures that decisions remain sustainable and do not negatively
impact the benefactor’s financial health.
VALUE OF PROPERTY WEALTH
Property wealth remains one of the most significant assets for families across the UK,
providing a solid foundation for financial support. Therefore, it is unsurprising that many are leveraging this wealth to assist younger family members in purchasing homes. However, seeking professional advice is paramount to maintaining benefactors’
financial stability over the long term and making informed decisions that benefit both the giver and the receiver.
UNDERSTANDING THE ECONOMIC IMPLICATIONS
The trend of family support in property purchases reflects broader economic dynamics,
including stagnant wages, rising living costs, and strict mortgage requirements, which collectively challenge younger generations to secure home financing independently.
As family contributions become integral to the property purchasing process,
improved financial education and access to professional advice are
crucial for effectively navigating these complexities.
>> READY TO DISCUSS HOW YOU NAVIGATE THE
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exploring tailored advice that’s right for you, please contact our team.
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*[1] Bank of Family Methodology: The Bank of Family research was compiled using primary survey data as well as existing data sources relating to the housing market. The survey work was carried out by YouGov.
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