The research, undertaken by the housing charity Shelter and involving more than 15,000 people, shows on average parents are contributing £17,000 of the average £28,000 deposit needed by first time buyers.
Staggeringly, the support of parents equates to around £2 billion each year, almost double the amount the Government spends on its affordable housing program in England.
Shelter also found that 27% of first-time buyers need financial assistance from their parents to get onto the housing ladder; up from 17% before the credit crunch.
There is mounting concern amongst financial experts, that helping their children buy a home, will affect parents own financial futures, particularly in relation to their retirement planning and savings levels. Indeed, 20% of parents said they were saving less for their retirement, so they could help their children buy a home.
Commenting on the research, Campbell Robb, Chief Executive of Shelter, said: “The fact that the bank of mum and dad has to play such a central role in our housing market shows just how desperate the situation has become for a generation that’s priced out of a home of their own.”
Robb continued: “Something is seriously wrong when people who work hard and save each month still have no hope of buying a home without significant financial support from their parents. And while parents want to help their children to get a start in life, with the growing squeeze on family budgets the reality is that the majority can’t afford to.”
Help for first time buyers
Over the past couple of years the Government has introduced a number of schemes designed to help first time buyers.
In August last year the Funding for Lending scheme was introduced and in the Chancellor’s last Budget, earlier this year, the Help to Buy scheme was launched.
The measures seem to be having an effect. Last week the Council of Mortgage Lenders (CML) revealed that the number of first-time buyers being granted a mortgage had risen by 42% in May, compared to the same time last year and were at the highest level since 2007.
However, with the number of parents having to help their children still far higher than before the financial crisis, it’s clear more work needs to be done to help first-time buyers, who are so important to the housing market.
Do you want to help your children get onto the housing ladder?
You might not need to use your own capital to do so.
Our mortgage adviser, Linda Wood, is here to help you and can advise you in your options.
Your home may be repossessed if you do not keep up repayments on your mortgage.
For providing mortgage advice we will charge an application fee of £300 and we may also be paid a fee from the lender, any fee paid by the lender will be disclosed to you. Alternatively we will charge an arrangement fee of 0.5% of the loan and refund to you any payment received by us from the lender.