Legal & General: ‘Bank of Family’ to provide £8.1bn in aid to first-time buyers during 2023

Legal & General: 'Bank of Family' to provide £8.1bn in aid to first-time buyers during 2023

The rise in reliance on familial financial support in the UK housing market has hit record levels, with new research revealing that the so-called ‘Bank of Family’ is anticipated to facilitate over 318,000 property transactions with support worth around £8.1 billion in 2023.

This insight stems from a joint research initiative by the FTSE100 company, Legal & General, and the Centre for Economics and Business Research (Cebr).

In previous years Legal & General has logged this lending as the ‘Bank of Mum and Dad’, but this year the business will be referring to the research as the ‘Bank of Family’, as the term more accurately reflects the contribution of other members and the breadth and diversity of modern family structures.

The value of financial support families will give, and the number of home purchases that this will help fund, have both ballooned over the last seven years. Following an inevitable dip in lending during the Covid-19 lockdowns, the value of financial support offered by families resumed its dramatic growth.

The average amount of money given by family is expected to hit £25,600 this year, while total lending is expected to climb to £8.1bn in 2023, up 50% on 2020. The total value of properties bought with family assistance is predicted to reach £124.6bn this year.

Family contributions are set to climb to a staggering £10bn by 2025, according to the research. This increasing reliance on financial support from parents, grandparents, other family, and friends underlines the challenges faced by aspiring buyers who don’t have access to this support.

The majority of recent or prospective family recipients said they would have to delay their home purchase without financial help from loved ones. More than one in five (21%) say they would have to delay their purchase by more than five years and one in 10 first-time buyers would not be able to buy a home without assistance from the bank of family.

Bernie Hickman, CEO of Legal & General retail, said: “Family wealth is increasingly becoming a prerequisite for homeownership, effectively locking some groups out of the housing market for years while they save for deposits, or even altogether.

“While family gifting has always played a prominent role in the UK housing market, our study shows that the value of those contributions has risen by more than a quarter on pre pandemic levels.

“An increasing reliance on family members isn’t only an issue for those seeking to buy – it is important to acknowledge the financial strain it can place on the giver, particularly if they are undertaking this commitment without financial advice.

“By dipping into savings and pensions, family members may be compromising on their own retirement incomes. A housing system which relies too heavily on gifted deposits not only perpetuates inequality today, but could create risks for the older generations of the future.”

The executive summary of the report is available on the Legal & General website here.

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