One in 12 properties bought in the UK is partly funded by a gift from a buyer’s friend or family member, a study has found.
Conveyancer My Home Move said that of 1.125m house purchases over the past year, 90,900 involved a deposit that had been given to the buyer by someone else.
This is an increase of 29.6pc from a year earlier, while general purchases have increased by just 3.6pc.
It also found that 17pc of first-time buyers relied on a gift from family or friends to buy a property.
Insurer Legal & General estimates that ‘The Bank of Mum and Dad’ has lent £5.3bn to buyers this year, making it the UK’s tenth largest lender.
Doug Crawford, chief executive of My Home Move, said: “With property prices racing ahead of earnings, we’re expecting to see the gifted deposit rate surpass the 10pc mark soon.
“However, a large-scale reliance among first-time buyers on gifted deposits is unsustainable, so it is important that those without the luxury of a gift from family and friends can get on the ladder, if the market is to work for everyone.”
Parents and grandparents have been encouraged to give away their money to millennial relatives who are struggling to buy, as earnings stagnate and house prices increase.
Over-55s in England now have £1.5 trillion of property wealth, according to research released in October.
The figures suggest that help from family and friends has been used more often than the Government’s Help to Buy Isa scheme this year.
While more than half a million of the Isa accounts have been opened, Government figures released this week show that the bonuses have been used for 38,595 transactions and in total have been worth around £2m.
However, the figures do suggest that the Isas are making it easier for younger people to buy. The average age of those collecting their bonuses is 27, compared to the national average first-time buyer age of 30.
The properties bought using the bonuses also cost less on average, at £169,045, compared to a first-time buyer average of £183,000.
The Isas have been criticised for rules that have left some buyers out of pocket. They can only be used to buy properties worth up to £250,000 outside London and £450,000 inside London.
Some who bought shared ownership properties found at the last minute that they were not eligible for the bonus because the total value of their property was more than this – even though the portion they were buying was worth less.
The bonus is only available at completion, not exchange, which means it can’t be used for the initial deposit – another issue that many buyers only found out about at the last minute.