The Bank of Mum and Dad has long been an active lender in helping offspring buy their homes – but a new report out today says it is also playing a pivotal role in the rental market.
Legal & General and CEBR (Centre for Economics & Business Research) have published new research which shows that the Bank of Mum and Dad will fund £2.3bn billion of rental payments this year.
Parents are now helping 9% of renters across the UK with their rent on nearly 460,000 properties. One in ten renters have also used parental money to pay for deposits, while some parents have also helped pay letting agent fees.
Previous Legal & General/CEBR research showing the Bank of Mum and Dad will support £6.5bn of lending to first-time buyers to get on the property ladder this year means the Bank of Mum and Dad will fund some £8.8bn this year helping children to either rent or buy a home.
Dan Batterton, fund manager of L & G’s build to rent business, said: “We have been tracking the role of the Bank of Mum and Dad for some years now – but this is the first time we’ve looked at its role in the rental market and the results are concerning.
“It is a real challenge for young people who are reliant on parental hand-outs just to pay the rent.
“Parents want to help their kids get on in life, and the Bank of Mum and Dad is a testament to their generosity, but it is also a symptom of our broken housing market.
“The UK is experiencing a supply-side crisis in the rental sector. We need more professional, affordable tenures and more choice for renters. We need to build more homes for the young, old and families alike – more quickly and cost effectively.
“Renters are currently facing not only expensive rental payments but moving costs, agent fees and deposits which are reducing flexibility – something that should be a benefit of renting.”
Unsurprisingly, the Bank of Mum and Dad’s payments to the rental sector are highest in London and the east of England, lending £626m and £604m in these areas respectively. It also funds £175m of rental payments in the North-West and £369m in Yorkshire & the Humber
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