‘Bank of Family’ to fund record number of property purchases claim

Record numbers of homebuyers are set to get on the property ladder with the help of the “Bank of Family” this year, research claims.

Financial support from family members, the ‘Bank of Family’ , is expected to help fund 318,400 housing transactions in 2023, according to new research and forecasts from Legal & General and the Centre for Economics and Business Research (Cebr). 

This is the highest number of property purchases family gifting has ever supported since Legal & General began tracking family lending in 2016.

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 it said the term more accurately reflects the contribution of other members and the breadth and diversity of modern family structures.

The average amount of Bank of Family 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 Bank of Family assistance is predicted to reach £124.6bn this year.

Family contributions are set to climb to £10bn by 2025, according to the research. 

The majority of recent or prospective Bank of Family recipients said they would have to delay their home purchase without financial help from loved ones. 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.

Younger buyers and first-time buyers are the most reliant on direct financial support and often can’t buy without it, the research suggests.

In 2023, the Bank of Family will provide support for almost half (47%) of house purchasers under the age of 55, and a majority (58%) of financial support from the Bank of Family currently goes to first-time buyers

Bernie Hickman, chief executive 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.”