The number of first-time buyers taking out a loan with the “bank of mum and dad” for financial help has hit a record high, according to new research.
A recent study performed by the Social Mobility Commission has suggested more than a third of homebuyers in England depend on assistance from their family.
The Social Mobility Commission was set up in 2010 and advises the government on social mobility issues in England.
Using the official data available, from 2013-2014, the study discovered that 34% of buyers needed cash or a loan from their parents, a rise of 14% when compared to statistics from 2010/11.
A further 10% of buyers relied on inherited wealth.
"Affordability problems mean that parents and other family members have a critical role in assisting their children to buy their first home, either by means of a gift of money or a soft loan," said the report author, Dr Paul Sanderson from Anglia Ruskin University.
The research also found the number of home owners among young families was “in free fall”.
The Rt Hon Alan Milburn, chair of the Social Mobility Commission, said: “The way the housing market is operating is exacerbating inequality and impeding social mobility.”
He added: “Owning a home is becoming a distant dream for millions of young people on low incomes who do not have the luxury of relying on the bank of mum and dad to give them a foot up on the housing ladder.”
According to statistics from 1990, as many as 63% of 25-29 year-olds owned their own property. By 2015 the number had fallen to 31%.
Savills performed a survey in December of last year, which found that just 20% of 25-year olds now own a house or flat.
The average price tag first-time buyers in England and Wales are paying now equals &200,000, according to the Land Registry.
Alan Milburn, a former Labour health secretary and now chair of the Social Mobility Commission, said: "Home ownership helps unlock high levels of social mobility, but it is in free-fall among young families.
"The way the housing market is operating is exacerbating inequality and impeding social mobility."
In an attempt to curb the first-time buyers crisis, former Prime Minister David Cameron started an initiative called the Starter Homes Programme. Buyers aged between 23 and 40 will be able to buy homes at a 20% discount on the value of the property.
The initiative is set to start in 30 areas of England and will apply to homes up to &250,000 in value or &450,000 in London.
The government’s February White Paper on housing laid out plans for incentivising councils to develop more specific house plans, to encourage smaller developers to build houses, and to allow more vertical building in urban areas.
The “bank of mum and dad” issue was first highlighted by Legal and General. According to their figures, a quarter of all mortgages in the UK last year were part-funded by parents, with the average amount given adding up to &17,500, and with a combined cost to parents of &5bn.
