First time buyers rely on bank of Mum and Dad

Almost 20% of first time buyer sales in 2011 would not have happened without funding from parents.

A report from the Centre for Economics and Business Research (CEBR) for HSBC found that transactions worth £5.3billion would ‘likely have been impossible’ without families stepping in to plug the gap needed for a deposit.

The report estimated that around 104,000 first-time buyers were helped by relatives between 2008 and 2011 making a total of 13% of all first-time buyer transactions in the UK during that period.

Many first time buyers have been forced to turn to their families for extra help as lenders toughened their borrowing criteria amid economic uncertainty.

The average size of the gift or loan varied with buyers in their mid 20s typically receiving around £19,000 and those in their mid 30s receiving more than £42,000 on average.  The figures also showed regional variations with those in London receiving £39,000 and those in the North East receiving £17,000.

Industry analysts have recognised families’ contributions as invaluable in helping thousands get onto the housing market who might otherwise have struggled or missed out altogether.

CEBR predicts that the need for parental help will decrease over the next 5 years as lenders became more resilient and the economy shows modest signs of recovery.  Based on their growth predictions they anticipate only 11% of first time buyers would need help from their families compared with 18.7% in 2011.

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