Increasing number of renters turning to the Bank of Mum and Dad for support
A growing number of tenants living in the UK property market's private rented sector are turning to their parents for financial support, according to a new study released this week.
Traditionally, younger people have looked to their parents for help in the property market, but this usually happens when it comes to buying a home, with many youngsters borrowing from the Bank of Mum and Dad for a mortgage deposit when they are buying their first home.
However, Legal & General has discovered that it's a phenomenon that's also becoming ever more common when it comes to the rented sector. It said that as many as nine per cent of tenants have asked their parents for help paying their rent at some point.
This means that 460,000 properties around the UK owned by landlords have seen rental payments that come from parents over the last few months, rather than from the tenants themselves. Overall, parents of UK tenants have contributed as much as £2.3 billion to the sector in rental payments.
Dan Batterton, fund manager for Build to Rent at LGIM Real Assets, said that the results show a concerning trend for young people who are struggling to make their payments for accommodation.
"It is a real challenge for young people who are reliant on parental handouts just to make the rent. The intergenerational inequality that creates the demand for the Bank of Mum and Dad funding continues to widen and now it’s affecting renters too," he said.
Mr Batterton also went on to say that the problems that have caused a growing number of young people to need help include the shortage of property, which pushes prices higher, and the lack of increase in earnings.
And while it's a new trend that people renting need help from their parents, it's no surprise that the same is still being seen in the owner-occupier sector. Throughout 2017, it's expected that parents will contribute £6.5 billion to the market when their offspring are buying.
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29-August-17General Lettings News