This is according to a survey commissioned by Legal & General which found 56% of those making their first home purchase did so using a gift from family or friends.
Meanwhile, 71% of these new homeowners said they would not have been able to buy their property without support from the so-called Bank of Mum and Dad (Bomad).
Indeed, if they hadn’t benefited from this financial boost, it would have set back their house-buying plans by an average of four years.
The analysis, which was carried out by the Cebr, on behalf of Legal & General, also found in 2020 Bomad would play an active role in 73,160 property purchases among those aged under 35, which is 8% fewer than 2019. This was despite wider property purchases collapsing by nearly half during Q2 2020.
Legal & General research also revealed Bomad was lending on average £19,000 to first-time buyers under the age of 35, with 21% of respondents in this age bracket saying they received more than £30,000.
In total in 2020, the under 35s would receive £1.36 billion in Bomad contributions, helping them to purchase £18.11 billion worth of property.
However, not all first-time buyers would receive the funding as a gift, with 30% expected to pay at least some of it back.
Nigel Wilson, CEO at Legal & General: “The Bank of Mum and Dad’s role in Britain’s housing market is ubiquitous.
“Across the UK, parents, grandparents, family and friends are digging into their pockets to help young, hopeful buyers and even growing families to make their housing plans a reality. These generous lenders are often funding most or all of the deposit buyers need to step onto or up the ladder.
“But while the Bank of Mum and Dad is playing a clear and present role for many buyers, it remains a symptom of a broken housing market.
“Thousands of people simply don’t have a Bank of Mum and Dad to rely on. For those that do, generous family members are still having to draw on retirement savings and rainy day funds even as the country experiences its most significant economic challenge since the Second World War.”
Over 35s also need Bomad support
Over 35s were also benefiting from financial support for home purchases from Bomad, with gifts or loans accounting for £2.14 billion, or 61% of the Bank of Mum and Dad’s total lending in 2020.
Legal & General said it was likely this high figure was in part due to older first-time buyers who were looking for larger, more expensive properties as a home for their growing families.
Despite the pandemic, the survey found, Bomad lenders themselves were still eager to help out. Nearly 74% of those who had seen their incomes fall during the pandemic said the crisis had made them no less willing to help loved ones onto the housing ladder.
Bomad ‘filling a gap’
Will Hale, CEO of Key, said: “Legal & General’s research underlines how vital the Bank of Mum and Dad is in the housing market and that the Stamp Duty holiday on all purchases up to £500,000, which lasts until the end of March 2021, is playing a major role too.
“To a large extent the Bank of Mum and Dad is filling the gap left by High Street mortgage lenders, many of whom have stopped offering high loan-to-value deals and/or have tightened criteria.
“Older generations have substantial property wealth with the over-65s alone owning homes worth more than £1.1 trillion and they are clearly focused on helping children and grandchildren where they can. In the first half of the year we saw almost a quarter of equity release customers using some of their funds to gift money to family.”
