Parents in the capital are giving their children almost twice as much financial help

  • 26 Aug 2016

Parents in the capital are giving their children almost twice as much financial help to get on the property ladder than those elsewhere in the country, research suggests.

The report by insurer Aviva found that the average amounts given by those over 45 to their children and grandchildren differs significantly depending on where they live.

The average amounts range from £20,000 given by those living in the East of England to £36,000 given by those living in London.

Nationally, parents who help out their children with the purchase of a home give on average £25,090, Aviva said.

However, its regional figures - given exclusively to us - show that parents in the capital are giving the largest amount of cash.

This region is also where average house prices are among the highest in the country at almost £600,000.

Parents in the East Midlands and North East followed closely behind with generous contributions of £32,500 and £27,950 respectively. 

Those in the East of England gave the least on average.

There were also differences in the way parents funded the financial gifts to their offspring, with 71 per cent using savings and investments to help with a deposit and 10 per cent used this to buy a property outright.

A further 10 per cent moved to a smaller property to help the younger members of their family to get onto the property ladder.

The Yorkshire and Humberside branch of the Bank of Mum and Dad is most likely to use their savings or other investors to contribute towards a deposit for their family, according to the research.

Four out of five suggested they will help in this way, compared to 71 per cent on average nationally.

The research went on to suggest that over 45 homeowners in the North East are more likely than any other region to use their savings and investments to buy a property outright for younger generations in their family, with a quarter either having done so already or planning to do so.

At the same time, 17 per cent of the London and West Midlands branches of the Bank of Mum and Dad plan or have already downsized to help with a deposit and are the most likely regions across the country to use this method.

The research found that 43 per cent of over 45 homeowners believe their children or grandchildren will never be able to afford to buy a property without family help.

However, not all over 45 homeowners can give the financial assistance they would like to. Almost two out of five said they would like to help a family member but couldn't afford to do so. And 12 per cent plan to skip a generation by giving money to their grandchildren instead.

Alistair McQueen, savings and retirement manager at Aviva, said: 'Home ownership is being talked about more than ever as today's millennials struggle to get their foot on the housing ladder. 

'We are seeing a growing effort among parents and older generations, who have traditionally benefitted from high levels of home-ownership and house prices, to financially support their family members. However, these trends have not freed young people from financial worries and there appears to be great divergences in terms of support given in different parts of the country.

'In our latest research, we have been able to unlock the hopes and worries of over-45 homeowners across the UK and take a closer look at how today's millennials are being supported by the 'Bank of Mum and Dad'. The findings show a real sense of wanting to help younger relatives overcome barriers to property ownership, and those who have been helped in the capital have received around £36,000 on average. 

However, financial pressures elsewhere in the country mean the story isn't the same for all young people, with the average amount from family members in the East of England dropping to £20,000. Offering a helping hand is not practical for everyone, which begs the question: if the financial pressures facing today's over-45s mean they cannot help as much as they would like, how will the next generation fare when it comes to supporting their own children?'