According to analysis produced by the Resolution Foundation, parental wealth has now developed into one of the determining factors whether young people in the United Kingdom own a home or not since the financial crisis – demonstrating the current inequality in the housing market.
Although home ownerships rates amongst the 25-34-year-old age group have indeed declined, the recent introduction of schemes such as Help to Buy and shared ownership, as well as the myriad of mortgages now available, have been helping first-time buyers on to the market. Despite this push, Britain’s young people have been dubbed “Generation Rent” due to their decreased likelihood to be able to purchase their own homes when compared to previous generations – they are much more likely to be renting from a private landlord.
The analysis produced by the Resolution Foundation is the first of its kind as it has linked two long-running data sets together in order to attempt to measure the importance of the aptly named “Bank of Mum and Dad”, referring to parents supporting their children on to the property market. The foundation found that those with parental property wealth were 80% more likely to become homeowners than those whose parents did not own their own home.
Stephen Clarke, senior economic analyst at the Resolution Foundation, said: “High house prices and sluggish wage growth have meant that being able to buy a home of their own is almost impossible for many young people without access to the Bank of Mum and Dad.”
Making an interesting comment on how to bridge the gap in inequality, the report stated that the government’s Help to Buy equity loan scheme ‘could be better targeted’ and should additionally consider family wealth.
The report added: “Fundamentally, schemes like HTB are about helping those who are close to being able to afford their own home. In order to improve home ownership prospects for the majority of younger people, more concerted action is needed.”
