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Guest blog: "The Bank of Mum and Dad can't solve this housing crisis"(77 Posts)
This week, the housing charity Shelter published new research which shows that parents pay out a staggering £2 billion each year to help their children into a home of their own.
Here, Shelter's Chief Executive Campbell Robb argues that unless something changes, our children will face a huge struggle to get a stable and affordable place to live.
Are you worried about how your children will be able to afford a home of their own? Let us know what you think here on the thread - and if you blog about it, don't forget to post your URL.
"As a parent I know that doing the best for your kids is always the number one priority. But while you can offer endless amounts of love and support, these days financial support from 'The Bank of Mum and Dad' is becoming almost as important if we want to see them get on in life.
This is increasingly true when it comes to where they'll live when they grow up, and have families of their own. Things have changed massively since I was a young adult. We were able to buy our first home in our 20s, with a deposit of just £4,000. Now, the average deposit is seven times that amount, while house prices have risen so fast over the past 40 years that buying a chicken would cost £51 today if food prices had gone up at the same rate. Saving for a deposit on a first home can take up to three decades in some parts of the country. And at Shelter, I hear first-hand from young people who say that no matter how hard they work or save, they're still priced out.
The knock-on effect of this is that more and more young couples have no choice but to bring up their children in unstable rented housing or put off having kids altogether while they try and save up. Alternatively, they're living at home until their 30s - unable to move out and live independent lives. I'm really worried that unless something changes, the housing situation my daughters will face will be even worse.
None of us wants this for our children, so it's not surprising that more parents are offering to help out. Our new research shows that the number of people relying on help from parents to raise a deposit is rising fast. And we're not talking about a few hundred or even a few thousand pounds: the average contribution was £17,000, which adds up to a staggering £2bn in cash being adding into the housing market each year by parents alone. I don't know about you, but on top of all the other costs parents face I find the prospect of raising that sort of money for even one of my children pretty eye-watering. With the squeeze on family budgets getting tighter, the reality is that the majority of parents simply can't afford it.
All this goes to show that relying on the Bank of Mum and Dad to get young people into a home of their own just isn't a sustainable solution to our housing crisis. If our kids are to even have a chance of a home of their own, the government has to start meeting people half way. This doesn't mean more schemes that help a handful of first time buyers - it means addressing the problem that's at the root of all this: our desperate shortage of housing. After all, this is what's driven house prices up and pushed homeownership further and further out of reach. Yet last year the Bank of Mum and Dad spent more on helping children with deposits than the government spent on building affordable homes.
We have to get a grip on this problem, and we have to do it now. More good quality affordable homes in every community is the only way to make sure our children can get a home of their own. What's more, it would ease pressure on the rental market and bring down housing costs for families at the sharp end of our housing crisis who are fighting a daily battle to keep a roof over their head. These are the people Shelter see's every day, and works hard to stop from becoming homeless. It's all interconnected ' more homes will ensure everyone in our society has a decent, affordable place to live.
The government must join parents now and start investing in our children's futures by building the homes we need."
You can find out more about Shelter's campaign - and use their work use their online calculator to work out how long it will take your children to save for a deposit - over here.
Some places on the north coast have the same problem.
Personally, I think house prices will have no option but to come down a lot further, even in 10 years, but dont quote me on that.
Perhaps saying lower expectations isnt quite the right phrase. Saying, expect lower may have been better to say.
I think about this a lot but I am lucky in that I only have one child and therefore at the moment bank of mum (single parent) is looking good for him.
I managed to buy my house with money that my mum inherited from my nan. 20% Deposit which was £38,000 there was no way I could have ever of saved that amount up while paying rent somewhere! The deal is that when my mum dies I pay a third of this back to my brother and sister which will of course include interest.
My plans for my DS is that when he gets a job and if he is still living at home to charge him some rent which I will put into a savings account but not tell him so that at some point he will have money for a deposit. Obviously if he chooses to go elsewhere this won't work but it an option at least.
Again I am lucky in that I live in a detached bungalow with 3 beds so if he does decide to have a family there is space if they can not move out and also the option of converting the loft.
The increasing costs of Uni fees, food etc is a worry though but I do try and save £100 a month for him which sometimes I manage and sometimes I have to borrow back as my nurses wage is exactly huge and I am not entitled to anything other than CB. If I had more kids I don't know what I would be able to do to help them.
i don't want to be on a ladder, I would just like to be able to afford to buy a small house for us to live in that is ours.
saintly I agree with you about the city salaries driving housing to be unaffordable for the majority.
It is a big problem. As I am old enough to have decent pensions and live in a big house, I see it my responsibility to sell up and fund my children when they want to set up home. But I recognise that I am one of a small minority who can make this choice
We were very lucky when we bought our house, it is a bungalow attached to a large house that has been converted into flats and apart from a parking problem documented by me in the legal section, we are very happy here.
But the reason we were able to buy it was that the previous owner an old lady did not want it sold to the owners of the large house and rented out, or bought as a holiday home by someone who would not use it. We got it quite cheap as it needed doing up and even our surveyor was impressed at the deal we got, however it was a private sale with no Estate Agents involved and the elderly Lady was selling to move into a retirement flat and had enough savings to add to the price she got to enable her to do so.
However we could have afforded something else, something not as close to the sea for the price we paid, I know a lot of people are not as fortunate as us and I do count my blessings
I just see the future is dc staying at home much much longer and going without luxuries if they want to save up and move out and need to salaries in order to do so. That is what my parents had to do so I feel it's gone full circle - actually after my Dad's dad died they lost their work accommodation so his siblings and Mum moved back in with his grandfather and each of them remained there until they married and for a while afterwards I think.
I also think if the government stopped propping up the first time buyers than surely in most areas of the country the housing market would crash???? That is what really needs to happen.
I think people believe what they want to believe.
I have 2 sons aged 18 and 21, they only earn min wage and the 18 year old only works part time.
Having their own home is important to them and they sacrifice other things to gain this, just as our generation did.
21 year old has nearly enough for a deposit and acceptance for mortgage no problem. Houses aren't so dear neither, 60k for a starter terrace round here, thats all done up. If you are prepared to do some work from 35k upwards.
I think that's very unusual morethan - you can't get a flat for under 100k here & a 2 bed house would be closer to 200k (depending a bit on area, maybe less but can be a lot more as well) in a place where wages are low. But see my earlier point about second homes.
DD1 and her boyfriend earn around £30k joint, minimum house price to be a reasonable distance from work by bus (neither can afford to run a car if they buy a house) is £130 for a 1 bed flat in a pretty dull ugly 60s/70s build area with not the best of reputations.
Rental prices are horrendous - no idea how you are supposed to get out of the cycle of renting if you can't save for a deposit. She has around £10k but the better rates are on 20% deposit or more so she has some way to go.
In London there is the problem of foreign investors buying flats - further and further out, too - as a bolt hole for their assets. I think I read that over 60% of sales in London last year were to overseas buyers. This obviously has a knock-on effect. I think there should be extremely punitive charges on investment/second properties. Something like ten times the council tax might be a start.
I also note that dirty face says she only got a housing association house because she was a single parent. It makes me wonder whether we should encourage our dds to have babies as teenagers to secure a property, because as sure as hell most aren't going to get one if they have a job and get married.
I live in the cheapest area of Surrey cheapest studio flat in postcode has asking price of £112k leasehold like I said my dc won't be moving out anytime soon!
I can see that where you are, morethanpotatoprints, that saving a deposit and getting a house is still obtainable, even for younger people. Nice to know.
60k wouldnt get anyone anywhere where I live. A garden shed?
I just looked at Rightmove, they have 50% ownership flats where I live for £80k new build. The cheapest 1 bed flat, leasehold, is £125k (which surprised me because I bought my 2 bed flat 5 years ago for £100k - but it is close to London)
Caster and Saintly
I don't think its unusual its just that its not south. True it is cheap in our area Greater Manchester, Liverpool, Lancashire, Cheshire, and the areas of NE. I think all areas are lumped together in many reports and give people the wrong view of it all.
I know its likely to be impossible in the south and really feel sorry for people down there.
I do think that some young people do expect lot too. Some of my ds friends who could quite easily afford a rent or to save a deposit have no money due to their love of luxuries. I think they are very entitled in some respects. We did without all luxuries and non essentials to save a deposit and we had 2 bedrooms not the 3 that many want to start with now.
I dont think you realise quite how cheap compared to elsewhere. I literally think that where I live, that may be the cost of a garage. Think that area of Dorset, that is famous. Not so bad as that, but nearly. Locals are almost totally priced out in certain areas. And they are in my area. The only young locals that live here, have a minor celebrity dad.
I can sympathise it sounds like where we used to live, our ds wouldn't have afforded a place there and local young people had to move out of the area it was so sad. We moved up north, and ended up with twice the size house for the same money as we paid in East Anglia.
My comment about the dc of today was in general and even up here there are young people bleating they can't afford to leave mum and Dad. In many cases they can clearly afford it but are prioritising other things such as cars, latest gadgets, entertainment etc. My point was my generation did without all this when saving for a house.
If a couple are living separately with their respective parents there is no reason why one full wage couldn't be saved per year at least. A hefty deposit could be saved. I know its not the case for all young couples, but it doesn't help to solve the problem if the truth isn't known.
To be fair, I have seen somewhere else on another thread, the things you went without with. So I know that when you say you went without luxuries and non essentials, that is exactly what you did. All the way down to furniture if I remember correctly.
Yes, we had old orange crates and a mattress and a few bits and pieces, but no new 3 piece, dining table etc.
I think we were the extreme though and wouldn't suggest others should have to do this, but a few less home comforts and entertainment/ gadgets would help younger people a bit.
We didn't need a huge deposit in comparison to house value like they do today and I know this is harder to achieve. I would imagine where you are the deposit could be completely out of reach, but in the same context we would never have afforded a house in your area neither.
I don't know what the answer is except maybe those who can relocate do so for the short term and allow some equity in a property which will fund a move back to the south again.
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Caster - the problem for our area isn't so much that it's south. It's not south east (we are four hours from London & further west it's even more of a problem) & wages are very low for the UK. We could actually move closer to London to an area with higher wages & find cheaper housing. The problem here is purely second homes that have driven the prices up way beyond the reach of locals. The stats show that this are of the UK has the largest multiple between average wages & house prices. It's bad for the area in many other ways - having many cottages empty in a village for the winter is not great for a community - and I would love to see more done to regulate second home ownership in certain areas.
Of course this is part of a wider problem of the salaries of this working in certain sectors being inflated beyond everyone else (a gap that has grown enormously in recent years)
Second areas are a problem in our area. And now seem to be getting worse again. Not directly where I am, but not far away. And I then think it makes the areas surrounding it have higher house prices because of it. Local MPs seem to make murmurings about it, but nothing happens. Perhaps their hands are tied?
Oh sorry caster my post was in reply to morethan - I do agree with you.
I was surprised you adressed it to me, but I did my best!
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