Guest blog: "The Bank of Mum and Dad can't solve this housing crisis"

[KateMumsnet]

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.

[noisytoys]

Me and DH are one of those with help from the bank of mum and dad, but we have 4 people living in a tiny 1.5 bed flat and have no plans to move. The mortgage will be paid when we are 40 and we hope to support out DCs in getting a small starter flat. Other than that they're on their own

[peteypiranha]

Leithlurker - It might be like that then but now people who live in social housing here have big houses with front and back garden etc.Its only the people I know who dont get social housing that are in small places with children.

[Caster8]

Good points Leithlurker, though for me I dont need politics brought into it all. As far as I am concerned all Governments make mistakes. Also all Governments dont have foresight.

Shelter amd the op seem to be thinking along the same lines. But I suppose, I still have in my mind that things are still going to get a whole lot worse economically, for many years. Therefore we could easily end up like Ireland or Spain with newly built houses empty and never used becuase people will just not be able to afford to live in them.

I am also probably older than some posters on here. So I know that even only a few decades ago, although there was not overcroding everywhere, it was normal to spend a few years with mum and dad after marriage, before a couple got their own house. Times really were not too bad then, doing that.
In other words, I think people need to lower their expectations a bit.

[Caster8]

I think people of this generation expect things to be the same financially or better than a previous generation. But they dont have to be, and I dont expect them to be. Why should they? Life changes all the time as far as I am concerned. Could be better, could be worse.

[peteypiranha]

Caster8 - That was when people married young though.I married very young and I would have lived with my parents then, but now most of my friends arent marrying until their 30s. Most of my generation will never have a mortgage, or if they do nowhere near as good a house as the previous generation

[TheFallenNinja]

I'll empathise with the student plight when all the student pubs close down through lack of business.

[Caster8]

There are thousand of young people having babies before they are 20 still.
Agreed that lots that go to uni, are not having babies until their 30's.

[dirtyface]

this terrifies me. my dcs are only 4 and 7 and i already worry about what it will be like when its time for them to leave home

dh and i rent a council house and feel very lucky. but i very much doubt the dcs will ever have that option. i only got my council house through sheer luck a few years ago when i was a single mum, and it took me nearly being made homeless to get it. and its in a rough, shit area but at least its a) affordable and b) secure

we would like to buy a house but even though we earn good money (well over average) we can not afford it, even though house prices have supposedly fallen in value. and i doubt we will never be able to help the dcs buy or even rent a place.

and i have a few 30-something friends who would love children but are trapped in private rented paying out 2/3rds of their salary on rent and just can't afford even one child. some are even still in house shares.

its ridiculously unfair, shelter is a basic human need along with food and water. why is it so scarce and expensive? and why is it increasingly only the wealthy that are able to have the security of buying. makes me sick

[Leithlurker]

Castor: Dirtyface makes it clear in her post that however much we would both wish (And I do wish it were the case,) that there was no need for politics to be brought in to it, unfortunately the whole discussion is now political.

From building new homes, to rent control, to the free market, to what it means today to have social mobility, to planning and land ownership. All of it has been politicised and no I am not just saying that it was only Thatcher, she may well have kicked it off. But the value of our society used to be seen as open and friendly, a little reserved maybe, but ultimately fair and cohesive.

Now it's fractured by the need to own things, the striving to look after ones self and family above and to the detriment of others, consumerism driven credit which has ultimately been the cause of the worst down turn in our economy for years. All this based on a simple premise that owning your own home is the one thing that marks you out as being a striver, those in social housing are then much easier to classify as the scroungers and so make the idea of social housing something to be avoided.

The original idea for social housing which can still be seen in little pockets of communities up and down the land is for the unskilled worker to live next door to the professional, for young and old to share the same streets, families and single people to live check by jowl. I would argue that goal is what we should be aiming for, not the retirement villages, or the gated communities for the wealthy, or as we have now the sink estates for the poor, were going back to the slums of the 30's complete with absent landlords in terms of those individuals who went for buy to let in a big way.

[SarahHillWheeler]

TBH housing situation much more complex than the Shelter blog admits.

As many posters have commented, people are living longer, and there is much more demand for smaller units due to marriage break-up, and children leaving home earlier (for many (pre-war) years, it was quite usual for children, including married couples to stay at home much longer). Perhaps, more controversially, there is also the impact of immigration on housing supply.

Add to this, people's expectations and tastes have changed. (It never ceases to amaze me how the countryside around us is despoiled for new builds whilst the houses in and around the town centre are allowed to fall into disrepair).

And the dismantling of the public rented sector, and it's hardly surprising we are in housing meltdown.

The answer, however, isn't primarily in building new homes (which most likley will always be sold off by developers at a premium)....it's about making good affordable homes available and preserving a good environment to live in.

More investment in social housing and regenerating our inner cities and old housing stock, better regulation of the private rented sector (when you have no guarantee that you'll be able to stay on at the end of a 6 month tenancy, there is little incentive as a tenant to invest financially or emotionally in a property).

Bank of Mum-and-Dad certainly isn't the answer for most of us. On the other hand, you can't blame people for wanting to help their children, is it really any different from helping out with college fees? This makes it all the more crucial that there are opportunities for those without that parental support...otherwise we will be building a very unequal and disatisfied society.

[Leithlurker]

Sarah you have added to my post in a most eloquent and factual way which was just brilliant. I hope people see my long winded rambling as a background context for your accurate summery.

[LittleMissSnowShine]

Me and DH bought a small terraced house in 2008 for £155k with a 10% deposit, helped out by our parents. We were 24 and 26 at the time. We now have a toddler and another on the way shortly. We don't have much of a garden and not a huge amount of space but like a whole lot of people, even though e have our mortgage down to around £120k the house is probably worth £115k tops and we have also spent money on renovating it so we can't really sell it.

We have spent the last year renting it out and renting another place ourselves out in the suburbs but we have decided that when our tenants' lease comes to an end in Feb next year we will move back to our own house because I don't like the instability of renting in private sector and our house, small as it is, is in a great area for schools, parks, close to family / shops / work etc.

Our ages have certainly not kept up with the rise in living costs, we have no savings, I still have at least £10k in student loans to pay off and I find it v hard to imagine how things will be better for our kids. At least our parents were in a position to help us out with some money for a house deposit / wedding but we are unlikely to be in a similar position to help our kids out in future, no matter how much we try to live frugally and build up savings, since the price of groceries / gas / oil / electric / petrol just seem to keep rising while our wages stay the same.

I def think the current system of bank of mum & dad is unsustainable since even fortunate people who have been able to turn to mum & dad to help them out (and given how many mortgage companies seem to want a 20% deposit for a house mum & dad's money won't stretch v far) may be very unlikely to be able to help their own kids out when the time comes to buy a house / pay for uni etc.

[Caster8]

The op thinks that the problem is the deperate shortage of housing. I dont agree. I think that family size has changed. There are now a vast number of houses with only one or two occupants. Be that elderly people or single parent families, or dads in bedsits.
Not sure what the answer to that is though.

Mind you, as I write this, I realise that when new homes are built they dont stay empty for long.

[droid400004]

My children owning their own home?! The chance of me and my husband owning our own home seems impossible, let alone our kids. We are 3 (soon to be 4) squashed in a nice-but-small rented 2 bed with a little roof terrace. There is no way we can get on the housing ladder, bank of mum and dad not an option here (trying not to be bitter about that!) and our 'savings' are laughable. I try not to fantasize too much about what family life would be like with a nice little three bed with a garden.... We feel like we have to choose between trying to put aside money for our kids uni/futures, and saving for a family home.

[MissHC]

I think one of the problems is that lots of properties are bought by buy-to-let landlords. Rents in my area are more expensive than a mortgage on a similar property would be.
I am one of those 20-somethings that won't be able to buy a house for a long time yet. We need a £60k deposit for a modest house around here and with how much we have to fork out in rent every month we don't have enough left to save for that deposit.

IMHO another issue is how difficult it is to build a house yourself. It's very hard to get building consent. I'm an EU national and moved to Britain 5 years ago. My partner is British. In my country people compare the price between buying an existing house, and buying a plot of land and building a house on it. If one is cheaper they go for that option. However it's a much more straightforward process than it is over here. Housebuilders here built too many houses with a tiny footprint of bad quality on a plot of land. They then sell them at a premium. People in the UK don't seem to have a clue how much it actually costs to build a house from scratch nor do they seem to expect any quality - probably because of the lack of good quality housing.

[LittleMissSnowShine]

Second what people are saying about buy-to-rent landlords pushing the rents way up.

For example, we pay £730 a month mortgage for our terraced house plus £80 rates (no council tax because we are in NI) so £810 in total to own our own place.

Rent on a similar house about a street away is £750, so it's actually more expensive than our mortgage payments. Even though the house prices have come down from the £155k we paid 5 years ago, since a lot of people still can't get mortgages without a 20% deposit and a permanent job contract, that doesn't make housing more affordable or attainable to them, but it is making it more affordable and attractive to buy to let landlords ho are buying places at rock bottom prices, slapping a bit of paint on them and putting in IKEA furniture, then charging £750 a month minimum!

[superduperwuper]

My grandparents lived with my grandads parents after marriage for a year in order to save a house deposit. They were able to buy a 3 bedroom semi in the north east for £3k. Interest rates were high and they had no car, granddad walked to work etc but they were able to do this.

Myself and DH cannot live with our parents. His are 150 miles away for a start. My parents house is not big enough and they are still 40 miles from our work (1.5 hours in rush hour). There is no decent paying jobs in either of our home towns.

Even if we could live at home - we would not be able to save up a decent (25%) deposit of a simmilar house. That would be 50k! We have scrimped and saved £10k now.

To people saying lower your expecatations - It should not be an unachievable dream to be married and own your own modest home.

[TiredyCustards]

it should not be an unachievable dream to be married and own your own modest home

Here here.

[cantdoalgebra]

30 years ago, my parents did not give me or DH a penny towards a house - nor did we expect it. We afforded a mortgage (which at one point reached 17% interest repayments) by eating baked beans, no foreign holidays and eating wild rabbits given to us by our neighbours. Why are houses are on such small plots nowadays? - Prescott reduced the permitted size of plot for new houses. Why are they in short supply? - one reason could be the increase in population in this country. The census shows an increase of approximately six million people between 2000 and 2011.

[mizu]

What about those of us who are now 40 and still rent! A two bed house with our two DDs.

No parental help available here.

We have saved £5,000 in the last year and it has been hard doing that. It will take us forever to get a decent deposit together and I am now thinking that by the time we do, I will be too old to get a mortgage over 25 years.

I am a teacher and DH works in the car industry, neither of us earns much, we earn about £40,000 a year between us which I used to think was a lot but isn't really if you live in the south west as we do.

Most of my friends bought absolutely years ago but got a deposit from parents to help them onto the ladder.

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.

[PerilsAsinger]

The Government could easily help people by freeing up land and ensuring that affordable houses are built on it. They aren't interested; instead Gideon comes out with another scheme to kick the can down the road as far as the house price bubble is concerned.

I didn't think it could get worse after Gordon Brown. I was wrong.

[funnyperson]

It is worrying.

As the bank of mum and dad the calls on the bank are very concerning: university, post graduation, housing, then, presumably grandchildren. All this assumes that one is not only earning enough to be independent, but putting by tens of thousands to support the DC till well after one's own retirement.

Downsizing to help out the DC with a deposit isn't a good option anymore because the rise in house prices means that the capital released wouldn't fund a flat for even one of the DC, as well as a retirement bijou flat for oneself.

So one is left hanging onto the family home as it is the only roof over the family heads.

What can be horrid are emerging comments about one rattling around inside the family home from one's own children who would like a deposit to buy their own place. Friends of mine have given into theses hints and sold up in their fifties and now rent, so as to afford the deposit for their darling DC to be independent.

[funnyperson]

This shocks me.

[saintlyjimjams]

Interesting thread. I live in an area where second homes are a huge problem. Musing a little while reading this thread it occurred to me that the increasing gap in salaries between executives (top ones I mean), and City salaries versus everyone else is a problem where I live.

Go to St Mawes out of season. The day we went every house facing the sea was empty, bar one where we could see an elderly lady sat alone. Her (small) house was up for sale - at a price utterly unaffordable to anyone on a normal local salary. House after house empty. A few decades ago those houses would have been full of families & fisherman & the place would have had a community.

Apologies to anyone from there, I'm sure it does still have a community, a few streets back from the sea) & you may well prefer it in winter) but on that bleak winter day, the empty houses & empty Notting Hill coffee shop summed up the problem for me. The majority of those houses should have had locals in, people who live there, not visitors.

[Caster8]

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.