Financial support from family members is expected to help pay for 318,400 homes this year, according to research from financial services group Legal & General.

This will be the highest number of properties bought with money from the ‘Bank of Family’ since 2016, if the figures prove accurate.

The average amount given by relatives is expected to hit £25,600 this year, with the total value of properties purchased with the help of Mum and Dad, as well as other loved ones, predicted to reach £124.6bn this year.

As first-time buyers struggle, family contributions are set to climb to a staggering £10bn by 2025, according to the research. This increasing reliance on financial support from parents, grandparents, other family, and friends underlines the challenges faced by aspiring buyers who don’t have access to this support.

The majority of recent or prospective Bank of Family recipients said they would have to delay their home purchase without financial help from loved ones.

More than one in five – 21% – say they would have to delay their purchase by more than five years and one in 10 first-time buyers would not be able to buy a home without assistance from the Bank of Family.

Younger buyers and first-time buyers are the most reliant on direct financial support and often cannot buy without it

In 2023, the Bank of Family will provide support for almost half – 47% – of residential property purchasers under the age of 55, and a majority – 58% – of financial support from the Bank of Family currently goes to first-time buyers. These groups are major recipients of Bank of Family funding, likely because they are comprised of buyers who might otherwise struggle to save the necessary deposit for home purchase.

Legal & General’s research found that 77% of buyers receiving family assistance directed at least a portion of their funding towards a deposit. This is perhaps not surprising given the fact that average household savings have not kept pace with large rises in deposit requirements, given significant house price inflation.

Families are not just offering monetary aid though. Many are also providing indirect financial support to help loved ones boost their savings pot. For example, almost a third – 31% – of parents and grandparents have welcomed adult family members to live with them to make it easier to save for a deposit, while a further 37% would be willing to house their adult children in the future.

Legal & General estimates that buyers save an average of £24,900 when living with family members, which they can put towards their deposit. However, this support is likely another key factor exacerbating the gap between those with and those without family wealth when it comes to homeownership – not only does this support rely on households being able to afford additional residents, but also having the space to adequately house them.

Bernie Hickman, CEO, Legal & General Retail, said: “Family wealth is increasingly becoming a prerequisite for homeownership, effectively locking some groups out of the housing market for years while they save for deposits, or even altogether. While family gifting has always played a prominent role in the UK housing market, our study shows that the value of those contributions has risen by more than a quarter on pre pandemic levels.

“An increasing reliance on family members isn’t only an issue for those seeking to buy – it is important to acknowledge the financial strain it can place on the giver, particularly if they are undertaking this commitment without financial advice. By dipping into savings and pensions, family members may be compromising on their own retirement incomes. A housing system which relies too heavily on gifted deposits not only perpetuates inequality today, but could create risks for the older generations of the future.”

The family lending and gifting patterns revealed in the report often reflect regional variances in house prices and affordability, as well as income and wealth inequality, across the UK.

Another factor contributing to the ongoing rise in Bank of Family lending is the enduring impact of the pandemic and the ongoing cost-of-living crisis, as outlined in Legal & General’s Deadline to Breadline report.

According to the report, high levels of inflation have meant that one in three households has less than £500 left after paying for their basic outgoings each month and 6% of households are left with nothing.

Hickman added: “Our latest Bank of Family research shows just how the high cost of housing, particularly in London and other major cities, continue to shape the UK. There are clear differences between urban and rural areas, and the lack of affordable housing in some areas is a legacy that will impact many peoples’ lives for years to come.

“As an organisation, we’re committed to improving the UK’s housing market and making sure as many people as possible have a fair opportunity to control their own future.

“This includes a £32bn investment in UK towns and cities and a commitment to increase the UK’s affordable housing by 20%. We’re also investing heavily in innovative new routes to homeownership, as we’ve shown with our support for Generation Home.

“Gifting a deposit is an incredibly kind and generous thing for those who can afford it, but it shouldn’t be a necessary part of the homebuying process.”

Bank of brother and sister helps first-time buyers get foot on housing ladder