This is likely to be the ‘golden age’ of the Bank of Mum and Dad according to Kath Scanlon, assistant professorial research fellow at LSE London.
Scanlon said future generations are unlikely to generate housing wealth in the same way owing to a slowdown in house price growth, while fewer have final salary pensions.
She was speaking yesterday after LSE released a report commissioned by the Family Building Society about older generations gifting or loaning money.
The report, called ‘The Bank of Mum and Dad: How it really works’, found that families are contributing surprisingly large sums of money.
For example, in London the average contribution is £76,290, while in the South East it averages at £56,355.
The report recommended for the gifter and the receiver to run through a checklist on what happens in various scenarios. For example if a family member gifts money to a couple which then splits up, while it needs to be established whether the money is a gift or a loan.
The report found that people are uncomfortable about talking about money within the family, a point supported anecdotally by Mark Bogard, chief executive of Family Building Society.
He revealed that when he was younger his dad gave him money to put down a deposit on his house – and due to an apparent lack of communication he didn’t realise his father expected him to pay the money back until years later.
The report also recommended for more joined up thinking about inheritance tax, stamp duty and care costs for the older generation.
Worryingly of those who gift money to help with a deposit only 8% are taking financial advice and just 14% are taking legal advice.
There is a danger of parents endangering their own future financial stability by giving money away, meaning they need to make an informed decision and know what they are getting into.
In many ways the term the Bank of Mum and Dad is something of a misnomer, the report said, because it certianly does not operate like a bank.