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The Bank of Mum and Dad masks the crisis in the housing market The Bank of Mum and Dad masks the crisis in the housing market
(2 months later)
Meet Jemma. She's 30 years old, and works as a teacher in Shropshire. She's worked hard and saved up throughout her 20s, but it soon became clear that she was never going to be able to get together a deposit to buy a home of her own. Like millions of young people today, home ownership was a distant dream, and she faced a future stuck in the private rental market in a house she couldn't make a home.Meet Jemma. She's 30 years old, and works as a teacher in Shropshire. She's worked hard and saved up throughout her 20s, but it soon became clear that she was never going to be able to get together a deposit to buy a home of her own. Like millions of young people today, home ownership was a distant dream, and she faced a future stuck in the private rental market in a house she couldn't make a home.
As it turned out, Jemma is one of the lucky few who could rely on the Bank of Mum and Dad. Her father, Peter, raided his savings to make sure his daughter could buy a home. Peter's not alone. Yesterday, Shelter released new research showing that parents pay out a staggering £2bn each year to help their children into a home of their own, and the number of first-time buyers relying on their parents is growing fast. We're not talking about a few hundred or even a few thousand pounds either; the average contribution is an eye-watering £17,000. Parents are raiding retirement pots and cutting back on spending to make it happen.As it turned out, Jemma is one of the lucky few who could rely on the Bank of Mum and Dad. Her father, Peter, raided his savings to make sure his daughter could buy a home. Peter's not alone. Yesterday, Shelter released new research showing that parents pay out a staggering £2bn each year to help their children into a home of their own, and the number of first-time buyers relying on their parents is growing fast. We're not talking about a few hundred or even a few thousand pounds either; the average contribution is an eye-watering £17,000. Parents are raiding retirement pots and cutting back on spending to make it happen.
Why is this a problem? Because while every parent wants to help their child get a start in life, the reality is that the majority can't afford to. With family budgets increasingly squeezed, the Bank of Mum and Dad is not going to be paying out for much longer. And without help from parents, saving for a deposit on a first home can take up to three decades in some parts of the country.Why is this a problem? Because while every parent wants to help their child get a start in life, the reality is that the majority can't afford to. With family budgets increasingly squeezed, the Bank of Mum and Dad is not going to be paying out for much longer. And without help from parents, saving for a deposit on a first home can take up to three decades in some parts of the country.
All this has a knock on effect across the housing market. High house prices and the size of deposits are pricing out more and more people, who are forced into a rental market that is completely overheated. Rents are sky-high, leaving more families struggling to keep a roof over their head. As Shelter sees every day, this all too often can lead to homelessness. It's all interconnected, and that's why we need to see real change now.All this has a knock on effect across the housing market. High house prices and the size of deposits are pricing out more and more people, who are forced into a rental market that is completely overheated. Rents are sky-high, leaving more families struggling to keep a roof over their head. As Shelter sees every day, this all too often can lead to homelessness. It's all interconnected, and that's why we need to see real change now.
The government points again and again to Help to Buy – its star housing policy – as a panacea for frustrated first-time buyers. It's not difficult to see why this might be a politically canny move – England's 9 million renters are looking more and more like typical swing voters, who politicians of all parties are desperate to court. The problem is driving up demand without increasing the supply of housing is a recipe for disaster, and Help to Buy is likely to push homes even further out of reach by inflating a house price bubble. We're not alone in saying this – Sir Mervyn King, the IMF and other top economists agree. There's no evidence that Help to Buy will help those on low or middle incomes, even with the 95% mortgages it offers. Our analysis shows that the average double-earner family will only be able to afford a two-bedroom home in less than half of the country.The government points again and again to Help to Buy – its star housing policy – as a panacea for frustrated first-time buyers. It's not difficult to see why this might be a politically canny move – England's 9 million renters are looking more and more like typical swing voters, who politicians of all parties are desperate to court. The problem is driving up demand without increasing the supply of housing is a recipe for disaster, and Help to Buy is likely to push homes even further out of reach by inflating a house price bubble. We're not alone in saying this – Sir Mervyn King, the IMF and other top economists agree. There's no evidence that Help to Buy will help those on low or middle incomes, even with the 95% mortgages it offers. Our analysis shows that the average double-earner family will only be able to afford a two-bedroom home in less than half of the country.
More importantly though, it doesn't address the fundamental cause of all this – that decades of failure to build the homes we need has pushed house prices and the size of deposits out of reach. We need to build more homes, but despite lots of promises, this still isn't happening. There's no shortage of ideas on the table – what's missing is the political will to make them happen. We could build new towns, garden cities or encourage self-building. We could lift restrictions on local authority borrowing so councils can borrow against the true value of their assets to build homes where they're needed most. Or, as the CBI suggests, we could significantly invest in housing, boosting growth and creating jobs at the same time.More importantly though, it doesn't address the fundamental cause of all this – that decades of failure to build the homes we need has pushed house prices and the size of deposits out of reach. We need to build more homes, but despite lots of promises, this still isn't happening. There's no shortage of ideas on the table – what's missing is the political will to make them happen. We could build new towns, garden cities or encourage self-building. We could lift restrictions on local authority borrowing so councils can borrow against the true value of their assets to build homes where they're needed most. Or, as the CBI suggests, we could significantly invest in housing, boosting growth and creating jobs at the same time.
What's more, we could build the right type of homes. Shared ownership schemes are one of the best ways to offer affordable places to live. We need to see more schemes like this that are affordable for low-income families and that give them the stability and security that our current rental market doesn't provide.What's more, we could build the right type of homes. Shared ownership schemes are one of the best ways to offer affordable places to live. We need to see more schemes like this that are affordable for low-income families and that give them the stability and security that our current rental market doesn't provide.
The Bank of Mum and Dad might still be in business for a lucky few, but until the government commits to building the affordable homes we need, the majority will be left out as they wait for a real solution to our housing crisis.The Bank of Mum and Dad might still be in business for a lucky few, but until the government commits to building the affordable homes we need, the majority will be left out as they wait for a real solution to our housing crisis.
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