Press releases

‘The bank of mum and dad’ in 2017 to spend £2.3bn on helping the kids pay the rent

Legal & General and Cebr (Centre for Economics & Business Research) have today published a new report on the role the Bank of Mum and Dad plays in helping their children in the rental market.

29 Aug 2017


The research shows the Bank of Mum and Dad will fund £2.3 billion of rental payments in 2017, paying out on average £415 every time a rental payment is made. The Bank of Mum and Dad now helps 9% of renters across the UK with their financial commitments to their landlords on nearly 460,000 properties.

Previous Legal & General/Cebr research showing the Bank of Mum and Dad will support £6.5 billion of lending to first time buyers to get on the property ladder this year means the Bank of Mum and Dad will fund some £8.8 billion in 2017 helping children to either rent or buy a home.

Dan Batterton, Fund Manager, Build to Rent at LGIM Real Assets, said: “Legal & General has been tracking the role of The Bank of Mum and Dad for some years now – but this is the first time we’ve looked at its role in the rental market and the results are concerning. It is a real challenge for young people who are reliant on parental handouts just to make the rent. The intergenerational inequality that creates the demand for BoMaD funding continues to widen and now it’s affecting renters too. The lack of affordable housing, low wage growth relative to inflation and burdens of student debt mean that many kids can’t even rent somewhere without significant contributions from their family. Parents want to help their kids get on in life, and the Bank of Mum and Dad is a testament to their generosity, but it is also a symptom of our broken housing market.

“The UK is experiencing a supply-side crisis in the rental sector. We need more professional, affordable tenures and more choice for renters. We need to build more homes for the young, old and families alike – more quickly and cost effectively. Renters are currently facing not only expensive rental payments but moving costs, agent fees and deposits which are reducing flexibility – something that should be a benefit of renting.

“Legal & General is playing its part by building and financing thousands of new homes for rent, professionalising the experience for tenants, so that they can be assured of quality, transparency and surety of tenure. By controlling all aspects of design and service, and taking advantage of economies of scale, we can deliver better value for money and more choice for our occupiers. This includes favourable all-in costs, through significantly reduced energy costs, no letting fees, and a number of free services.”

Other key findings from Legal & General’s Bank of Mum and Dad research include:

  • The Bank of Mum and Dad will fund £2.3bn of rent payments in 2017
  • In 2017, 9% of renters will receive BoMaD financial assistance for their rental payments. 10% of renters have had BoMaD help with their security deposit
  • Some parents helped with other rental costs - moving expenses (6%) and letting agent fees (5%)
  • With 64% of renters having moved at least once in the past 5 years and home ownership levels under pressure, we can expect BoMaD to play an increasingly important role in the private rented sector
  • In 2017, BoMaD has helped pay rent due on nearly 460,000 properties

Unsurprisingly, the Bank of Mum and Dad’s payments to the rental sector are highest in London and the East of England, lending £626m and £604m in these areas respectively. BoMaD also funds £175m of rental payments in the North West and £369m in Yorkshire and the Humber.

Dan Batterton concludes: “The Build to Rent sector is only going to become more important in the UK’s housing mix. We need to be able to offer young people a good selection of affordable options for rental properties – either for the long term or as a step to buying their own home. Institutions like Legal & General can regenerate not just residential housing, but the towns and cities in which the homes are built. Infrastructure, jobs and local economic growth are all key to creating thriving communities where people want to live.”

L&G is involved in housing creation across the spectrum, backing a fast growing pipeline of over 70,000 new homes over the next five to ten years and looking to help provide the UK’s population with high quality, affordable living at all stages in their life cycle. Forming an important part of this, its Build to Rent fund is creating quality rental stock that offers a positive choice for elective renters through high service levels and flexible lease structures. Focused on key urban regeneration areas centred around transport hubs, it is targeting schemes of over 150 units, taking advantage of economies of scale to deliver better value and more choice for its residents, whilst building sustainable, vibrant communities. It currently has 1,500 build to rent homes under construction, in planning or now being occupied by residents in Walthamstow, Leeds, Bath, Bristol, and Salford.

-Ends-

Further information

Fallback Thumbnail People

Dan Williams

Senior Account Manager, Rostrum

Rostrum

T: 07341 127774

Email Dan Williams

L&G_Olivia_Bayliss_480x480px.jpg

Olivia Bayliss

Head of Communications

Capital and LGIM Real Assets

Notes to editors

Legal & General Capital (LGC) is Legal & General Group’s alternative asset platform, creating assets for Legal & General Retirement and third-party clients in order to achieve improved risk-adjusted returns for our shareholders.  LGC has built its capabilities in a range of alternative sectors, including in residential property; specialist commercial real estate; clean energy; alternative credit; and venture capital, which are all supported by long-term structural growth drivers, meet a financing gap and respond to a scarcity of supply that is underpinned by enduring societal needs.

Its purpose is to invest society’s capital for society’s benefit. Investing in the real economy and supporting the Group’s focus on climate and inclusive capitalism, LGC’s investments create jobs, change lives and contribute towards a net zero carbon future.

Legal & General has invested over £29bn in levelling-up regional economies, including through major UK-wide regeneration schemes and has recently made a commitment to enable all its new homes to operate at net zero carbon emissions from 2030.

*at 31 Jun 2021

Legal & General Mortgage Club is one of the UK’s largest and longest-running mortgage clubs, completing £667bn of mortgages since 1995. We are involved in nearly one in five of all mortgages in the UK, in addition to nearly one in three of all intermediated mortgages. The Mortgage Club prides itself on adding value to the adviser community by working closely with new and existing lenders to deliver great products, pricing and criteria. Our popular SmartrFit tool, which is free to advisers, combines an affordability calculator with lender criteria to provide accurate, quick results, to help make advisers jobs easier so they can spend time where it matters.

https://www.legalandgeneral.com/adviser/mortgage-club/

LGIMRA is a division of Legal & General Investment Management (LGIM), one of Europe’s largest
institutional asset managers and a major global investor. LGIM manages £1.29 trillion1 ($1.57tn) in
assets, working with a range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.

LGIM Real Assets has assets under management of £36 billion2 ($43.8bn) and is one of the largest
private markets investment managers in the UK. Investing in both debt and equity and across the
risk/return spectrum, LGIM Real Assets actively invests in and manages assets across commercial,
operational and residential property sectors, as well as infrastructure, real estate, corporate and
alternative debt.

Taking a long-term view in order to future proof our investments, LGIM Real Assets continues to lead the industry in ESG performance, considering all environmental, social and governance issues at asset level as well as portfolio level.

1LGIM internal data as at 30 June 2022. These figures include assets managed by LGIMA, an SEC Registered Investment Advisor. Data includes derivative positions.
2Source: LGIM Real Assets. AUM data as at 30 June 2022.

*at 13 Jan 2023

IMPORTANT INFORMATION

For professional clients only. Past performance is not a guide to the future. The value of an investment and any income taken from it is not guaranteed and can go down as well as up, you may not get back the amount you originally invested. Views expressed are of LGIM as at 12 January 2023. The Information in this document (a) is for information purposes only and we are not soliciting any action based on it, and (b) is not a recommendation to buy or sell securities or pursue a particular investment strategy; and (c) is not investment, legal, regulatory or tax advice. Legal & General Investment Management Limited. Registered in England and Wales No. 02091894. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised and regulated by the Financial Conduct Authority, No. 119272.

Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with £1.2 trillion in total assets under management* of which 40% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we We are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.

*at 31 December 2023