By Kasia Banas, Consultant
Having parents with property wealth is significantly more important in determining your ability to buy a home than your earnings or education, new research has shown.
Young people whose parents have property wealth are now almost three times as likely to be homeowners by the age of 30 compared to those who do not, according to a new report published in December by the Resolution Foundation.
At a launch event at its Westminster headquarters last month, the Resolution Foundation presented new research showing that since the financial crisis, parental wealth has become one of the most important determiners of young people’s home ownership prospects.
Key findings from ‘House of the rising son (or daughter)’:
Is BOMAD becoming more important?
With the ‘Bank of Mum and Dad’ now considered to be a key lender for first-time buyers, assets increasingly determine opportunities in social mobility rather than income. This shift will require an adequate response from policy makers as it is already impacting young people’s borrowing capabilities.
Speaking at the report launch event, Neil O’Brien MP suggested that in trying to solve the housing crisis there has been too much focus on building more homes and not enough focus on managing the demand side.
He also argued that for housing to be cheaper, there is a need to return to a balance between the private owned and private rented sectors. He called for a more active role for local government in acquiring land and building homes of all types and tenures.
The financial sector is also responding to the trend and banks are now focusing their marketing efforts more on parents than their children. Following the financial crisis, lenders are still cautious and those with the BOMAD behind them are at an advantage. Sue Hayes from Aldermore Bank warned that if this trend continues, it will cause a social strain as there is a psychological effect of seeing those jumping the queue for the rest of the young population.
Wealth and social mobility
The rising importance of parental wealth on their children’s home-ownership prospects should have an impact on how Government works to enhance social mobility in the future and what policy makers do about it. This already divisive issue should be a signal that a wider discussion is needed on how wealth is shared as it will shape the kind of society we become in the future.
In the more immediate future we need more affordable homes, fast, if young people who haven’t got property in the family are to have a chance at getting on the property ladder and closing the gap on their peers who have got a leg up from mum and dad.
We work with strategic land developers and promoters, landowners and planning consultants to promote sites …
From new nuclear and unconventional gas to renewables, waste and airports, our team has worked …
From complex site assembly to city and town centre regeneration, we work with developers and …