Rising costs have made family wealth central to first-time buying

Family financial support has become a structural requirement for UK homeownership, with new research from The Private Office (TPO) finding 97% of adults aged 45 and over believe it is difficult for young people to buy a home without family backing.

The survey of 2,126 adults, conducted by TPO in May, found 80% believe homeownership is becoming increasingly dependent on family wealth. Property purchase is now the single biggest reason families transfer money between generations, cited by 51% of those who have already gifted funds, ahead of general living costs (20%) and education (8%).

Grace Whalley (pictured top), financial adviser and chartered financial planner at TPO, told Mortgage Introducer the findings reflect a change she sees in client conversations daily. "It is essentially one of the first things I will ask them if they've got children," she said. "We'll be having a conversation about what their goals are, and then you often say, 'is there anyone you want to leave a legacy for?' And most of the time nowadays the conversation comes to, 'well, actually, no, I think the children need the help whilst I'm alive'."

The figures place family gifting at the centre of the first-time buyer market. According to Savills, the average family contribution to a first-time buyer now stands at £55,572, while Barclays data shows the Bank of Mum and Dad has provided £38.5 billion in support over the past four years.

A shift in when wealth moves

TPO’s research points to a broader change in the timing of wealth transfers, with 81% of those surveyed believing parents or grandparents should help younger generations during their lifetime rather than leaving an inheritance on death. However, separate Freedom of Information data obtained by TPO from HMRC shows in 2022/23, people aged 85 and over accounted for nearly 60% of all estates that included lifetime gifts, suggesting that in practice, gifting still happens far later than most would prefer.

Whalley said the generational comparison is a recurring theme among clients in their 50s and 60s. "A lot of clients, by the age of 30 they would have already had their first home, or maybe already married, or already had kids. And they look at their children and say, 'when I was their age, I still had a pot of savings. They've got nothing to their name, and it really worries me.'"

What is driving the change in attitude?

Whalley identified two converging forces behind the shift from inheritance to lifetime gifting. Rising living costs and an ageing population.

"The trend has kind of gone from lots more children going to university, so they leave home at 18, then they decide to stay away from home and it's so expensive to do so," she said. "I was speaking to some clients this morning and their three children live in Bristol, which is apparently one of the most expensive places for an adult to live, because it's London prices without the London wages."

The pressure means that even willing parents face a dilemma. "If they gave their children a chunk of money with the hope that it went towards a property, that probably just gets spent on the child living," Whalley said. "It then becomes a case of, 'I don't really want it to just go into the bills and meeting rental costs.'"

Longevity is also reshaping expectations around inheritance. "People are living longer," Whalley said. "When your inheritance finally hits you, most adult children, if their parents died in their 80s or 90s, are going to be in their 50s or 60s as it is. Getting a big chunk of money at that point – although yes, technically life-changing – it's not going to do the same thing as if you're in your 20s and you've got say a £50,000 deposit for a property. That's really going to make quite a significant difference to your life at that point."

The barrier that holds families back

Despite high willingness to give – 88% of those surveyed said they would consider helping children or grandchildren buy a property – retirement security remains the primary obstacle. The biggest concern holding people back from gifting earlier is fear of running out of money in later life, cited by 37% of respondents, ahead of care home costs (16%).

Whalley said cashflow planning is central to resolving that anxiety. "We simulate, with really cautious assumptions over the long term, how things look if they carried on spending the way they were," she said. "If at age 100 you might have £200,000 left over in your pension pot unspent, we know that today you could affordably gift away at least half of that, and there would be no detriment to your standard of living throughout the rest of your life."

Brokers working with clients who are receiving or expecting family gifts will find ongoing debate about the role of the Bank of Mum and Dad in the UK housing market increasingly relevant to affordability conversations. As family wealth becomes the default first-time buyer funding mechanism, understanding how gifts are structured – and when they arrive – matters as much as the mortgage product itself.

Recent analysis of how government reliance on property tax is reshaping client conversations sets out how inheritance tax and gifting are now front of mind for a growing number of households, while research into how over-55s are tapping property wealth to reduce their inheritance tax exposure offers additional context on how older homeowners are responding to the same pressures.

That shift in expectation – from waiting to inherit to gifting with purpose – is also changing where families direct their support. Whalley noted that weddings, once a major focus of family financial transfers, have largely lost out to property. "The two biggies used to be property and weddings," she said. "Most of the time the wedding has just got to take a back seat. It has to be an investment into something."

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