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Cash-strapped first-time buyers are being gifted record sums by family members in their pursuit of getting on to the property ladder.
A new report by Legal & General (L&G) shows that financial gifts are set to exceed £9bn this year, as buyers boost their deposits to offset high mortgage rates.
Read on to find out how the 'bank of family' is impacting house purchases and for advice on alternative ways you can help your child buy their first home.
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L&G's new Bank of Family Report forecasts that gifted money from family members will contribute to 335,000 property purchases this year.
Money gifted towards house deposits will help fund 42% of purchases by buyers under the age of 55, with buyers receiving an average of £27,400.
In total, family members are expected to hand out £9.2bn to help fund purchases, up from £8.1bn last year. L&G estimates that gifting will rise to £11.3bn by 2026.
L&G's research found that financial gifts from parents are most common, helping to fund 61% of purchases.
Gifts from grandparents (13%) and other family members (26%) made up the remainder.
Most commonly, family members gift from their cash savings (48%), Isa savings and investments (40%) and pension savings (12%).
Some families also tap into property wealth. Some 12% of those who gift money raise it by downsizing, 8% via equity release and 4% by remortgaging.
Financial support can be a big factor in helping first-time buyers to get on to the property ladder – and for some, it's make or break.
L&G's survey found that the majority of recent or prospective first-time buyers said they would have to delay their purchase if they didn't get financial support.
One in five buyers said that they would have to wait at least five years, while one in 10 said they wouldn't be able to buy at all without help.
Perhaps unsurprisingly, more than half of recent purchasers in London received financial support from family members, with gifts averaging £30,800.
However, the largest gifts were in the South West (£32,900), South East (£31,300) and the East of England (£31,000).
Homebuyers in Scotland (£21,000) and the North West of England (£20,100) received less help, perhaps taking into account lower house prices.
L&G estimates that by 2026, the average family contribution towards a deposit will have increased from £27,400 to £29,900.
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When it comes to saving a deposit, some prospective buyers are cutting back on other expenditure.
Nearly one in five first-time buyers told L&G that they'd paused, stopped or reduced their pension contributions to prioritise buying a home.
This isn't necessarily a good move. L&G says even temporary pauses in pension contributions can have a significant impact on saving for later life.
It calculated that a 30-year-old pausing their contributions for one year could end up with £8,000 less in their pension pot.
While gifting money is one way to help your child or family member buy a home, it's by no means the only option.
Many people simply won't be able to offer this kind of financial help, and it's important not to stretch your finances too far.
L&G found that 49% of people who provided financial support felt less secure about their own financial position afterwards.
Most worryingly, a further one in 10 said that gifting money had negatively impacted their standard of living.
With this in mind, only consider gifting a lump sum if you're sure you can afford to and look into any inheritance tax implications before doing so.
This might not be for everyone, but one alternative is to let your child move back in with you for the short term while they save a deposit.
More than a third of relatives surveyed by L&G said that they had welcomed adult family members back home rent-free.
L&G estimates that buyers can save an average of £32,600 while living with family members.
Loaning money can be an alternative to gifting, but it's important to set out clear rules, including a repayment plan and whether you'll be charging interest.
You should also note that any loan repayments will be taken into account by your family member's mortgage lender when assessing their affordability.
This means that while a loan could boost their deposit, it could also dent how much they can borrow when they apply for a mortgage.
Guarantor mortgages enable parents to use their savings or property as security for their child's mortgage application.
By doing this, you can reduce your child's risk profile with lenders, making it easier for them to get accepted. Putting up your savings as security can also reduce the deposit your child will need for a mortgage.
The biggest downside of guarantor mortgages is that if your child defaults on their mortgage repayments, you'll be responsible. For more information, see our full guide on guarantor mortgages.
Another alternative is to buy a property with your child using a joint mortgage. This allows you to use your income and savings to help them onto the property ladder.
However, there are a couple of drawbacks. First, you'll be jointly responsible for mortgage repayments. Second, you'll need to pay stamp duty at the additional rates if you already own a home.
The stamp duty issue could be resolved by taking out a joint borrower, sole proprietor (JBSP) mortgage, where you're named on the mortgage, but not the property's deeds. The exact rules can be complicated, so it's recommended that you take advice from a mortgage broker.
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