Are Young People Increasingly Relying on the ‘Bank of Mum and Dad’ to Buy Their First Home?
- TBA
- 6 days ago
- 3 min read
According to major media reports, the so-called ‘Bank of Mum and Dad’ is playing a major role in the UK housing market, helping young people buy homes earlier and at higher prices — particularly first-time buyers.
In other words, for many people under 30 in the UK, homeownership is simply not realistic without financial help from parents.
‘Bank of Mum and Dad’
A recent analysis from UK Finance compared first-time homebuyers who received financial help in 2024 with those who didn’t.
Unsurprisingly, those who received help from family were much better off when it came to buying power. These buyers typically bought a home by age 30, with an average household income of £56,000.
They also bought properties worth nearly £40,000 more than buyers without financial support. Interestingly, buyers without help actually had higher household incomes — averaging £65,000 — but typically only managed to buy a home around age 32.5.
This shows how significant family support can be. Even with lower incomes, supported buyers can afford more expensive homes.
Average down payment (with family help): £118,073
Average down payment (without family help): £60,741
That’s a gap of nearly £60,000!
This growing dependence on family wealth may further deepen inequality in the UK housing market.
Across the UK:
Average home price (with family help): £317,846
Average home price (without help): £279,381
In London, the gap is even starker:
Down payment (without help): £145,133
Down payment (with help): £224,054
Stamp duty & interest rate policies widen inequality
Certain government policies — like changes to stamp duty and interest rates — are amplifying the inequality between those with and without family support.
1. Stamp duty relief cut
From April 1, 2025, the stamp duty threshold for standard residential purchases will drop from £250,000 to £125,000, meaning more property transactions will be taxed.
For first-time buyers, the relief is also reduced:
Exemption threshold: from £425,000 → £300,000
5% rate threshold: from £625,000 → £500,000
If the property price exceeds £500,000, the buyer gets no first-time buyer relief at all.
This has already caused a disproportionate increase in first-time buyers using family wealth to get into the market before further costs set in.
2. Base rate cut spurs market
The Bank of England recently cut its base interest rate from 4.5% to 4.25%.
Mortgage lenders have already launched products with rates below 4%, encouraging more buyers to enter the market.
3. How to legally reduce your tax burden when buying in the UK
Regardless of whether you’ve got help from the Bank of Mum and Dad, everyone wants to save money on buying a home.
Here are some tax-saving strategies:
Use trusts to transfer funds
Setting up a family trust can help transfer funds while potentially avoiding inheritance tax (IHT) or capital gains tax (CGT) later — particularly helpful for high-net-worth families.
Ensure first-time buyer status
Have your children buy under their own name to qualify as first-time buyers. Avoid joint ownership or improper funding structures that could disqualify them from stamp duty relief.
Avoid tax on gifts
If parents gift money directly and register the property under the child’s name, this may be deemed a taxable gift in the UK. Plan the amount and timing carefully to minimise potential tax burdens.
Use a company to hold rental property
Families buying property for rental purposes might benefit from buying through a limited company, which can optimize tax on rental income and allow deductible expenses.
Consult a professional tax advisor
Since every family’s financial situation is different, it’s best to consult a UK-based tax advisor or accountant before buying. This ensures your plan is both legal and tax-efficient.
For individuals and businesses looking for UK taxation services, use our contact form to get in touch for more information.
Get in touch with us at info@tbgroupuk.com or for a free one-to-one consultation.
