Don't blame The Bank of Mum and Dad for Britain's housing crisis

In reality, the problem is more complicated. The Bank of Mum and Dad is not the cause of Britain’s housing crisis. It is symptomatic of a system that is no longer working as it should.

For generations, young people were told to work hard, build a career, save carefully, and eventually they would be able to buy a home. That story has become much harder to believe, not because younger generations lack ambition, but because the numbers no longer add up.

We have not built enough homes, and what we do build has been too slow, too concentrated in the hands of a small number of large national developers, and too often disconnected from where people actually need to live and work. At the same time, decades of low economic growth has meant wages and career mobility have not kept pace with the rise in asset prices, especially property.

That is the real divide. People who bought homes or other assets years ago have seen those assets rise sharply in value. People trying to enter the market today are trying to do so from wages that have not grown at the same speed.

The tax system has added to this imbalance. Earned income has often been penalised more heavily than gains made from assets. That has left many older homeowners, through good timing as much as anything else, in a far stronger position to help their children onto the housing ladder. This is where the Bank of Mum and Dad comes in. According to our data at Armalytix, more than 20% of home purchases now involve a gifted deposit. Family help is no longer rare. It is becoming a normal part of how people buy homes. There is nothing wrong with parents helping their children. Most families would do it if they could, but when homeownership depends so heavily on whether your family owns assets, the idea that the market simply rewards hard work starts to look thin.

Gen Z and Millennials have been failed by successive governments. They have taken on student debt, shouldered high rents, contributions to defined contribution pensions, and still been expected to build deposits in a market shaped by low supply and weak economic growth. It is not enough to tell them to save harder.

It is also too easy to blame lenders. High loan-to-value mortgages and first-time buyer products do exist, but they cannot undo decades of house prices and asset values rising faster than wages. Another point often missed is that not all gifted deposits are treated in the same way. Some lenders may be more cautious where money comes from a distant relative rather than a parent. That is not necessarily unfair by design. It can reflect concerns that a gift may really be a loan in disguise, or that money laundering risk is higher where the relationship between the giftor and buyer is less clear. Not every lender takes the same approach, but the side effect is obvious. Buyers with wealthier parents may have a smoother route than those relying on help from elsewhere in the family.

Britain needs to build more homes, especially near places where people can earn good wages. That will mean difficult choices on planning and, inevitably, parts of the green belt. We also need to stop pretending mortgage tweaks alone can fix a problem rooted in supply, wages, taxes, and the way asset ownership has become more rewarding than work.

The Bank of Mum and Dad is not the villain; it is a rational family response to a broken market.

If Britain wants young people to believe that work, responsibility and aspiration still matter, it cannot allow homeownership to depend so heavily on whether your parents have assets bought at the right time. That is not a fair housing market. It is a flashing red warning sign that the promise made to younger generations needs to be rebuilt and its starts with an agenda to promote broad based economic growth that drives increasing wages and career opportunities.

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Mike Ward is Executive Chairman at Armalytix.

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