They accommodated you, your mom and dad. If Philip Larkin had written his poetry in the 2020s, he might have removed the expletive from his famous poem to reflect the reality of modern parental financial support. Children of wealthier parents begin their adult lives with enormous financial advantages.
The Bank of Mum and Dad (Bomad) helps students by paying their university fees and, more importantly, money for a deposit on their first property. This parental support seems to be increasing. According to the Office for National Statistics, 36 per cent of first-time home buyers in England said they were helped by family and friends in 2022-23, up from 27 per cent in the previous financial year. Research by YouGov puts the proportion even higher: it found that between 2015 and 2020, 54.4 per cent of first-time buyers in the UK received financial help from their parents.
And we have a lot more help waiting for us. Baby boomers have profited from the huge rise in property prices since they stepped onto the property ladder in the 1970s and 1980s. By the time they die, their children will enjoy a substantial inheritance. A 2017 report for the Kings Court Trust estimated that £5.5 trillion will pass between generations over the next 30 years in the UK.
For those who believe in meritocracy and equal opportunity, this trend has significant implications. In a new book, InheritanceEliza Filby writes that “If you’re under 45, your life chances and opportunities are increasingly determined by your access to the bank of mum and dad, not what you earn or learn.”
That perception is supported by research from the Institute for Fiscal Studies, published in 2023. It concluded that parental earnings are a much stronger predictor of income for those born in the 1970s and later than they were for previous generations. A key part of this growing gap is wealth transfers between parents and their children.
There are long-term consequences for social mobility. Figures show that children of poorer parents are less likely to go to college. In 2021 and 2022, the share of school children who received free school meals and who continued higher education was 29.2 percent; for all other children it was 49.4 percent. That gap of 20 percentage points has widened in recent years. When they get to university, students have to pay both tuition and living expenses; the result is that they will graduate with an average debt of around £44,000. But the lucky 5 percent of students will avoid that debt because their parents will pay their school fees.
The result is what Benjamin Disraeli, the 19th century Tory prime minister, would describe as “two nations”. One group of graduates, unencumbered by debt, who can buy their own home; another group, saddled with student loans and with little prospect of saving a large enough deposit to buy a property, with implications for their retirement and what they can pass on to their own children.
The question is how did we get to the point where the Bank of Mum and Dad has become so important to the modern economy? And, in the coming years, is his power likely to wane or increase?
The problem has its roots in 45 years of housing policy. In early 1979, the year Margaret Thatcher came to power, the National House Price Index stood at 941.1 (the baseline of 100 was set in 1952). The index is now 14102.4. This fifteen-fold rise in prices compares with average weekly earnings in the United Kingdom, which have risen nominally by around eight times over the same period.
The obvious problem is that higher house prices mean higher deposits. Zoopla estimates that the average deposit paid by a first-time buyer was £72,000 in the South East and £144,500 in London. Across the UK, the average deposit for a first-time buyer has risen from £16,000 in 2000 to £60,000 in 2023. For those without parental means, that’s a huge amount to put aside.
What makes it even more difficult to save for a deposit is the trend of rising rents. The average monthly rent for a property in England was £1,348 a month in October, according to the Office for National Statistics, up 8.8 per cent on the previous 12 months.
Here is the irony at work. First, this enormous increase in the market value of our housing stock is one of the reasons why moms and dads have the ability to help their children in the first place. According to ONS research carried out between 2018 and 2020, the average wealth of people aged between 55 and 65 was £553,000.
Secondly, today’s house prices are only affordable in the first place because mortgage rates are much lower than they were in 1979, when the Thatcher government pushed the prime rate to 17 per cent. But the long decline in rates that began in the 1980s played a key role in driving up those home prices.
But not the only role. The supply of homes simply did not keep up with the demand. Back in 1979, 250,000 new apartments were built. That figure has not been reached in recent years, with completions well below 150,000 in the first half of the 2010s. Contrast that with a rapidly growing population. Between the 1971 and 1981 censuses, the UK population rose from 55.6 million to 56.3 million, an increase of 700,000. But between 2011 and 2021, the population increased from 63.3 million to 67 million , which is an increase of 3.7 million. In other words, the population is growing much faster than 50 years ago, but the pace of construction has fallen sharply.
This widening gap between house prices and earnings has changed the life trajectory of the average Briton. The average age of a first-time buyer in the UK was 23 in the 1960s and 28 in the 1980s, but has risen to 34 in London and 33 in the rest of England by 2023. In 2000, 59 percent of people aged 25 to 34 owned their own home; until 2022-2023. that share dropped to 39 percent.
Since people have to wait longer to buy a house, it is not surprising that they wait longer to have children and have fewer of them. The fertility rate in England and Wales fell to a record low of 1.44 children per woman, while the average age of women giving birth for the first time rose to a record 29.3 years, up from 25.8 30 years ago. In the long term, the consequence of the decline in the birth rate is the reduction of the labor force. This, in turn, will require more immigration, which is a politically contentious issue.
The political consequences do not stop there. The economy will work most efficiently when it can optimally use all the talents of its citizens. But in the 100m sprint that is British life, some competitors are forced to compete in Wellington boots.
Let’s take those graduates who are not in the lucky minority whose parents paid their school fees. Let’s assume they aspire to the kind of salary that allows them to dream of owning their own home. The interest rate for higher earners is the retail price index plus three percentage points (currently 7.3 percent), so this is not cheap debt. It is true that those earning under £25,000 a year do not have to pay off their college loans. But as of April 2025, that amount is equal to the annual income of a full-time worker earning the minimum wage.
The picture is not entirely rosy for children of rich parents. Their inheritance may not be as large as they expect, not least because the government has made pension funds subject to inheritance tax. In addition, their parents may end up in nursing homes, requiring expensive long-term care. In England, those with assets of more than £23,250 currently have to pay for care themselves; at least until the money (and children’s inheritance) runs out. Money can disappear quickly. The average cost of a UK nursing home is £60,000 a year, rising to £73,000 a year if care is required.
Parents may also decide, after retirement, to spend on travel. Any listener of Classic FM, a radio station popular with the older generation, will be familiar with the numerous commercials for expensive cruises. In jargon, such activities are known as “skies” – spending the children’s inheritance. Some retirees can go too far and run out of money. A recent survey for Aegon, the insurance company, found that 55 percent of adults expect to have to support their parents as they age.
Even those children who do not see the disappearance of the inheritance will wait longer for the payment. People are living longer than before. Those people born in the 1960s could expect to lose their last living parent at age 58; for those born in the 1980s, this won’t happen until they’re 64.
It is possible for grandparents to choose to bypass their children in their wills and pass their money straight to their grandchildren. There is also room for them to give money while they are alive. But the size of this Grandparent Bank is quite smaller than Bomad. The Institute for Fiscal Studies estimates that only 9 percent of all gifts received by family members (and 3 percent by value) come from their grandparents.
Despite the pressure on older peoplethe long-term trends that have led to the current prominence of the Bank of Mum and Dad will not reverse quickly. The government has a goal construction of 1.5 million houses in England by 2029 or 300,000 per year. But given that the current housing stock is 25.2 million apartments, this will only be a small addition to the total; barely enough to make houses suddenly affordable. Likewise, it seems unlikely that real wages for twenty- and thirty-somethings will rise dramatically, making home ownership more affordable.
Indeed, inequality seems likely to increase over time. Of all gifts made within families, the Institute for Fiscal Studies found that the top 5 percent of transfers accounted for more than half of the total value. Another factor is “assortative mating”: those in better-off families tend to marry partners from similar social circumstances. A 2017 report by the Resolution Foundation found that adults under 50 who are in couples and not expecting an inheritance tend to have partners with an average expected income of £25,000. But those expecting to inherit more than £500,000 have partners who are likely to receive an average inheritance of £190,000.
The situation is reminiscent of an old TV drama, Up down about the upper classes and their servants in early 20th century England. In this case, the people “up” are those who can afford to own a house on more than one floor, and the people “down” are stuck renting an apartment. The split could still have political ramifications as many young people feel their interests are being neglected in favor of pensioners.
As in Europe and the USA, they can turn to populist parties that want to undermine the political consensus. Whether such parties will improve the situation is another matter. In the meantime, those without access to the bank of mum and dad should ponder the irony of the old adage “choose your parents wisely”.
