As property prices rise around the world, many young people are priced out of owning their own home. One exception is those who are able to rely on financial support from their parents. It’s estimated that in the UK, the so-called “bank of mum and dad” contributed nearly £9 billion toward the house purchases of offspring.
Research from the University of Newcastle shows that this support could have a dark side to it, not least for the parents themselves. The study suggests that parents could open themselves up to financial abuse as they get older.
Risk of abuse
The report highlights that relying on the “Bank of Mum and Dad” can foster ageist attitudes. When coupled with soaring property prices and a lack of safeguards for older individuals in the banking sector, these conditions create a breeding ground for financial elder abuse.
Based on interviews with 54 donors and recipients of family financial aid for home ownership, the report reveals several key findings:
- The assumption in the Banking Code of Practice that older individuals will readily recognize and report abuse to financial institutions does not align with the actual challenges of financial elder abuse.
- Requirements imposed by lenders on recipients of family financial assistance may put those providing help at a disadvantage.
- A large majority of donors do not seek financial or legal advice, nor do they establish formal agreements, often feeling uneasy about such discussions.
- Many donors lack clarity about the status and expectations associated with the assistance provided to family members, finding these discussions difficult or awkward.
Despite encouragement from mortgage brokers, financial advisors, and politicians for older individuals to support their children in entering the property market, the report underscores that consideration of the risk of financial elder abuse is notably absent from these discussions.
