In recent years, the phenomenon of the Bank of Mum and Dad (BoMaD) has become increasingly prevalent, with parents providing financial assistance to their children in the form of property gifts. This type of intergenerational support has been credited with helping young people get onto the property ladder, but it has also raised questions about the potential impact on intergenerational inequality. In this article, we will explore the implications of BoMaD on intergenerational inequality and discuss how this phenomenon can be addressed.
The Bank of Mum and Dad is a term used to describe the financial support that parents provide to their children in order to help them purchase a home. This support can take the form of a loan, a gift, or an inheritance. According to a recent report by Legal & General, BoMaD is estimated to have provided £5 billion in property gifts in 2018, with an estimated 1.3 million people receiving assistance from their parents.
The impact of BoMaD on intergenerational inequality is twofold. On the one hand, it can help young people who may not otherwise have access to the funds necessary to purchase a home. This can help reduce the gap between those who are able to purchase property and those who are not. On the other hand, BoMaD can also exacerbate existing inequalities, as those with wealthier parents are more likely to receive support than those from less affluent backgrounds. This can lead to a widening of the wealth gap between generations.
In order to address the issue of intergenerational inequality caused by BoMaD, it is important to ensure that all young people have access to the same opportunities when it comes to purchasing a home. This could include increasing access to affordable housing, providing more support for first-time buyers, and introducing measures to make it easier for young people to access mortgages. It is also important to ensure that parents are aware of the potential implications of providing financial assistance to their children, and that they are encouraged to consider other options such as savings or investments.
In conclusion, BoMaD has become an increasingly common phenomenon in recent years, and it has the potential to both reduce and exacerbate existing intergenerational inequality. It is therefore important that measures are taken to ensure that all young people have access to the same opportunities when it comes to purchasing a home, and that parents are aware of the potential implications of providing financial assistance to their children. By doing so, we can ensure that intergenerational inequality is reduced rather than exacerbated.