British parents are spending more than £2 billion a year on their children's rent as prices spiral

Smiling Union Jack piggy banks are lined up for sale in the window of a souvenir store on Oxford Street in central London January 20, 2014.

Reuters / Andrew Winning

LONDON — British parents are spending over £2 billion a year to cover their children's rent bills, according to research.

A report from Legal & General and the Centre for Economics & Business Research found the "Bank of Mum and Dad" will fund £2.3 billion of rental payments in 2017, paying out an average £415 every time a rent payment is made.

Buying a house is an increasingly unrealistic prospect for younger generations in the UK, but the figures demonstrate that even renting a property is becoming difficult to afford.

They show parents now help 9% of renters across the UK, as rental prices rise while wage growth remains stagnant.

The average cost of a new UK rental tenancy is £925 a month, according to HomeLet, and £1,564 in London.

"Concerning"

Dan Batterton, a fund manager at LGIM Real Assets, said the results were "concerning."

He said: "Intergenerational inequality continues to widen and now it’s affecting renters too. The lack of affordable housing, low wage growth relative to inflation and burdens of student debt mean that many kids can’t even rent somewhere without significant contributions from their family."

"Parents want to help their kids get on in life, and the Bank of Mum and Dad is a testament to their generosity, but it is also a symptom of our broken housing market."

Previous research from Legal & General found homebuyers received money from their parents to help with a deposit on a quarter of all mortgage transactions in 2016.

Family members gave an average of £17,500 each to fund 306,000 property deals worth £77 billion, the study said, as buyers battled with increasingly unaffordable house prices.

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See Also:

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• MORGAN STANLEY: 'We expect UK house prices to fall as Brexit bites'

• House building is at its highest level since 2008

SEE ALSO: The Bank of Mum and Dad is the UK's 9th biggest lender and funds a quarter of all mortgages