In a move that has sent shockwaves through the UK housing market, a major building society has slammed the door shut on a cornerstone of first-time buyer deposits: the 'Bank of Mum and Dad'.
Leeds Building Society has abruptly changed its lending criteria, now outright banning gifted deposits from parents for a significant number of its mortgage products. This controversial policy shift effectively cuts off a vital lifeline for thousands of aspiring homeowners who rely on family help to get a foot on the property ladder.
Who is Affected by the New Rules?
The new restrictions specifically target buyers seeking mortgages at higher loan-to-values (LTVs), typically those with smaller deposits. For many of its deals, the society now insists that the entire deposit must come from the borrower's own savings, with no external gifts allowed.
This change is particularly devastating for first-time buyers in high-value areas like London and the South East, where soaring property prices make saving a deposit from salary alone a near-impossible task for many.
Why the Sudden Change?
While the Leeds Building Society has not issued a formal public statement detailing its reasoning, industry insiders point to growing economic uncertainty. Lenders are becoming increasingly risk-averse, and some may view borrowers who haven't saved the full deposit themselves as a higher potential liability.
This decision starkly contrasts with the approach of other major high-street lenders, many of whom still readily accept family gifted deposits, often with just a simple signed letter from the parents confirming the money is a gift and not a loan.
Expert Backlash and Industry Outrage
The move has been met with fierce criticism from mortgage experts and brokers. Nicholas Mendes, a mortgage technical manager, called the decision "very surprising" and highlighted the immense pressure it places on buyers. He warned that other lenders might now be tempted to follow suit, creating a domino effect that could freeze a generation out of the market.
The 'Bank of Mum and Dad' has long been an unofficial pillar of the UK housing market. This sudden withdrawal of a key funding option is seen as a direct attack on the aspirations of young people and families.
What Should Affected Buyers Do Now?
For those suddenly caught out by this policy change, the advice is clear:
- Shop around immediately: Numerous other lenders still accept gifted deposits. Consulting a whole-of-market mortgage broker is now more crucial than ever.
- Seek professional advice: A broker can navigate the complex lending landscape and find a suitable alternative product.
- Act quickly: With lenders frequently updating their criteria, securing a mortgage offer with a supportive provider is a time-sensitive priority.
This decisive action by Leeds Building Society has ignited a fierce debate about affordability, risk, and the very future of homeownership in Britain, leaving many to wonder if the dream of buying a home is now only for those who can do it completely alone.
