A recent research study shows that Britain’s grandparents hold over £400 billion in wealth.
The bulk of this wealth has arisen as a result of the continuing rise in property values. Elderly couples with homes will pass down on average property worth £400,000 to £500,000 to their offspring, with the money they leave behind set to benefit four or five recipients.
Based on just over a million people who fall into this category, this equates to a substantial “wall of wealth”, much of which will be passed on to grandchildren, though with elderly care costs potentially eroding this in some cases. Contrary to public opinion, there is little evidence that these grandparents are planning on spending their kids’ inheritance. In fact, they feel under pressure to help the next generations and are more focused on passing money on than they are on consuming it themselves.
It seems that this cohort is acutely aware of the challenges faced by the millennial generation and is keen to help them with the big financial challenges in their lives, like getting onto the housing ladder.
Generation Rent disadvantaged
Those millennials lucky enough to have home-owning parents and grandparents are in the fortunate position of being able to buy a property themselves.
However, this doesn’t apply to all, and many who form part of what has been dubbed “Generation Rent”, may find themselves in this position for many more years than would have been the case a few years ago. Since the early 2000s, high house prices, weak growth in real incomes and greater controls over lending have all combined to make home ownership harder, despite a long period of low interest rates, competitive mortgage deals and various government policies designed to help first-time buyers.
The number of 25 year olds who own their own home has more than halved in the last 20 years. If you would like advice on how to pass your wealth on to the next generations, then do get in touch.