If you happen to be a millennial today – and one of the thousands of individuals or couples struggling to get on the UK housing ladder then, understandably, you may be looking to the “Bank of Mum and Dad” for help.
There’s not much else you can today anyhow if you’re looking for finance. And why wouldn’t you be? Inflation and huge rental bills which, in many cases, come in at two-thirds of a millennial’s salary means there isn’t much cash left over for savings. And getting a loan is complicated – especially if you don’t have a great credit record.
Baby boomers and their housing windfall
The Baby Boomer generation did extremely well from the Right to Buy sell-off of council housing under the Conservative government, after all. At the same time property prices and rents were no-where near as high compared to salaries in the 60s, as they are today. In addition, inflation was half of what millenniums are faced with in 2018 and only half the number of young people today own their own home aged 30 as their parent’s generation did.
Parents of millennials own 50 per cent of UK wealth
In fact, Baby Boomers did so well that this group now collectively own 50 per cent of Britain’s wealth.
Many parents are, of course, aware of this current generational inequality and as a result are happy to help out their offspring in terms of giving them cash towards the deposit for their first home.
But the real help won’t come until you’re reaching pensionable age, according to the government think tank the Resolution Foundation. A recent report they did showed that although two thirds of millennials aged 15 to 35 had parents who owned their property, they wouldn’t benefit from any inheritance until they were around 61.
Inheritance to double – along with age of typical offspring
This isn’t just three to four decades too late for first-time buyers, but also well past the stage when Second Steppers with their own offspring and looking to move into a family home, could have benefitted too.
On the plus side, that inheritance is set to double over the next 20 years, reaching its peak in 2035.
The inheritance boom is to be welcomed by millennials, of course, but Laura Gardiner, senior policy analyst at the Resolution Foundation, warns it’s no ‘silver bullet’ when it comes to society’s ills and the inequality in the housing market.
She added: “Inheritance is not the silver bullet that will get a whole new generation on the housing ladder or address growing wealth gaps in society.
“Even for those millennials who will receive a bequest, it’s unlikely to come when they’re coupling up, having children, and trying to buy a family home when the extra wealth would be much needed, but as they approach retirement instead.”
Instead Gardiner says there needs to be a national debate and changes to public policy so that wealth creation and the subject of inheritance is brought up to date and in line with millennials needs in the 21st century.
With our expert network of financial advisers, we can offer you the latest and most beneficial advice on financing home buying. Staying up to date with all of the changes, we can find a bespoke solution for you.