Young People Increasingly Reliant On Inheritance And Gifts To Buy Property
The most recent government report into Intergenerational transfers, looking at the years in between 2014 and 2016, has highlighted the way different sections of UK society give inheritances, gifts and loans.
The research enables the public to ascertain whether inheritances and gifts are received predominantly by the economically more advantaged.
Interestingly, gifts and loans were most commonly received among 25-34-year-olds. 11% of this age bracket had received a loan or gift from a loved one. The research also highlights that this is the time that people are more likely to become a first-time buyer and have children.
In comparison, the next highest beneficiary of a gift or loan was 9% of 35-44-year-olds and the overall average is only 6% of respondents. Here, the research highlights the dependence that adult children still place on their older relatives in the modern world.
However, the research delivers a very different outlook when it comes to receiving an inheritance. Primarily attributed to living longer, the average time a person is now most likely to inherit is between the ages of 55 and 64 with 7% of respondents receiving an inheritance between 2014 and 2016. 5% of 45-54-year-olds and 4% of 65-year-olds and over were then more likely to inherit.
When people receive an inheritance, it seems as though they are most likely to invest it as 49% agreed that they would invest at least some of the money. 53% of those over 55 were more likely to save the money whilst only 44% of people between 16 and 34 and 47% of people between 35 and 54 would save their money.
This highlights the middle generations desire to use their money to acquire property and possibly the older generation looking to save for their own inheritance.
Whilst the most common source of funding to buy a property remains savings, since 1996 there has been a 7% increase in those reliant on gifts and inheritance to fund their own property deposits. Currently, 29% of people in 2016 waited for an inheritance or gift before buying a property; this was only 22% in 1995.
What does this trend suggest about the future of homebuying in the future?