One in six baby boomers owns a second home
RECORD numbers of baby boomers are using second homes as a way of topping up their pensions or salaries, according to a study.
It found one in six 55 to 64-year-olds own a second property, contributing to an average wealth of £250,000 in this age range.
Many of these baby boomers are renting out their second homes to boost their incomes, according to the Institute for Fiscal studies.
At the same time, home- ownership among millennials has slowed significantly.
They will, however, benefit from windfall inheritance packages from their parents who are likely to hand down their accrued property wealth, the IFs said.
Millennials are expected to inherit £100,000 each on average, although they will not receive the money until they are in their 60s.
Other research by the Resolution Foundation think- tank shows that overall second home ownership in the UK has risen by a third since 2000. More than 10 per cent of adults in the country – 5.2million people – own another property.
The rise of second home ownership has been blamed for an increasing concentration of property wealth held within a smaller pool of well-off families. Baby boomers, those born roughly between 1945 and 1965, are typically associated with living through an unprecedented period of economic, social and cultural improvement. The group accounts for more than half of all the wealth tied up in secondary properties. In contrast, only 3 per cent of millennials own a second home. home ownership in general among middle-income millennials has declined from two-thirds to one in four in 2015/16.
The research found four 30-year- olds in ten today live in privately rented flats and houses, compared with one in ten baby boomers at the same age.
The younger generation’s efforts to get on the housing ladder have been hit by relatively low incomes at a time of rising property prices. In 2015/16 almost 90 per cent of 25 to 34year-olds faced average regional house prices of at least four times their income, compared with less than half 20 years earlier.
Rowena Crawford, an associate director at the IFs and author of the latest report, said: ‘Older people do not draw on their wealth much during retirement.
‘The majority of homeowners do not move or access their housing wealth, and even financial wealth is drawn down only slowly.
‘This means that most wealth held by retired people is likely to be bequeathed to future generations rather than spent.
‘This will have implications for the level and distribution of resources among current working-age individuals, particularly those with wealthy parents and few siblings.
‘Given the increased freedom people now have over how they spend their pension wealth in retirement, carefully monitoring how the use of wealth evolves in future will be important, both for the living standards of retirees and also for younger generations.’
‘Handed to future generations’