Inheriting a home might still not make you rich
Is anyone with any power in Westminster worrying about the economic fortunes of young adults? If the Budget – which included no meaningful housing policies to help renters or would-be firsttime buyers – is anything to go by, the answer is not really.
Perhaps that’s because they read the write-ups of a report by the global estate agency Knight Frank, which claims that people born between 1981 and 2000 are going to receive a “seismic” windfall over the next 20 years because their parents will die and pass on their property assets.
This generational transfer of wealth will, Knight Frank says, see £71trn worth of assets move from older generations to younger adults making “affluent millennials the richest generation in history”.
The crucial line here is “affluent” – not all millennials have rich parents who own homes and not all millennials will be able to enjoy the assets they do inherit.
This is because the average millennial will have to use any inheritance they do receive to pay for expensive childcare, buy a home if they don’t already own one or pay historically high rent and mortgage payments.
The mortgages market in Britain is volatile and it’s unlikely that rates will return to the lows seen after 2008 any time soon.
So young adults who do buy homes will also be paying far more interest than older generations did throughout the 2000s when they were able to benefit from the ultra-low interest rates imposed by the Bank of England as well as rapidly rising house prices.
Remember, also, that young adults are taking out enormous mortgages for longer terms than ever before and may well be repaying them into retirement. Even with inheritance, they may not be able to clear all their debt.
Members of the millennial generation as well as Gen Zs may also have student debt they want to repay and, in years to come, find themselves needing cash for private health insurance for procedures because NHS waiting times are so long.
All that is assuming the money tied up in their parents’ assets is not required to pay for any residential or at-home care. Anyone with more than £23,250 in capital must pay full price for adult social care, which ranges between £4,640 and £5,640 per month in Britain.