Why future first-time buyers could be OAPs
Many millennials are relying on an inheritance to buy their first home, but waiting for this windfall could mean they are old age pensioners when they eventually step onto the property ladder.
That’s the verdict of wealth management firm, Charles Stanley, which has been looking into the challenges of the intergenerational transfer of wealth and the changing nature of inheritance.
It discovered the biggest financial priority for over half of millennials was to get onto the property ladder. Yet only a quarter thought they would be able to buy a property without an inheritance and less than a quarter believed they could pay off their mortgage without one.
But, while an inheritance was likely to provide many with their only shot at homeownership, only one in seven millennials expected to inherit before they turned 35.
Indeed, the average age by which they were likely to receive an inheritance was 50. Data from the Office for National Statistics backs this up, revealing the peak inheritance age is between 55 and 64, with other sources suggesting 61 was typical.
Charles Stanley said this would be six years after the minimum pension age of 55, which meant future first-time buyers may be OAPs if they are relying on an inheritance to buy.
John Porteous, group head of distribution at Charles Stanley, said: “People are living longer than ever, so relying on an inheritance to get on the housing ladder is a risky strategy as you may get less, and much later than planned.
“In reality most people save and invest to get on the housing ladder – starting early and planning ahead is essential to achieving the deposits you need.”
He advised families keen to help children on to the property ladder to start their inheritance tax planning early. “The earlier you plan, the more options you have,” he added.
Article By Kate Saines for www.whatmortgage.co.uk