For many members of generation rent, some of whom see more than 70% of their paycheques go straight into their landlord’s pocket each month, the thought of one day owning a property is a pipe dream that only a lottery win or hefty inheritance could bring to pass.
Well, we hope you’re feeling lucky, because most millennials will miss out on a colossal property “wealth mountain” worth £400bn that is set to be passed from grandparents to younger generations in the coming decades.
This is according to research by the insurers Royal London, which questioned more than 5,600 people from the older generation, the middle “sandwich generation”, and younger people about their plans and expectations for receiving an inheritance, reported the Guardian.
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The grandparents surveyed, all of whom were homeowners, expected to leave behind an estate worth between £400,000 to £500,000. Based on just over one million older people being in this situation, the report suggested “a 'wealth mountain' of over £400 billion [is] set to be passed on" across the UK.
The “sandwich generation” of 45- to 64-year-olds were the most likely to benefit from this inheritance, but around half of the grandparents questioned said they planned to leave wealth with their grandchildren directly.
40% of the sandwich generation also felt under pressure to pass on their inheritance to the millennial generation, while nearly two thirds (62%) said they’re concerned about millennials’ financial position. As most of us will know, millennials are the most disadvantaged by the surge in house prices and haven’t seen their wealth increase unlike the older generations, the report said.
However, the report warned that only a minority of 25 to 44-year-olds will actually benefit from this cascade of wealth. Just four million of the 17 million in that age group are in the “fortunate position” of being in line to inherit from grandparents with housing wealth.
More needs to be done politically to help those members of generation rent who won’t benefit from inherited wealth, Royal London also said.
"Those millennials lucky enough to have home-owning parents and grandparents may be set to benefit from significant inheritance which will help them on to the housing ladder,” said Sir Steve Webb, director of policy at Royal London and a former pensions minister. “But the majority of millennials are not in that position.”
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He added: "There is a danger that this will reinforce the advantage of those who are set to benefit from a cascade of wealth from the older generations."
According to a report by the Institute for Fiscal Studies (IFS) published earlier this year, the wealth of younger generations will depend more on who their parents are than was the case for older generations.
“At the same time, today’s young adults will find it harder to accumulate wealth of their own than previous generations did, due to the sharp fall in homeownership for that group, the dramatic decline of defined benefit pensions in the private sector and the stagnation in their incomes," said Andrew Hood, a senior research economist at the IFS.
Anyone else fancy a stiff, cold drink all of a sudden?