Private Wealth Experts Argue Report Should Be Considered Alongside Ageing Population Care Crisis
Tax specialists at leading national law firm Irwin Mitchell Private Wealth are warning that the increasing reliance on the Bank of Mum and Dad coupled with an ageing population care crisis could lead to much intergenerational wealth being wiped out.
A new report by The Resolution Foundation has revealed millennials whose parents don’t own a home are 60% less likely to become first-time buyers by the age of 30 thanks to the growing strength of the Bank of Mum and Dad phenomenon.
The report, which was published today (4 December), proves the increasing influence of the Bank of Mum and Dad: in the 1990s and 2000s 30-year-olds with parental wealth were twice as likely to own a home. Today, this figure has increased to three times as likely.
The report is the first to look into the significance of the Bank of Mum and Dad on homeownership rates for UK millennials, and experts at Irwin Mitchell Private Wealth say the findings are cause for concern when it comes to younger generations accruing wealth in the future.
They say the findings should be considered in conjunction with the ageing population. If younger generations are increasingly reliant on parental wealth to buy a home or support their family, paying for care could wipe out any inheritance and create a serious wealth inequality in the country.
Expert Opinion“The results from this report are staggering: millennials’ wealth and homeownership patterns are vastly influenced by their parents’ wealth, and this is only growing in strength. If their parents don’t own property themselves, then they’re significantly less likely to own a home before the age of 30.
“This causes serious concern for the future when the aging population crisis is considered alongside it. If the current generations are waiting longer and longer to inherit wealth, buy a home or invest, this could have serious ramifications for the economy as it leaves young people tied to their parents and creates a wealth gap, leaving some in a much better position than others.
“When care home fees are considered – which can wipe out inheritances due to their high costs and more people needing them for longer – this leaves future generations in a very dangerous position of being significantly less financially secure than their parents or grandparents.
“We’re having more conversations about this with our clients and there are more reports being published on the matter every week because it is the new reality for younger people that they have to rely on their parents’ and grandparents’ wealth to achieve those big life milestones. Any autonomy over the system is rapidly diminishing for many.” Andrea Jones - Partner