Tax planning news

Billions to be inherited over next 15 years

1 April, 2006

Halifax Financial Services (HFS) says that this transfer of housing wealth is the largest of its kind recorded in the UK, reflecting demographic changes and the passing away of the first mass generation of homeowners.

HFS calculates that the value of housing assets inherited every year will more than double from £14 billion in 2002/3 to £32 billion in today's money by 2019/20. Much of this (60 per cent) will be accounted for by housing.

Also, the number of estates with property assets is expected to increase from 104,950 (59 per cent) of the total in 2002/3 to 115,347 (65 per cent) in 2019/20.

The creation of a property owning society has significant implications for the role of housing as a source of inherited wealth, says Halifax. In 1946 an estimated 31 per cent of households owned their own homes. By 2001 this number had increased to 70 per cent.

The first baby boomers, the age group that owns more property than any other, will begin to retire this year and will play an important part in the intra-generational transfer of housing wealth that is to come.

However, this wealth will not be spread evenly over the country. The South of England will account for 54 per cent of the total value of residential housing by 2019/20. Wales is expected to have the lowest share at 4 per cent.

Ray Milne, managing director of HFS, says: “The amount of housing wealth inherited is expected to double in 15 years, reflecting demographic changes and the passing away of the first mass generation of homeowners.

“Housing wealth will undoubtedly assist the next generation to provide for their pension. But it does not, by any means, reduce the need to save for the future including making provision for retirement.”