We have very similar issues here in Australia at present - quite possibly much worse. As David suggests in his comment, the trend among the 50 somethings (based on straw poll of my network of friends/work colleagues) appears to be selling up early, downsizing the house and splitting the equity among the kids for deposits to give them a leg up. Makes for a very unfair system if you come from a non property owning family I guess but hard to see how it can be avoided.
Thanks Mark. It is extraordinarily difficult to think this through. How can we not help our kids? It’s what every parent will do. I think it has to be a political solution over time. The madness of near zero interest rates caused the inflation of asset prices. That has to be wound down. Inheritance taxes are very unpopular, at the last but one general election, the Tories were attacked for wanting to increase “death taxes” but that nettle has to be grasped. Also as everyone knows we need many more houses to be built. With immigration at net 500,000 pa we need a city the size of Edinburgh built every year in UK. As prices rise the number of home owners falls this makes the wealth inequality even more stark. Also council taxes should be reformed so that they reflect increase in values. At present older people have no incentive to downsize.
Thanks, Iain. Very interesting. It certainly is a massive divide. It wandered into my radar last week with a Guardian personal opinion piece, from someone who twigged how some of her friends were managing to get ahead in housing in London, while doing normal jobs. Normal wages obviously being hopelessly inadequate for buying property there. I think people may be looking to pass on assets well before the nursing home fees begin to bite also.
Thanks David. Yes that is something I didn’t mention - the cost of elderly care. Some of this wealth is recycled in a sense since some older people sell their houses to pay for social care. Boris Johnson tried to cap this at £80000 which was the wrong approach. That just benefited people in the south east with £500000 plus houses (the average in London). Increasingly parents are finding ways of transferring wealth tax feee by bequests to children. I don’t see how that could ever be stopped. But everyone who has a son or daughter trying to start a career in London, or most big cities,knows the score here. They are buying their children into professional jobs
We have very similar issues here in Australia at present - quite possibly much worse. As David suggests in his comment, the trend among the 50 somethings (based on straw poll of my network of friends/work colleagues) appears to be selling up early, downsizing the house and splitting the equity among the kids for deposits to give them a leg up. Makes for a very unfair system if you come from a non property owning family I guess but hard to see how it can be avoided.
Thanks Mark. It is extraordinarily difficult to think this through. How can we not help our kids? It’s what every parent will do. I think it has to be a political solution over time. The madness of near zero interest rates caused the inflation of asset prices. That has to be wound down. Inheritance taxes are very unpopular, at the last but one general election, the Tories were attacked for wanting to increase “death taxes” but that nettle has to be grasped. Also as everyone knows we need many more houses to be built. With immigration at net 500,000 pa we need a city the size of Edinburgh built every year in UK. As prices rise the number of home owners falls this makes the wealth inequality even more stark. Also council taxes should be reformed so that they reflect increase in values. At present older people have no incentive to downsize.
Thanks, Iain. Very interesting. It certainly is a massive divide. It wandered into my radar last week with a Guardian personal opinion piece, from someone who twigged how some of her friends were managing to get ahead in housing in London, while doing normal jobs. Normal wages obviously being hopelessly inadequate for buying property there. I think people may be looking to pass on assets well before the nursing home fees begin to bite also.
Thanks David. Yes that is something I didn’t mention - the cost of elderly care. Some of this wealth is recycled in a sense since some older people sell their houses to pay for social care. Boris Johnson tried to cap this at £80000 which was the wrong approach. That just benefited people in the south east with £500000 plus houses (the average in London). Increasingly parents are finding ways of transferring wealth tax feee by bequests to children. I don’t see how that could ever be stopped. But everyone who has a son or daughter trying to start a career in London, or most big cities,knows the score here. They are buying their children into professional jobs