"Housing Market Slumps"

ukcarper

GreatApe wrote: »

How do you come to that conclusion?

You don't even need to guess the ONS published the amount of inheritances and how they are distributed so why not use that information. From memory its over £70 billion annually and rising and distributed quite widely
Oh and those figures are out of date it's likely closet to £100 billion annually and those don't include trusts or gifts

Latest figure I can find on ONS are 2014 there were roughly 270k inheritances, approx 500k people died so just under 50% left nothing.

Of those leaving an inheritance only 12% left more than £500k with another 21% between £300k and £500k, 45% were below £200k.

economic

ukcarper wrote: »

Latest figure I can find on ONS are 2014 there were roughly 270k inheritances, approx 500k people died so just under 50% left nothing.

Of those leaving an inheritance only 12% left more than £500k with another 21% between £300k and £500k, 45% were below £200k.

so about 90k left inheritances of 300k or more. what about gifts given? surely commonsense says that people who are retired or close to retired would be gifting if they have assets over 500k each so to avoid paying inheritance taxes?

ukcarper

economic wrote: »

so about 90k left inheritances of 300k or more. what about gifts given? surely commonsense says that people who are retired or close to retired would be gifting if they have assets over 500k each so to avoid paying inheritance taxes?

I am worth over £500k on paper I am not making gifts because like most people the majority of my money is tied up in my home and pension.

economic

ukcarper wrote: »

I am worth over £500k on paper I am not making gifts because like most people the majority of my money is tied up in my home and pension.

maybe like most people but how many exactly? and how many have liquid assets to give away as gifts (at least £200k)? i would expect quite a few.

westernpromise

In the longer term it seems clear that tax will affect the south east disproportionately.

If you own a 6 bedroom family house in Stafford or Lichfield you can pass it on with no tax hit as it's worth less than £650k. If you owned that house in London it would be two or three million, so your heirs would be forced to sell it unless they can find half a million in cash to pay the IHT.

Basically if you live outside the south east you can pass your family home down the generations. Otherwise you will be forced to sell it. Over generational time scales this must cause London family houses to decline in value relative to similar houses in the sticks.

economic

westernpromise wrote: »

In the longer term it seems clear that tax will affect the south east disproportionately.

If you own a 6 bedroom family house in Stafford or Lichfield you can pass it on with no tax hit as it's worth less than £650k. If you owned that house in London it would be two or three million, so your heirs would be forced to sell it unless they can find half a million in cash to pay the IHT.

Basically if you live outside the south east you can pass your family home down the generations. Otherwise you will be forced to sell it. Over generational time scales this must cause London family houses to decline in value relative to similar houses in the sticks.

this along with lower birth rate means family homes are in less demand as family homes compared to history. that doesnt mean family homes are not bought - they could be bought and converted to flats or HMOs.

ukcarper

economic wrote: »

maybe like most people but how many exactly? and how many have liquid assets to give away as gifts (at least £200k)? i would expect quite a few.

Only 10% of households have a wealth of over £1m the median wealth is £225k, wealth held is 35% property, 40% pension, 14% financial anf 10% physical.

The wealthiest 10% have 21% financial wealth while the lowest 50% have only 4%.

These are 2014 figures.

BikingBud

BBC:

The number of first-time buyers relying on the "bank of mum and dad" for financial help has hit a record high, according to new research.

Analysis for the Social Mobility Commission suggests that more than a third of homebuyers in England depend on money from their family.
Using the latest official data available, from 2013-14, researchers found 34% of buyers needed cash or a loan from their parents.
That compared with just 20% in 2010/11.

A further 10% of buyers relied on inherited wealth, the research found.
"Affordability problems mean that parents and other family members have a critical role in assisting their children to buy their first home, either by means of a gift of money or a soft loan," said the report
author, Dr Paul Sanderson from Anglia Ruskin University.

Affordable: Cambridge Dictionary: (used about houses, etc.) able to be bought or rented by people who do not earn a lot of money:

GreatApe

westernpromise wrote: »

In the longer term it seems clear that tax will affect the south east disproportionately.

If you own a 6 bedroom family house in Stafford or Lichfield you can pass it on with no tax hit as it's worth less than £650k. If you owned that house in London it would be two or three million, so your heirs would be forced to sell it unless they can find half a million in cash to pay the IHT.

Basically if you live outside the south east you can pass your family home down the generations. Otherwise you will be forced to sell it. Over generational time scales this must cause London family houses to decline in value relative to similar houses in the sticks.

Yes that is definitely now a problem for London housing. I am sure most people will try to avoid paying huge sums of IHT

Gift the house before you die. Most people know about the 7 year rule but its actually a taper with the full amount payable if you die within 3 years and none after 7 years. So if a person died 5 years + 1 day after the gifting they would only pay 16% IHT on it rather than the full 40%

GreatApe

ukcarper wrote: »

Only 10% of households have a wealth of over £1m the median wealth is £225k, wealth held is 35% property, 40% pension, 14% financial anf 10% physical.

The wealthiest 10% have 21% financial wealth while the lowest 50% have only 4%.

These are 2014 figures.

We have already had a whole thread on inheritances and gifts so I dont want to run though that again here. Its sufficient to say that inheritances and gifts are about £200 billion annually and hundreds of thousands benefit from inheritances.