A change in the way people own property?

economic

GreatApe wrote: »

There is a breakdown on the Inheritences stats on the ons page. From memory half was homes and the other half a mix of everything else.

My assumption is that gifting is on a similar scale of inherited wealth
We can have a guess. We know the UK is £10 trillion wealth. Let's say 0-25 year olds hold close to zero. 26-50 year olds 1 unit and 51+ year olds 2 units. That means the oldies own about £6.6 trillion and live about 30 more years so they will pass down at a rate of about £220 billion a year.

Inheritences were about 75 billion a year but that data is a few years old now so let's say £100 billion inherited means another £120 billion or so gifted.

It's a reasonable guess to say £100 billion inherited and £120 billion gifted annually.
It will be close to that


Lots of young ones get gifted wealth
From parents buying their first car/car insurance/dirivng lessons (£6k perhaps doesn't sound a lot but if 1/3rd of a million kids get that each year = £2 billion annually just there)
To parents gifting whole homes or significant deposits to buy a home.

I agree whole sums are inherited and gifted in vast quantities. But this is in aggregate, but what about for the average person? What age does the average person receive something substantial enough to at least part fund significantly a home purchase?

I am not sure about your assumption on gifts being the same amount as inheritances for any given year. I would have thought the amount that is inherited is by far the most. Gifts are a lot harder to track vs inheritances.

Are there any sums for the amount that is inherited (and if available gifted) split by asset class? So split by:
- properties
- cash
- stocks
- jewellery
- businesses
etc
etc.

That would be more telling. Someone inheriting or being gifted a business valued at £5m maybe a huge increase in net worth for the individual receiving it but much of that would be locked up in capital equipment , inventory etc and so not much direct use without liquidation.

GreatApe

lisyloo wrote: »

What do you call significant?
Average home price is £224 (land registry Oct 2017)
So £94k when divided by 2.4.
Are we talking about the same thing?

Average UK born woman has less than 2 kids. I can't be bothered to check right now but for argument sake let's say 1.75 kids

The average Inheritences pot is about 50% house 50% other (pension savings land art shares securities bonds etc)

If you want to take £224k as the average house. Double it and you have around £448k pot divided to 1.75 kids = £256k each kid

We can do a check to see if this is a reasonable guess.
If you model the UK as 20 million kids 20 million in the middle and 20 million old
You get 20 million recipients per generation x £256k = £5.12 trillion.
Seems close I would have guessed £6.6 trillion which would be 2/3rds of the national wealth.
So it broadly checks out
Roughly speaking British born kids will get around quarter of a million each in inherited wealth.
Yes I am aware some will get little to none but a lot of British born kids get very significant sums

economic

GreatApe wrote: »

Average UK born woman has less than 2 kids. I can't be bothered to check right now but for argument sake let's say 1.75 kids

The average Inheritences pot is about 50% house 50% other (pension savings land art shares securities bonds etc)

If you want to take £224k as the average house. Double it and you have around £448k pot divided to 1.75 kids = £256k each kid

We can do a check to see if this is a reasonable guess.
If you model the UK as 20 million kids 20 million in the middle and 20 million old
You get 20 million recipients per generation x £256k = £5.12 trillion.
Seems close I would have guessed £6.6 trillion which would be 2/3rds of the national wealth.
So it broadly checks out
Roughly speaking British born kids will get around quarter of a million each in inherited wealth.
Yes I am aware some will get little to none but a lot of British born kids get very significant sums

But what will a 60 year old do with 256k when his best days are long gone?

Windofchange

GreatApe wrote: »

Average UK born woman has less than 2 kids. I can't be bothered to check right now but for argument sake let's say 1.75 kids

The average Inheritences pot is about 50% house 50% other (pension savings land art shares securities bonds etc)

If you want to take £224k as the average house. Double it and you have around £448k pot divided to 1.75 kids = £256k each kid

We can do a check to see if this is a reasonable guess.
If you model the UK as 20 million kids 20 million in the middle and 20 million old
You get 20 million recipients per generation x £256k = £5.12 trillion.
Seems close I would have guessed £6.6 trillion which would be 2/3rds of the national wealth.
So it broadly checks out
Roughly speaking British born kids will get around quarter of a million each in inherited wealth.
Yes I am aware some will get little to none but a lot of British born kids get very significant sums

Except I have already put a link above that shows that the average inheritance is nowhere near to just under 500k!!!

https://www.ifs.org.uk/publications/8239

Draw a line across to the 500k point on figure 1 - something like the 91st percentile will get that. 250k may be in the 75th percentile. Please stop posting nonsense.

Windofchange

economic wrote: »

But what will a 60 year old do with 256k when his best days are long gone?

And here is the crux of the thread. My feeling is that they might pass it straight to their offspring, so infact perhaps the children of the millennials will be the true beneficiaries? Either that, or he / she might buy their first home should they have not been able to in their working life. Will the impact of inheritances, however large they may be, be less for millennials due to their parents living much longer?

economic

Windofchange wrote: »

And here is the crux of the thread. My feeling is that they might pass it straight to their offspring, so infact perhaps the children of the millennials will be the true beneficiaries? Either that, or he / she might buy their first home should they have not been able to in their working life. Will the impact of inheritances, however large they may be, be less for millennials due to their parents living much longer?

If we see huge medical advancements over the next 20-30 years then potentially. I do not think we have enough data though. Gifts are very very hard to keep statistics of and i think a lot is being gifted - inheritance data alone does not give the full picture.

Windofchange

economic wrote: »

If we see huge medical advancements over the next 20-30 years then potentially. I do not think we have enough data though. Gifts are very very hard to keep statistics of and i think a lot is being gifted - inheritance data alone does not give the full picture.

We have the data - figures 3 and 4

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/632797/IHTNationalStatisticsCommentary.pdf

Seems the richer you are the less your property matters.

GreatApe

economic wrote: »

But what will a 60 year old do with 256k when his best days are long gone?

UK life expectancy is 82 if a person had kids at age 30 that means the kids would get around age 52

What it means is you could probably spend more and save less.
Plus I suspect the gifting side is of course before death if its 10 years before death that means gifting is around age 42. In my experience the young ones get significant gifts when they get married. Eg homes or deposits for homes.

economic

GreatApe wrote: »

UK life expectancy is 82 if a person had kids at age 30 that means the kids would get around age 52

What it means is you could probably spend more and save less.
Plus I suspect the gifting side is of course before death if its 10 years before death that means gifting is around age 42. In my experience the young ones get significant gifts when they get married. Eg homes or deposits for homes.

Yes in my experience too. Most people i know have gotten help when buying a first home or getting married (for future house purchase). Me and my sibling have received such gifts.

I should just up my spending as i can imagine when i am set to inherit i would have to pay quite a lot of income taxes if i maintain my current wealth. I do not want to end up like chuck, a nice problem to have is still a problem. either that or my parents should just up the spending (which would be much better) but they are not the sort to spend so much for the sake it of it.

GreatApe

Windofchange wrote: »

Except I have already put a link above that shows that the average inheritance is nowhere near to just under 500k!!!

https://www.ifs.org.uk/publications/8239

Draw a line across to the 500k point on figure 1 - something like the 91st percentile will get that. 250k may be in the 75th percentile. Please stop posting nonsense.

Total UK wealth is over £10 trillion net and growing

Those who own that wealth today will die in time and it will pass to those who do not own it

See of you can figure out at what rate this wealth is transfered.