Millennials finding it hard to get “on the ladder”


As we continue to look at the financial challenges faced by millennials, it is hard to ignore the issue of property ownership as one of the key concerns amongst today’s Generation Y. With rising house prices and inflation outstripping wage increases, the dream of owning their own home appears to be a reality reserved for a lucky few.

A report by the Resolution Foundation found that half of UK millennials will rent rather than own their homes into their 40s, and one-third will rent into retirement unless there is a radical change in taxation, new funding for public housing and a reform of the private sector.

Of particular note from the research is that in the past 15 years, the number of families living in assured short-hold tenancies has tripled to 1.8m.

As many who are or have been renters will testify there is a strong chance that “renter status” (with no imminent hope of home ownership) brings with it a degree (possibly high) of uncertainty.

As you will have seen in the media, tackling the housing crisis has become a priority for all UK political parties though the rate of development in certain areas will not be going down well with everybody – especially owners.

UK landlords would oppose such changes, the report acknowledged, but experience from countries including Germany, the Netherlands and more recently Scotland most would accept that it is a long term aspiration of many to own their own home – regardless of their political views. There will be exceptions but on the whole it is believed that home ownership remains a strong and resilient personal financial goal.

The Resolution Report also proposes increasing stamp duty for overseas buyers; maintaining the existing surcharge for those buying second homes; and cutting the duty for all others. This would make it easier for older homeowners to downsize. The report proposed that this could be funded by a reform of council tax – the overall effect making it “less attractive to be over-housed – but easier to move”.

Director at Finura, Nathan Mead-Wellings, comments:

“At Finura we have always believed that many inheritance and tax planning strategies are particularly effective when grandparents, parents and children work together. This also applies to home ownership. There are a number of opportunities that we can look at to help the younger generation get onto the property ladder, although these will depend on the circumstances of the case. The possibilities could include an outright property purchase by the parents or grandparents, a gift of a deposit, a loan, a mortgage guarantee, being involved in some kind of intergenerational mortgage or a JISA, LISA and other tax efficient funding strategy.

“When receiving help from relatives, there are many considerations to take into account including inheritance tax or, if they are likely to be moving from their own home, additional stamp duty; however we have been successful in helping a number of clients reach a solution that can benefit all members of the family in both the short and long-term.”


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