One in six baby boomers owns a second home


Published : 24th August 2018

News

A record one in six baby boomers now owns a second home, according to analysis by a think tank.

The housing wealth boom among people in their 50s and 60s has come despite a steep decline in the housing wealth of younger generations over the same period, causing inter-generational tensions.

According to the Institute for Fiscal Studies around 15 per cent of 55 to 64 year olds owns a second property, with most people buying up second properties as a means of supporting their pension or salary.

On average people currently aged 55-64 have built up wealth of a quarter of a million pounds, largely as a result of their property purchases, the IFS said.

According to the Resolution Foundation second home ownership in the UK has risen by a third since the year 2000, with more than one in 10 UK adults, or 5.2 million people, now owning a second home.

Most of this is made up of people choosing to become landlords in order to boost their income as they approach retirement.

Meanwhile, since the late 1990s home ownership among the Millennial generation has slowed, from two in three (65 per cent) middle-income young people owning property to one in four (27 per cent) in 2015/16.

Four in 10 adults own no property at all and are either renting from social or private landlords.

However, as older generations are unlikely to spend the vast majority of their wealth, Millennials could be set for a bumper inheritance, the IFS said.

They are expected to inherit £100,000 each on average, the analysis showed, although they will not receive the money until they are in their 60s.

Rowena Crawford, an associate director at the IFS and author of the set of reports, said: “Older people do not draw on their wealth much during retirement. The majority of homeowners do not move or access their housing wealth, and even financial wealth is drawn down only slowly.

"This means that most wealth held by retired people is likely to be bequeathed to future generations, rather than spent. This will have implications for the level and distribution of resources among current working age individuals, particularly those with wealthy parents and few siblings.

"Given the increased freedom people now have over how they spend their pension wealth in retirement, carefully monitoring how the use of wealth evolves in future will be important, both for the living standards of the retirees themselves, and also for younger generations.”

Source:- https://www.telegraph.co.uk/news/2018/08/22/one-six-baby-boomers-owns-second-home/