Millennials renting into old age

There is a great divide within the UK's housing market which, unfortunately, is split down to a familiar fault line - young vs. old. However, elderly homeowners are trying their hardest to correct this gap. Today's older generation were indeed privileged with more affordable housing, and when they got their first mortgage in the 1960s and 70s most young people could afford to join the property ladder, but those days are gone for the modern youth. In that time the majority of first time buyers did not need so much support from the 'Bank of Mum & Dad', but in 2018 this is the unfortunate reality.

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Andrea Rozario | Bower Retirement
29th June 2018
Andrea Rozario Bower Retirement
"In 2017 alone, older homeowners lent or gifted a whopping £6.5 billion to their younger family members. "

Research has shown that over 50% of all millennials will be renting into their forties, and as many as 1 in 3 will still be renting when they become a pensioner. The result could be an entire generation of people who will be relying on hand-outs and benefits in a time when their parents and grandparents were entirely self-sufficient. This sad state of affairs would result in the nation's pensioner housing benefit bill doubling to over £16bn by 2060.

The pain of this issue may seem far away, but we need to help 'Generation Rent' now if they are going to have any hope of having a retirement even comparable to their parents and grandparents. Instead of putting it off and letting the problem worsen, as has happened with our old friend the interest only timebomb, we need to look for a cure immediately. Luckily, however, older homeowners are doing more than their bit to bridge the divide without little recognition.

It is true that the baby boomers have enjoyed much economic success and avoided many of the hardships their older relatives had to endure, like war, rationing and true poverty. But today this has been twisted by some to present an image of the baby boomers as a 'selfish' group who had a 'free ride'. Everything from housing to global warming is apparently the baby boomers fault, but in truth, blaming any individual generation for today's problems is misleading at best.

In 2017 alone, older homeowners lent or gifted a whopping £6.5 billion to their younger family members. This generosity resulted in almost a third (29%) of all first time buyers having some form of financial assistance from their parents or grandparents. This meant that in 2017 the Bank of Mum & Dad (and Grandpa & Grandma) was in the top ten of all mortgage lenders. Does this sound like a selfish generation to you?

The gifts or long term loans that parents and grandparents are dishing out are coming from lots of different places, but equity release is becoming a far more accessed avenue the baby boomers are exploring. I am sure that we will see more homeowners looking to pass on their own success in the housing market to their children via products like the lifetime mortgage. It is also possible that the Government could finally act decisively to cure this problem, and look to equity release as one tool it could support.

Everyone, from those in Parliament to those in the wider mortgage arena, need to help 'Generation Rent' get on the housing ladder, but equity release could be part of a wider plan. Of course, building more houses is an obvious remedy, but open support for equity release from those in power could also go a long way in helping to cure the generational divide and the housing crisis. Ultimately, I am proud of what modern equity release delivers, and I know that equity could be the major player in rectifying the quagmire some people find themselves in. But the main thing we should be concerned about is helping young people get the start on the housing ladder that their parents had.

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