British kids going to become more dependent on parental wealth...

[mids2019]

https://www.theguardian.com/lifeandstyle/2024/nov/17/bank-of-mum-and-dad-why-we-all-now-live-in-an-inheritocracy

I think this article is she opening but I think it is a reality we have with rising property prices and the impact of accumulated generational wealth.

Is there going to become an increasing acceptance that the blank of mum an dad will play a big part in children's lives and that ultimately once wealth is accrued within a family of stays there......

When we were young, we just tightened our belts. We didn't waste money on avocados and the latest iPhones. And when interest rates skyrocketed, we tightened our belts more. The youth of today need to learn how to cook. I saw a young woman by the checkout complaining about the cost of ready meals then go and buy cigarettes.

Could a mortgage on a higher interest rate with house prices from forty years ago have be more affordable with salaries then than a lower interest rate mortgage on today's property prices with salaries now?

... We just tightened our belts...

And it really is a spiral ie those that have money get richer by having passive income streams (letting out btl, investing in S&S. I put £28K into the S&S at start of Oct thanks to inheritance and it has already made me £945 in 6 weeks. It's been higher than this as well but this is todays increase
So half a monthly wage for some folk by doing utterly nothing all because I had the cash to start off with (thanks to parents)

By the same token those who have no spare cash and live month to month pay more for things often. Renting and moving house more. Paying things in instalments and paying interest. Having to borrow to buy a new boiler. Getting worse rates on loans because they are seen as less 'attractive'

The horror of it was in black in white. In Sept when I was a bit skint my bank had it's latest offer for me (you get them automatically) - you can borrow 3K at some astronomical rate. Once I got large sum of money in via inheritance I was suddenly able to borrow 8K at way less interest. I mean it was like 20% when I was poor via 6% when I was 'cash rich'

And of course - parents leaving property is a huge part of how wealth is going down the chain v parents who aren't in a position to do so.

I know a very average joe who did a very average job (didn't go to uni and was not particulary clever or hard working) He was an only child though. So far he has been gifted 4 properties (2 via gifts and 2 via inheritance). Probably around 700K worth of property. No doubt will get another one when dad dies plus any cash he has. All these properties were bought for buttons in the eighties.

Another had a grandfather who was a baker. He was very savy though and ended up with his own company and invested in land in seventies/eighties. Got his own house built with stables etc. This wealth is passing down the generations and accumulating more wealth as time goes by. Another person who ends up fairly rich thanks to property and family wealth.

Working hardly seems worth it any more.

Completely agree with this

@Zilla1 I’ve read your post 3 times and still can’t tell if you’re being sarcastic 😆

Great joke post, well done for including all the stereotypes.

In the 80's mortgages went up to 18% interest so loads of people had to find random second jobs to keep up the payments but loads of people had their houses repossessed

At least jobs were easier available back then but it was an awful time for families

It’s such a disgusting system, isn’t it. Every time I hear someone boast about having properties that they rent out for a good profit, my opinion changes of that person. Never mind when they then go on to make arguments based on “how businesses work”. No one should be making profit from a basic human right like shelter. (Yes, that goes for large corporations too.)

The level of mortgage compared to salary was generally much lower though.

Agreed.

I got a load of flack off a poster for asking questions about an employment issue. I asked her if she'd benefited from any improvement to employee rights since she'd started working, and she replied that she didn't have an employer, she earned her own money from her property portfolio...

Ugh I bet she felt so smug about it too. Honestly, the worst type of person. I feel like I come across so many of them nowadays. I can’t work out if it’s because of the age that I’m at (early 30s, so the age people are generally starting to buy property these days), or if it’s a part of a cultural shift.

But the proportion that mortgage repayments vs wage was much lower back then.
So yes it was harder.
Im not sure it was harder than now when people have £1500+ mortgage payment to make each month.

That sort of thread always amazes me. Esp the answers along the lines of ‘it has always been like this.

Not when you then compare it to threads where a 30yo OP was hoping fir financial support from wealthy parents (eg to buy) and they’re told they’re just grabby and they need to do like everyone else - work hard and save.

Timing wise, I’m expecting that my parents will be both deceased in about 10 years time. My own dcs will be early 30s. My plan is already to pass at least some of that down to them so they buy a house. I’m only too aware of the difference it will make to them to have a house and ‘only’ a mortgage to pay rather renting.
So yes inequalities are going to increase again. And generational wealth will make a huge difference. (See also pension fir that matter)

My own parents bought a second home for the purpose of work, because they lived in a place without reliable broadband. The second house was about an hour from the first. They split their time between the two every week.

My mum in particular was FURIOUS at the idea that she was occupying local housing stock on a whim. They NEEDED this house. Except there were several options for co-working spaces much closer to home than the whole house they bought...

They sold it due to increased council tax on second property, much to their chagrin.

My dad spent four years in a nursing home which cost roughly £92,000 a year. My step mum also needed care although her costs were lower.
They weren’t in a financial position to be giving us large lump sums for house deposits, they had some savings plus the house they lived in.
Im glad they kept their money so they could pay for decent care when they needed it.

The only reason DH and I aren't struggling like so many is because of inheritance. It does make me feel guilty! But at the same time, I have tried to ringfence a proportion of that inheritance for my own children as it's just so much harder for them now.

My parents though also benefitted from inheritance and they were boomers. My mum's inheritance meant they could buy a nice big house in London which massively increased in price, sold for a huge amount and ultimately benefited my family and their grandchildren.

It's been going on a long time but the standard of living a "normal" inheritance gets you now is very different.

Sorry but I have to disagree with this. I’m working class (dad was a miner) I didn’t go to university as working class girls in the 70’s generally didn’t.
My friends are in a similar situation yet we have all funded for our children;-
driving lessons and first car and sometimes second car.
Supported them through university
Deposits for rental flat then deposits to buy a property.
Funded weddings
Provide copious amounts of childcare

In the meantime we are scrimping and saving pennies where we can.
But actually isn’t this what we should be doing, providing for our own families not expecting other people to fund them via taxes.

Yes, that's exactly the point- well put.

That only works if the parent doesn’t need to go in a care home.

In the 80's mortgages went up to 18% interest so loads of people had to find random second jobs to keep up the payments but loads of people had their houses repossessed

18% of a lower amount can be similar to 5% of a higher amount, that’s percentages…

I think it's the divide between those that inherit a lot and those that don't that is stark. Obviously we have had the very wish always handing down vast sums to children but I think inheritance is becoming an increasigly powerful economical and social force for a lot of families.

The idea that managing wealth and investing well becomes a substitute for hard work ambition and aspiration is concerning.
My personal with is that we have increasing cohorts of children perhaps no not trying at school and university as there is an expectation of family wealth supporting them even if they have career stumbles. I suppose opposing this is the fact university, early house buying,, internships etc. Is going to be so much easier with those with family wealth.

@Nespressso my mum is exactly like this and it baffles me! Grew up very poor and is now worth a couple of million across four properties, huge savings, two pensions etc. she’s retired and spends every day at the gym/ lunch. We have done well by ourselves but I find it insane that she would rather pay hundreds of thousands in inheritance tax than give it to her children/grandchildren. She also has no interest in helping with our kids even sporadically which again I cannot understand. We already save huge amounts and plan to help with childcare/nursery fees if we can when ours are our age

The question is are you screwed without inheritance! Is this going to become a new form of poverty, the non wealthy parent to inherit from?

I see people at work in their 30s with houses they could not afford based on their incomes and it seems quite normal. I think you probably have many people in their 50s (like myself) with inheritances from parents who now setting up their own children in life.

Whether you're screwed or not depends where you live really. It's affordable still to buy where I am if you're able to live with parents for a bit and save up a deposit. If you're in the south east it will be far harder.

@Nespressso thank you.

@DieStrassensindimmernass The conversation was 100% genuine. I was pleased it wasn't with either of my beloved parents, rather another family member of the same generation.

I edited out more of the criticism of the younger generation wasting their money as seen in a supermarket queue for ready meals, drinks, cigarettes from the kiosk and a new iPhone.

It was interesting that there appeared to be a cognitive clash as I suspect they knew the point about salaries and house prices was correct. There was a long pause before they dismissed it and repeated the point about belt-tightening.