Leave your money to the grandkids, says Minister
Parents should skip a generation and help their grandchildren get on the property ladder, the housing minister has said.
Gavin Barwell said that his own mother plans to leave her estate, which includes a £750,000 home, to her five grandchildren.
Mr Barwell suggested that others should do the same, as skipping a generation would combat ‘inter-generational unfairness’.
He made his comments at a fringe meeting at the Conservative Party Conference last week, the Daily Telegraph reported.
Mr Barwell’s comments come as new research by retirement income specialist, Age Partnership, reveals that over-55s in England have more wealth locked away in their homes than the entire annual GDP (gross domestic product) of Italy.
Homeowners in England in this age bracket currently own £1.5 trillion worth of property – £0.1 trillion more than Italy’s annual GDP, £0.3 trillion more than Brazil’s, and £0.6 trillion above Spain.
Simon Chalk, equity release expert at Age Partnership, comments: “A small fortune is locked away in the houses owned by the older generation in England.
“Over the next 20 years housing wealth will become increasingly important, as the baby-boomers generation reach retirement en masse. We are forecasting that with only modest growth to property values, £2.9 trillion will be held in property wealth in England in two decades time – these sorts of figures just can’t be ignored.
“Pensions will continue to cause a headache as the population ages. Adding property wealth to the mix could help alleviate that pressure,” he adds.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.
The total money value of all the finished goods and services produced in an economy in one year. It includes all consumer and government consumption, government spending and borrowing, investments and exports (minus imports) and is taken as a guide to a nation’s economic health and financial well being. However, some economists feel GDP is inaccurate because it fails to measure the changes in a nation's standard of living, unpaid labour, savings and inflationary price changes (such as housing booms and stockmarket increases).
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
A term to describe financial products or ‘plans’ that help older homeowners turn some of the value (equity) of their homes into cash – a lump sum, regular extra income, or sometimes both – and still live in the home. There are two main types of equity release: lifetime mortgages and home reversion plans (see separate entries for both). Whichever type you choose, you borrow money against the value of your property, on which interest is charged, and the loan is repaid when the house is sold after your death.