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OLDER HOMEOWNERS HAVE GIFTED OVER HALF A BILLION TO FAMILY AND FRIENDS IN 2020

04 December 2020

In the first three quarters of 2020, older homeowners used their property wealth to gift over half a billion (£530 million) or around £59 million per month to family and friends, new analysis from Key, the UK’s leading equity release adviser, shows.  Help with housing deposits and early inheritances were the main consistent drivers behind this generosity.
 
Over-55s were most generous in Q3 when they gifted £221 million to younger members of their families with £100m being pumped into the housing market – potentially due to the temporary Stamp Duty cut to zero for all purchases up to £500,000 which lasts until March 31st next year.  Over 2020, the total amount used for housing deposits was £230m.
 
Average gifts to families are as high as £133,000 from older homeowners in London while people in the East Midlands and Wales are the most likely to be helping out with house deposits (see table below).

  Q1 Q2 Q3
Proportion of Amount Released Gifting 21% 21% 25%
Total Amount Gifted (Millions) £199m £110m £221m
       
Proportion used for House Deposit 44% 38% 45%
Total Amount Gifted for House Deposit (Millions) £88m £42m £100m
Proportion used for early inheritance 24% 25% 26%
Total Amount Gifted for early inheritance (Millions) £48m £28m £58m
 
Will Hale, CEO at Key, said: “Helping out family and friends has always been a major motivator for older homeowners using equity release but it is striking to see that more than half a billion has been gifted thus far in 2020.  Of this, £230m has been used for house deposits and £134m as an early inheritance potentially helping families to meet other needs including home renovations.
 
“Our data suggests that while customers have focused on using their property wealth to shore up their own finances by repaying debt or boosting their income, they are still looking to support their families rather than spending money on themselves for holidays or even on home and garden improvements. 
 
“The temporary Stamp Duty cut is an opportunity to ensure that financial help goes further and is likely to mean demand for equity release remains strong as more people want to provide help to family members to get them on, or moving up, the property ladder.  Retired homeowners however remain extremely cautious about their finances – and rightly so, particularly due to the current uncertainty. People need to put significant thought into how their financial position may change through later life, including consideration of care needs and other expenses, and therefore whether they can afford to make generous gifts. How and when to access housing equity is an important decision and specialist advice is key.”
 
Regional Overview:
Key's unique data shows money for house deposits is the most popular reason for gifting reported by equity release customers when taking out plans.  Older homeowners in the East Midlands and Wales are the most likely to give money for house deposits while those in the South East gave the most collectively at £183.929 million.
 
In Q3 2020 older homeowners in London gave the biggest gifts at £133,561 driven by higher house prices followed by the South East on £70,142 and Wales on £49,808.  The table below shows the picture around the country – helping with house deposits was the main reason for gifting in all regions apart from Yorkshire & Humberside where giving an early inheritance was cited as the most popular reason for gifting by 28%.
 
Region Average Gift Q3 2020 Total gifted to September 30th 2020 (million) Proportion of gifting used for house deposits
London £133,561 £133m 48%
South East £70,142 £184m 40%
Wales £49,808 £14m 53%
South West £43,147 £52m 30%
East Anglia £42,442 £27m 45%
East Midlands £40,970 £36m 53%
North East £38,377 £12m 32%
West Midlands £37,111 £29m 49%
Scotland £29,152 £15m 49%
Yorks & Humberside £25,545 £16m 24%
North West £21,283 £19m 32%
 
Anyone looking to release equity from their home can get Key’s independent guide to equity release by calling 0800 531 6027 or visiting https://www.keyadvice.co.uk/equity-release/is-it-right-for-me
 

Page last updated: Monday 25 January 2021