This is Home Front with Vicky Spratt, a subscriber-only newsletter from i. If you’d like to get this direct to your inbox, every single week, you can sign up here.
Good afternoon and welcome to this week’s Home Front. Are millennials about to be “stinking rich”? I think not and below you’ll find my reasons why.
Since last week’s Budget, much attention has been given to how pensioners – mostly members of the Baby Boomer generation – will not benefit from Chancellor Jeremy Hunt’s decision to cut national insurance while freezing tax thresholds for the next six years.
But is anyone with any power in Westminster worrying about the economic fortunes of young adults? To support a cohort who find themselves paying for historically high house prices, and childcare costs with wages that have, broadly, been stagnant since the 2008 global financial crisis?
If the Budget – which included no meaningful housing policies to help renters or would-be first-time buyers – is anything to go by, the answer is not really.
Perhaps that’s because they read the write-ups of a report by the global estate agency Knight Frank which claims that people born between 1981 and 2000 are going to receive a “seismic” windfall over the next 20 years because their parents will die and pass their property assets on.
This generational transfer of wealth will, Knight Frank say, see £71trn worth of assets move from older generations to younger adults making “affluent millennials the richest generation in history”.
The crucial line here is “affluent” – not all millennials have rich parents who own homes and not all millennials will be able to enjoy the assets they do inherit.
This is because the average millennial will have to use any inheritance they do receive to pay for expensive childcare, buy a home if they don’t already own one or pay historically high rent and mortgage payments.
The mortgages market in Britain is currently volatile and it’s unlikely that rates will return to the lows seen after 2008 any time soon, if they ever do again. So, young adults who do buy homes will also be paying far more interest than older generations did throughout the 2000s when they were able to benefit from the ultra-low interest rates imposed by the Bank of England as well as rapidly rising house prices.
Today’s higher interest rates will mean that the savings and pensions of young people are worth more, but the mortgage debt burden is not to be underestimated.
Remember, also, that young adults are taking out enormous mortgages for longer terms than ever before and may well be repaying them into retirement. Even with inheritance, they may not be able to clear all their debt.
Members of the millennial generation as well as Gen Zs may also have student debt that they want to repay and, in years to come, find themselves needing cash for private health insurance for procedures because NHS waiting times are so long.
All that is assuming the money tied up in their parents’ assets is not required to pay for any residential or at-home care. Anyone with more than £23, 250 in capital must pay full price for adult social care which ranges between £4, 640 and £5, 640 per month in Britain.
And, even if your parents don’t need care, you will have to pay inheritance tax on any assets you do inherit which is charged at 40 per cent on estates worth more than £325,000.
Knight Frank’s report was reported widely and uncritically. More’s the pity. It’s unhelpful to distract from the very serious economic difficulty that young adults face today because they pose very real problems for our society.
These problems are underrated and have been ignored for too long. Last week’s Budget suggested that some members of the Government’s Treasury team know we’re in trouble and want to at least appear to be trying to lessen the financial burden borne by young adults.
Cutting national insurance was an attempt to throw something to young working people, raising the child benefit threshold to £60,000 was also a nod to the issue.
But none of that will go far enough. This is presumably why former Cabinet minister and Tory peer David Willetts has suggested that the Government should give all 30-year-olds a “citizen’s inheritance” of £10,000. This won’t do much for millennials, though, who are mostly older than that. And, while it might give young people’s savings a boost, it’s a drop in the ocean in comparison to the average student debt which is now £45,000 or the average deposit required to buy a home which is £34,500, according to the property listings site Zoopla.
It’s now been over ten years since Willetts wrote his book The Pinch which looked at “how the baby boomers took their children’s future and why they should give it back”. Since then, the trends he identified – the tax burden, the housing crisis, the asset price boom that benefited today’s pensioners – have all only become starker.
For their part, Labour doesn’t currently have many more ideas about how to fix this intergenerational inequality. If they take power at the next election, it’s something they won’t be able to avoid. This can only be kicked down the road for so long.
Key Housing
Next, I’d like to draw your attention to a campaign which has been started by Jane Williams, the CEO and founder of an organisation called The Magpie Project, which supports homeless families with children who are living in temporary accommodation.
The campaign is simple: Jane is calling on the Housing Secretary Michael Gove to provide all families living in temporary accommodation with food vouchers, community kitchens and – where possible – rings, hobs or microwaves in their rooms.
There are more than one million households in England alone on local authority social housing waiting lists and more than 100,000 households stuck in temporary accommodation.
Many of these people will not have access to adequate kitchen facilities – like the family I recently visited who are living in one room in a Travelodge with nowhere to prepare food. This is not only bad for their health, as they told me during my visit, it’s expensive because it means they are forced to buy takeaways or eat out if they want a hot meal.
Ask me anything
Thank you to everyone who has submitted a question. Please keep them coming there @Victoria_Spratt, on X, formerly Twitter, @vicky.spratt on Instagram or via email [email protected].
This week’s question comes from a reader via Instagram:
“We live in a house share and just found out that our landlord doesn’t have an HMO licence, what can we do?”
Ok, first things first. For anyone who is unfamiliar with the term HMO – it is shorthand for House in Multiple Occupancy.
Your landlord must get an HMO licence from the council if:
- you share your home with 4 or more other people that you are not related to
- there are 2 or more separate households living in your home
In some areas, landlords of smaller HMOs must also get a licence. This is called additional licensing. And, in other areas, all private landlords must get a licence. This is called selective licensing.
If any of these conditions apply and your landlord does not have an HMO licence you can report them to your local council. It also means that they may not be able to evict you and could be banned from renting our homes in the future.
Your landlord can get a fine and could be forced to repay up to 12 months’ rent to you. This is known as a Rent Repayment Order.
There is more information about all of the above and, in particular, how to get a RRO on Shelter’s website.
Vicky’s pick
And now, for something different. I finally watched Sophia Coppola’s Priscilla over the weekend.
I love Coppola’s films, she never imposes herself on the story but, like a good journalist, she’s an incredibly empathetic witness who takes you into someone else’s world.
This time, that’s Priscilla Presley’s world. The film is based on her autobiography Elvis & Me. And, though the film doesn’t quite go as far as to present Priscilla as an underage victim of grooming, it goes just far enough to cast the relationship between a teenager and a rock star in a new and nuanced light.
This is Home Front with Vicky Spratt, a subscriber-only newsletter from i. If you’d like to get this direct to your inbox, every single week, you can sign up here.