Grandparents gift £1m of property wealth a day during stamp duty holiday
The ‘bank of Gran and Grandad’ has given £323.9m for house deposits using equity release since the stamp duty holiday started in July 2020.
Chancellor Rishi Sunak announced the tax break last summer to help homebuyers financially hit because of the Covid pandemic.
The temporary rule change means buyers do not have to pay any tax on the first £500,000 of a property price.
Data from adviser firm Key shows the pay-outs for house deposits peaked in September last year at £40.6m and hit a low of £13.16m in February this year in the run-up to the original tax break deadline of 31 March. The deadline has been extended to the end of June.
Key said the average amount gifted was £51,595.
Will Hale, chief executive of Key, said: “With the stamp duty holiday giving people an unprecedented opportunity to climb onto the property ladder, the bank of Gran and Grandad has stepped up to help finance it. This type of inter-generational generosity is more common than you think and even before this change, one in five equity release customers were using their housing equity to support younger family members.
“While the stamp duty holiday has undoubtedly stimulated some additional demand, we anticipate that older people will continue to want to provide this type of ‘living inheritance’ for years to come.
“However, it is important that people’s generosity doesn’t leave them financially exposed.”
Equity release mortgages enable older people to free up some of the value in their properties. The loan is repaid when the property is sold when they die or go into care.