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Housing minister’s inheritance suggestion ‘fundamentally flawed’

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Written by:
10/10/2016
Housing minister Gavin Barwell's suggestion that grandparents should skip a generation when passing on their inheritance to support grandchildren with homeownership has been blasted as “fundamentally flawed”.

Dean Mirfin, technical director at financial planning firm Key Retirement, said relying on inheritance would leave aspiring homeowners “waiting too late” to buy, adding that everyone had a responsibility to look after their own financial future.

Barwell’s comments were made during the Conservative party conference, where he told attendees that his mother was passing on her estate and £750,000 home to his sons.

According to a report in the Telegraph, Barwell said his suggestion would help to ease the housing crisis and combat the intergenerational divide.

But Mirfin challenged whether inheritance was the best solution for this problem, explaining that models like equity release gave older homeowners more control of how they passed on their wealth.

“The problem with inheritance, is that it’s typically too late to buy once you’ve waited for grandparents or parents to die. I think there can be a strategy to support intergenerational lending, but is leaving a property the best way of doing that? Around one in four borrowers that use equity release gift the money that they release to children and/or grandchildren.

“The reason why a lot of people gift through equity release is because firstly you’re in control of how that money is used, but secondly, you are able to gift that money at the most appropriate time, as opposed to it being reliant on your death,” Mirfin added.

“No one, in principle, should be relying on inheritance as being the answer to their own financial security. I’d be very disappointed if my parents were living a life planned around what I would inherit. That’s why a reliance on inheritance is fundamentally flawed because you can’t control when it’s going to happen.”

Nigel Waterson, chairman of the Equity Release Council, added: “All the points Gavin is making are good ones, but they underline the fundamental need for equity release in our society.

“Using equity release, his parents could happily stay in their home and release the cash for their grandchildren now, rather than them rather ghoulishly waiting around for their grandparents to die.”

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