Wealth must ‘skip’ a generation to help people on to the property ladder

Matthew Wyles of Castle Trust comments:

“We agree with many of the points raised in the report issued today from Shelter and KPMG entitled ‘Building the homes we need – a programme for the 2015 Government.’

There is a crisis in the UK housing market where young people have little or no chance of getting on to the property ladder unless they receive financial support from parents or grandparents. Our research(1) shows that around 772,000 people who plan to become homeowners one day are waiting to receive an inheritance before they can do this.

However, improved life expectancy means many of those relying on a financial windfall will have to wait longer before they can buy. We need to find ways in which it becomes easier for parents and grandparents to release their wealth earlier, and pass more on directly to the younger generations – skipping generations if necessary.”

Castle Trust research highlighting the housing crisis facing the younger generation

  • 4.1 million adults have given up on ever owning their own home
  • 1.8 million of these people are aged 25 – 44
  • Only one in seven adults not currently on the property ladder believes they will buy a home before they are 30
  • Over half of those struggling to get on to the property ladder cited raising a deposit as the key reason (53%). 38% said it was because they don’t earn enough whilst 21% said that they would not be able to keep up with their mortgage repayments

Castle Trust solution to the housing crisis

  • Partnership Mortgage

For those parents or even grandparents who own their home, Castle Trust’s Partnership Mortgage allows them to withdraw equity up to 20% of the value of their homes to generate funds for a range of needs, such as helping loved ones raise a deposit for their home. To help with cashflow, there are no monthly repayment obligations. Instead, the loan is paid at redemption plus a minority share of the increase in the property’s value during the life of the loan.

  • Housas

Castle Trust Housas are national house price index trackers with returns better than, or equal to, UK house prices – as measured by the Halifax House Price Index (“HHPI”), whether house prices rise or fall. There are no charges or fees. They offer a way to save for a deposit for a home and provide some sort of hedge against changes to property prices.