An Increasing Number of UK Homes to be Passed On for Free This Year
An ever-growing number of UK homes are set to be passed on for free this year as homeowners seek to escape rising taxes by passing on assets to family members. According to freedom of information requests by broker Hamptons, over 220,000 homes are on course to change hands – either fully or in part – for no cash in 2024, up about 45% from last year.
In London, more than a quarter of homes will go for nothing. About 4 out of 10 gifted transactions in 2024 are set to involve entire properties, typically involving a parent and child. The remainder involve a share of the property in a deal often completed within generations, such as a homeowner gifting a share of their property to a non-homeowning partner.
Rising transaction costs, particularly the higher rate of stamp duty for those who own more than one property, mean ownership is increasingly being spread across the wider family. Gifts can be made tax-free as long as the person passing on the assets lives for at least another seven years, making it a popular hedge against inheritance tax.
The so-called Bank of Mom and Dad is a growing source of finance for UK adults seeking to get on the UK’s expensive housing ladder. The total value of financial gifts reached £29 billion in 2018-2020, more than double the level a decade earlier, due to a rise in both the size and numbers of gifts.
The data also underscores the scale of the housing crisis confronting the new Labour government after years of rampant home price inflation and a cost-of-living crisis stretched affordability.