TThe millennial generation, we have long been told, is also generational rent: prevented from buying their own home and growing their wealth with it, because of an unfavorable economy or too much toast to the lawyer, depending on who you ask.
The statistics are now familiar, but nonetheless dismal. Homeownership rates have fallen due to converging price and supply crises. In 2017, 35% of 25 to 34 year olds were owners, compared to 55% in 1997; the problem only got worse over the next five years. In 2022, only 10% of homeowners in England were aged under 35.
City-dwelling millennials, in particular, may seem grimly resigned to their fate as lifelong renters: according to a Zoopla survey, only one in five adults Those under 40 believe they will “definitely” be able to buy their own home in the next decade.
The short economic straw drawn by the millennial generation has been one of its defining traits and the source of conflicting comparisons with baby boomers in particular. The oft-described divide between the two – the “war” between poor and precarious millennials versus rich and clueless baby boomers – has always been a simplification, but it is now collapsing as older generations begin to share their good luck with their children.
But, increasingly, this cultural shortcut we rely on to think and talk about generational inequality is starting to take its toll. The image of millennials as reluctant permanent renters is increasingly being challenged by the intergenerational wealth transfer, still looming but accelerated by the pandemic.
The coronavirus caused greatest loss of life in the UK since the Second World War, but it was not what demographers would call a fair distribution. Of the 208,000 “excess deaths” checked in In the UK, between March 2020 and May 2023, the majority were older people. These deaths are no less tragic or untimely for their advanced age and must be recognized and mourned. But another consequence of this premature loss of human life has escaped the attention of the general public: the increasing amount of inheritance taxes, indicating – to use the language favored by accounting firms – an increase in “wealth transfers” to the decline.
According to Treasury figures, inheritance tax (IHT) reached a record £7.1 billion in the most recent tax year. 2021-22 was also a record year, with £6.1 billion: itself an increase of 14% on the previous period. The Hargreaves Lansdown investment platform concluded in analysis that “spikes in IHT revenues align with increases in deaths from the virus”.
With the pandemic, the transfer of wealth from one generation to the next has suddenly and unexpectedly accelerated, and many members of the annuity generation have found themselves the beneficiaries of a windfall they might not otherwise have thought – for decades, if ever.
As might be expected, inheritance tax only affects the wealthiest Britons, with the vast majority of estates processed being worth less than £1 million. But properties of lesser value are also the subject of exchanges between generations; many wealthy families also commit to “giving while living” to minimize taxes. A recently published study in the Economic Journal revealed that £11 billion of bequests are made each year in these types of private transfers, on top of a further £99 billion given in wills. Furthermore, the Institute of Fiscal Studies find that parents give or lend around £17 billion to their adult children each year.
For millennial solidarity, this is just a fly in the ointment of avocado toast. For the better part of a decade, we have been characterized (and have characterized ourselves) as struggling and structurally disadvantaged. For many, of course, this remains the case. But the uneven distribution of the changes brought about by Covid means that many people in their 20s and 30s, who might have rightly said in 2019 that they had no hope of ever getting onto the career ladder property, have since seen their fortunes change in unexpected ways.
This leaves us wondering how to talk about generational inequality and how to act when it no longer applies to us. Increasingly, in this “asset economy,” family wealth, inheritance, and social class are recognized as being more weighty against you than the year you were born.
As recognized by the Pew Research Center recent changes In his research on generations and groups, labels such as millennials, zoomers, and baby boomers are often cynically invoked to inflame tensions, emphasizing minor points of difference to deflect attention to similarities or nuances.
Respond to findings of “giving while living”, Professor James Sefton, of Imperial College Business School, suggested that the fact that older generations are “passing on what they can” was evidence that the divide between baby boomers and millennials was overrated, even unnecessary. Again, your agreement undoubtedly depends on your parents living and giving.
THE An ongoing “transfer of wealth” creates a sharpening divide between us, calling into question the way we’ve always conceived of ourselves as a group. Increasingly, we millennials will be faced with a choice. Will those who find themselves hoisted onto the property ladder continue to act in the interests of these lifelong tenants, to whom they had always believed they belonged? Or will they act to protect their new assets?
The potential for impact is significant as millennials gain institutional and structural power. We are already 26% of the UK adult population, and constitute the largest cohort in 51% of constituencies. A analysis from the center-right think tank Onward gives reasons for optimism. He says millennials are “the first generation not to become right-wing as they get older,” with housing and taxes identified as particularly important. The question is whether this trend will persist despite the continued transfer of wealth.
Keir Milburn, author of Generation Left and co-director of Abundance, believes this will be the case, partly because young people are aware, unlike all previous generations, of the random nature of fortune.
He says millennials who inherit property are less likely to believe it is “deserved or legitimate in any way.” (In contrast, a recent survey by King’s College London found that half of the British population believe that young adults cannot afford to buy a home due to their standard of living. frivolous spending on Netflix and takeoutas if this would make a significant dent in a repository.)
While older people benefited from asset price inflation throughout the 1990s and early 2000s, offsetting wage stagnation, younger people – whose expectations of homeownership have been significantly reduced – know that housing and wealth have little to do with hard work and reasonable money. management or moral fiber.
This kind of structural view of inequality and societal outcomes is “the kind of thing that takes you to the left,” Milburn says. Younger people generally understand that “individual outcomes have structural causes” and that economic disadvantages are rarely overcome by willpower alone. The Onward report corroborates this, finding that millennials believe “that a person’s position in society is due to external factors” and that equality should take priority over economic growth.
Only time will tell if millennials will remain as fair-minded to the detriment of their own pockets — but accessing boomer wealth doesn’t necessarily mean entering politics. You might think that millennials are unlikely to forget their rental years and feel excluded from homeownership, even if they unexpectedly find themselves on the other side of the fence.
In the meantime, we should try to eliminate superficial divisions between generations and seek solidarity more meaningful than that of our year of birth.
