Why family bullying over inheritance has become rife

UK Cost of living is making relatives impatient for their money.

Trillions of pounds are expected to be passed down through families over the next 30 years in a “great wealth transfer”.

However, as households are squeezed by rising prices, increasing numbers of older people are being pestered to hand over money by impatient “entitled” relatives. But this pressure to give up their assets can amount to financial abuse, campaigners warn. “This is not just a growing trend but an epidemic,” said Richard Robinson of Hourglass, a charity that campaigns against the abuse of older people.

This type of financial abuse is distinct from fraud or scams because it is not perpetrated by strangers, but a trusted person in the victim’s life. More than half of perpetrators are an adult child of the victim, according to research by Hourglass, and 81 per cent are a family member.

Older people are being manipulated to hand over cash to family members struggling with the cost of living.

“This is a massively underplayed issue in all walks of society, something we’ve been calling for urgent governmental action on for many years,” Robinson said. The charity supports 75,000 victims a year, up from about 4,000 in 2018.

Vicky Reynal, a money psychotherapist, said a common reason for “inheritance impatience” is a sense of entitlement to the victim’s estate. “The economic climate we live in is creating a lot of tension,” she said. “Handouts from parents are seen as increasingly necessary, and inheritance seems too far down the line to make much of a difference.”

Housing and tax pressures

Many families are seeking early access to inheritances to get on the property ladder. The average house price in the UK has more than tripled from £84,000 in 2000 to £293,000 today, according to the Office for National Statistics.

As a result, 57 per cent of renters believe that buying a home is impossible without family help, Barclays found. Rising tax pressures also drive demands for family handouts. The inheritance tax-free threshold will be frozen at £325,000 until at least 2030, and pension savings will be included in estates from April 2027.

This will mean many more estates facing a 40 per cent tax bill. And the seven-year rule, which exempts from inheritance tax gifts of money, provided the donor lives for seven years after making the gift, adds a sense of urgency. Now family members are pushing to receive sums sooner.

The Institute for Fiscal Studies estimates that almost all of the £17 billion gifted or lent by pensioners each year is given to their adult children. While most of this money is given freely and lovingly, some pensioners may be coerced into giving it away earlier than planned, often through emotional manipulation.

“We’re definitely seeing people with more of a sense of entitlement or ownership of their future inheritance, as opposed to anything they might receive as a boon or a gift,” said Stuart Downey from TWM Solicitors, based in the southeast. Reynal described how she has seen clients struggle to refuse their children’s demands for money.

Some children even use threats such as cutting them off from their grandchildren or no longer visiting if the money is withheld. Many victims fear they will be sent into a care home against their will. Downey said he has seen many clients’ families place their elderly relative in a far cheaper care home than they could afford, to save their inheritance.

This is known as “inheritance preservation”, where family members block pensioners from spending their money in the hope of taking it themselves.

Taking advantage

Callers to the Hourglass helpline have suffered financial losses of more than £53 million in the past three years. But in reality this figure is probably much higher, because only 14 per cent of callers disclosed the amount they had given away.

Robinson said that many older people were reluctant to report how much they had lost. They didn’t consider transferring money to family members as abuse and didn’t recognize that they may have been manipulated.

The attitudes of both victim and perpetrator are a big obstacle to the prevention of this type of abuse. In England 25 per cent of people do not believe that taking items from an older relative’s home without asking is a form of abuse, according to a survey of more than 2,000 people conducted by YouGov for Hourglass.

And 26 per cent of respondents did not believe that using power of attorney over an older relative for personal financial gain was abuse, nor that family members trying to change the wills of older relatives was a form of abuse.

At the same time, many victims do not want to see, or perhaps admit, that a family member may be taking advantage of them. “Most people don’t believe they’re being abused,” Robinson said. “They trust and love those people, who are their family and are there to look after them. They believe that if they call them out as abusers, they’ll lose that support.”

How can people protect themselves?

Reynal said families must learn to speak openly about finances and inheritance, and added that for those passing down an estate, “it’s important to be clear about why you’re doing what you’re doing”.

Family members should also try to empathise with their older relatives. “Step into the shoes of the parents to empathise with the impact of those demands being made,” she said. Older people can create a lasting power of attorney while they have mental capacity.

This gives someone the authority to manage their finances if they become unable to do so. It is recommended to seek professional guidance before making any decisions.

While there are some tools that can be used to help protect finances, such as bank account controls, Robinson said: “People are craving inheritance like there’s no tomorrow, and the safeguards are simply not there.” 

Source: The Times

UK House prices beat forecasts before budget

House prices rose more than expected last month in a further sign of resilient demand despite the possibility of property-related tax reforms in the budget. Average prices rose 0.3 per cent in October after rising by 0.5 per cent in September, mortgage lender Nationwide’s latest house price index showed.

Year-on-year prices were 2.4 per cent higher, up from a 2.2 per cent annual increase in September.

Economists had forecast no change over the month and a 2.3 per cent increase over the year.

Robert Gardner, Nationwide’s chief Martin Strydom economist, said: “Against a backdrop of subdued consumer confidence and signs of weakening in the labor market, this performance indicates resilience, especially since mortgage rates are more than double the level they were before Covid struck and house prices are close to all-time highs.

”The figures come after Bank of England data on Wednesday showed that the number of mortgages approved by lenders in September came in higher than expected. Mortgage approvals totalled65,944 during the month, the highest figure since December and above economists’ forecasts of 64,000.

The data are at odds with other measures of the housing market which have suggested a slowing in price growth in recent months, attributed to caution among homebuyers before the budget on November 26.

A report by the Royal Institution of Chartered Surveyors published in October quoted Timothy Shaw, of Vincent Shaw estate agents in Cambridge as saying that the housing market was in a “state of semi-paralysis”, with agencies reporting another fall in inquiries, sales, new instructions and prices in September.

It said the autumn slowdown, brought on by speculation about potential reforms to property taxes, has “become more firmly entrenched of late” .Rachel Reeves, the chancellor, has said that “higher taxes on the wealthy …will be part of the story” in the budget, with some form of property tax seen as a possibility.

Ashley Webb, UK economist at Capital Economics, said that data suggested that “homebuyers may not be as fazed by the threat of tax rises in the budget on November 26, potentially on property, as it first appeared”.

Elliott Jordan-Doak, a senior UK economist at Pantheon Macroeconomics, said that while house prices had remained subdued, they were likely to continue rising slowly over the coming months.“ Some homebuyers are taking await-and-see approach to the budget, which is weighing slightly on sentiment in the market.

“But the activity indicators holding up better than their survey-based signals suggests to us that demand remains robust,” he said. Nationwide said housing affordability was likely to improve modestly if income growth continues to outpace house price growth. It also expects borrowing costs to ease, bolstering buyer demand.

Goldman Sachs said this week that after a sharp deterioration in economic data, it expected the Bank of England to cut interest rates by a quarter point to3.75 per cent next week.

Source: The Times

How Trump Might Fix A ‘Housing Emergency’ in the US

There are no easy solutions to ease the housing affordability crisis, and some may run counter to President Trump’s other goals. 

The ballooning costs of buying a home have put homeownership out of reach for many Americans for quite some time, and last week the White House weighed in. “We may declare a national housing emergency in the fall,” Treasury Secretary Scott Bessent told the Washington Examiner in a Labor Day interview, but he provided scant detail beyond suggesting that the administration is looking at ways to standardize building codes and trim closing costs.

Some experts are concerned that such an emergency declaration would amount to an empty gesture. Although an affordability crisis is undoubtedly ongoing, there are no simple solutions, and many steps that could address the issue run counter to President Donald Trump’s other goals. “There are no shortcuts to answering this problem, because it took a long time to create,” says Andrew Wells, chief investment officer of investment management firm SanJac Alpha. “Either mortgage rates have to come down, or the cost of things associated with homeownership like insurance have to come down.” Of course, there is no guarantee that any patches are in the works.

Moreover, it “remains unclear exactly what kind of emergency measures the administration could take to address housing, or even if using emergency powers in this way is lawful,” notes Realtor.com senior economist Joel Berner. Assuming a declaration is issued, there are practical limitations on what the White House could do to address long-term affordability issues. Some of the president’s keystone policies, like tariffs and mass deportations, are contributing to housing costs, given increasing prices for things like lumber, steel, and labor. Although most of the market is focused on interest-rate cuts that Trump has demanded, which may come as early as this month, they won’t necessarily bring down mortgage rates.

After the last round of rate cuts in 2024, mortgage rates actually finished the year higher, as they (and long-dated Treasuries) take into account other data, including inflation and economic expectations. Likewise, Wells warns that if the government offers a tax rebate or subsidy, that only goes so far in helping Americans buy an “unaffordable asset, and you’re back to printing checks again,” like the pandemic-era stimulus checks that contributed to inflation and higher housing prices.

The housing bubble and subprime mortgage crisis helped kick off the 2008-09 global financial crisis, so there was a reluctance to build homes in the aftermath. However, some 20 million households have been formed since, and only 18 million homes have been built. There are some actions the president could try to increase supply, but these are likely to be met with resistance.

“Overriding, or at least standardizing, local laws on zoning would be a great step toward allowing builders to deliver the inventory needed,” says Berner. “Streamlining the permitting process and putting fewer restrictions on builders would be a great way to augment home inventory.”

That probably would boost builder stocks. The iShares US Home Construction exchange-traded fund is slightly trailing the S&P 500 index this year, although some builders, like D.R. Horton and PulteGroup, have surged more than 25%. Others, like Lennar and NVR, have lagged behind peers. Buddy Hughes, chairman of the National Association of Homebuilders trade group, also hopes deregulation will be part of any executive action, arguing for a “secure and affordable supply chain of building materials, and enacting policies that address a lack of skilled labor in construction.

A proactive agenda to bring down material, construction, and labor costs will also help.” The problem is that many high demand areas, like the Northeast, are likely to want to keep their local regulations for safety and environmental reasons—and blue states are more likely to challenge changes in court. Still, any well-reasoned action would be better than nothing.

According to the builders’ trade group, 75% of American households can’t afford a median-price new home. That means there could be ample public support to smooth the way for any popular policies that ease this crisis. Yet any lasting solution will necessarily be multipronged and take time to implement. No matter what happens, it seems as if the current house of cards can’t stand much longer 

Source: Barrons