Half of the value of the £17bn of financial gifts handed over in the UK each year are used to buy homes, and drive inequalities among the young, says the Institute for Fiscal Studies.
On average, gifts for property purchase, or home improvements, total over £20,000, and are given by parents aged over 50 to children in their late 20s and early 30s, says a report published today by the think tank.
Around 30% of young adults receive at least one substantial transfer, of £500 or more, over this eight-year period.
But the survey says that the size of these gifts help perpetuate “inequality among the younger generation”.
It adds: “The children of university-educated homeowning parents receive around six times more in wealth transfers during their 20s and early 30s than the children of renters.
“White young adults are three times more likely to receive a substantial gift than Pakistani or Bangladeshi young adults.”
It points out that the children of wealthier, homeowning parents tend to have higher incomes themselves, while benefitting from bigger gifts from their parents.
Over half of the value of transfers are from the wealthiest fifth of older adults, who are almost exclusively homeowners and disproportionately live in London and the South East, the survey says.
It finds that 46% of the children of university-educated homeowners receive a substantial gift in early adulthood, while 18% of the children of renters can expect the same.
Moving away from strictly housing gifts, the amounts received by the highest-income fifth of young people are 26 times bigger than those received by the lowest fifth.
The report says that the highest-income fifth of these children receive an average of £6,300, or 3% of their income over the same period, while the lowest fifth receive an average of £240, or 0.5% of their income over an eight-year span between their late 20s and early 30s.
The study’s co-author Bee Boileau says: “Substantial intergenerational transfers happen when people – particularly those with richer parents – are in early adulthood and are buying their first home or getting married.
“While these transfers are important assistance for some, they are very unequally spread.
“As well as the benefits these transfers can provide, policymakers should therefore keep in mind these transfers’ potential to pass on inequalities from one generation to the next.”
The IFS study, ‘Who gives wealth transfers to whom and when? Patterns in the giving and receiving of lifetime gifts and loans’, was written by research economist Bee Boileau and senior research economist David Sturrock.