How clients can get into intergenerational property investment

Young people today can struggle to build up wealth in the same way that their parents did.

Not only do they face a huge challenge in terms of indebtedness – with the majority taking on enormous amounts to pay for student loans and mortgages – but they also face a challenging job market and stagnating incomes. 

Older family members are eager to pass on as much wealth as possible to young relatives. However, the number of options available to them can make this daunting.

While there are many excellent vehicles for intergenerational wealth management, it is hard to beat well thought out investment in the residential property market.

While the market has slowed somewhat in recent months, the long-term outlook remains strong due to an imbalance between supply and demand across the country.

Not only can property be passed from family member to family member with relative ease, it is also a tangible asset that can provide an excellent income in both the short and long-term through rental yields and capital growth.

However, as with any investment, a client needs to make a well considered and rational decision before putting their money into bricks and mortar.

The case for property

Not only does property allow people to pass on their wealth directly to their children or grandchildren, but it can also be used as somewhere to live, somewhere to holiday, or as a rental property. 

Investors in residential property benefit from the appreciation of these assets over their lifetimes.

While the market has slowed somewhat in recent months, the long-term outlook remains strong due to an imbalance between supply and demand across the country.

According to research from Prime Economics, house prices in the UK have increased by over 400 per cent since 1993, which has provided long-term investors with fantastic returns on their investments.

On top of this, investment in residential property also provides strong yields in the form of rent, which makes it an even more attractive proposition when added to the underlying capital appreciation.

Another reason why residential investment makes sense to families is that younger family members can often live in the properties, which can help them to overcome high rental and property prices.

While this approach means that families can’t fully realise a property’s rental value, it can make sense if their decided approach is to focus immediately on the needs of younger family members.