The influence of generational support on housing pathways: Evidence from the British Household Panel Study (BHPS)

The family home is the single most valuable asset for most individuals and households. In addition, people have strong emotional attachments to their family home, when it is passed down generations. In recent years this idealised housing pathway has become more and more complex. Young people are increasingly depending on their parents, both financially (deposit) and in-kind (guarantor, living rent free at parental home), to acquire their first home. Qualitative evidence shows that middle aged children support their less well-off parents to purchase their own flats via the right-to-buy scheme. This paper contributes to this debate by investigating the influence of bequests and in-kind generational transfers on homeownership.
Based on the British Household Panel Study (BHPS) we investigate how housing pathways are influenced by receiving an inheritance and in-kind support by offering rent-free accommodation. Estimates suggest that inheritance seems irrelevant compared to other socio-demographic control variables. Based on the results the timing of such windfalls seems to be crucial. Most individuals receive an inheritance at the end of their work-life and often share the amount of the windfall with their siblings. Hence, at this stage in life few people move into their family home as owners or use the windfall to purchase their own home. However, rent free accommodation seems to have an effect on housing pathways. Young people who are living with their parents are benefiting from this in-kind support and are able to purchase their first home earlier than independent mortgagers who are saving up for a deposit while renting. These results are discussed in the wider context of housing policy, welfare and generational support.