Every year in England and Wales, 1 million to 1.2 million homes are sold to buyers paying with either a mortgage or cash. But no money changes hands in another 130,000 transactions because these properties have been passed down or gifted to family members. This figure is equivalent to around 13% of the sales which took place across England & Wales.
Our research, based on a Freedom of Information (FOI) request, shows that, in each of the five years to 2019, 8%-25% of the homes that passed into new ownership had been gifted to children, grandchildren, or other beneficiaries.
Most such transfers between those who have amassed property wealth and those who may be struggling to afford homeownership tend to be made when the property market is slow.
The pace of these transactions has been accelerated by higher rates of capital gains tax (CGT) on the sale of second homes, which can make it more attractive to pass on a property to a family member rather than putting the home on the market. Under the inheritance tax rules, such transfers are tax-free so long as you survive seven years beyond bequeathing the gift.
In 2023, there were as many as 152,000 such transactions, and in 2024, this is estimated to have risen to as many as 220,000.
"In each of the five years to 2019, 8%-25% of the homes that passed into new ownership had been gifted to children, grandchildren, or other beneficiaries."
This gifting takes two forms. In 2024, about 61% of transactions involved passing a share in a primary residence to another individual, a spouse or a partner. In the other 39% of transfers, an entire property is handed over, usually to a child.
This total seems set to increase following a series of changes to inheritance tax (IHT) in the Autumn Budget, under which the nil-rate threshold and the residence nil-rate band remain frozen until April 2030. Unused pension funds are set to be brought within an individual estate for IHT purposes, and agricultural and business property reliefs are set to be reformed.
These measures, which aim to boost the sum raised for the Exchequer by IHT, could be followed by further changes to improve the tax take. Concerns that the rate of CGT on the disposal of second homes could be increased remain.
Furthermore, there are precious few signs that younger generations will need less help to buy any time soon, meaning older generations with the means to do so will continue to support their children well in advance of a potential inheritance.