Most families approach the Bank of Mum and Dad the same way: a sum moves toward a deposit, it feels like the right thing to do at the right stage of life, and the conversation stops there. What it rarely prompts is a conversation about what that capital was doing before it moved, what it will no longer be doing afterward, and what the consequences might look like two decades from now. The emotional logic is immediate, however, the financial logic is considerably more complicated.

The transfer is broken

Property wealth in Britain passed between generations almost automatically for forty years. That mechanism is now failing, and the failure runs deeper than affordability. The timing of any transfer has shifted so far that for most families it arrives too late to matter.

Bobby Duffy, in Generations, identifies three forces that shape how different cohorts experience the world: the historical period they live through, the cohort into which they are born, and the lifecycle stage they have reached. All three are working against younger buyers at once. Post-2008 stagnation, suppressed wage growth, and a tightening of mortgage credit compressed earning capacity at precisely the moment when previous generations were accumulating deposits. Those born in the 1980s are on track for lower homeownership rates than any generation since the 1930s.

The inheritance that might eventually correct this imbalance will, for most families, arrive too late to do so. Increased longevity is welcome for obvious reasons, and it also means the transfer will not reach the young until well after the decade in which it would have mattered most. A bequest received at sixty does not fund a first home. So families that can are pulling the transfer forward. In 2022–23, roughly one in three recent first-time buyers used gifts from family or friends to fund their purchase.

Gifting has become the implicit workaround for a broken inheritance timeline. It is being made, in most cases, without a plan.

Normal friction, abnormal gap

Before examining what that plan should contain, it is worth pausing on the generational framing that tends to surround these conversations, because it can distort the financial one.

The difficulties facing younger buyers are structural and measurable. House price-to-earnings ratios bear no resemblance to those faced by first-time buyers in the 1980s or 1990s. Student debt has become a near-universal starting condition for graduates, suppressing savings capacity through the early working years. The labour market is contracting in ways that affect graduate entry points, career timelines, and the income certainty on which mortgage lenders rely. These are not character failings. They are the compound effect of period, cohort, and lifecycle forces arriving simultaneously.

The cultural narrative that follows, that something has fractured between generations in a way that is unprecedented or uniquely hostile, is harder to sustain under scrutiny. Duffy makes the point plainly:

“There’s this sense that we’ve got more division between young and old today, bigger gaps than ever — but it’s just not true. What we’re actually seeing is the natural progression that generational thinkers talk about. You need young people coming through who aren’t set in their ways, who’ve got new ideas. If you didn’t have that, you probably aren’t changing enough as a society.” – Bobby Duffy (The Rest is Politics interview & Generations)

Social friction between generations has always been the price of a society that is actually moving. The 1960s looked like rupture from the outside. It was, in retrospect, simply energy: a generation arriving with different assumptions and the confidence to act on them.

The same energy is present now. Generation Z (age 14 – 29) is the best-educated in modern history. They are asking more precise questions about money, work, and security than their predecessors did at the same age, partly because the stakes are higher, and partly because they have the analytical tools to understand why. They are not paralysed, rather they are well-equipped for a landscape that is genuinely harder to navigate.

The distinction that matters is between social friction, which has always existed, and financial divergence, which is genuinely new in its scale. Parents and children are not more opposed in their values than previous generations were. They are operating from different maps of how the economy works. The parent who bought a first home at twenty-eight for three times their salary is not being wilfully obtuse when they struggle to understand why their child cannot do the same. They are applying a map that was accurate for their age group at that time. That map has since become useless, and the financial planning response to that divergence begins with stress-testing the capital before it moves.

The pool is smaller than it looks

Gifts made today are drawing on wealth that probably has a prior claim against it, and many families have not priced that claim in.

Care costs in later life have the capacity to consume a material portion of the property wealth that parents intend to pass on. The Resolution Foundation states that one in seven adults will incur lifetime care costs exceeding £100,000. That is not a tail risk, it’s a very real planning scenario. For a couple, the probability that at least one partner crosses that threshold is substantially higher than one in seven. A gift made against an assumed inheritance that has not been stress-tested against care costs is a gift made against an asset that may not exist.

The families best placed to give are, paradoxically, the most exposed to this miscalculation. Not because they lack the means, but because the emotional logic of generosity tends to crowd out the financial one. The desire to help is immediate. The care liability is abstract, distant, and easy to defer. That asymmetry is where the planning gap opens.

Supporting your children with life’s big purchases is entirely reasonable. The question is whether you have modelled what supporting yourself will cost first.

Three questions worth asking

Three questions frame the conversation a financial planner should be helping families have:

• What does the realistic range of care costs look like across the next two or three decades, and how does that affect what can prudently be transferred now?
• Where does any proposed gift sit within your current inheritance tax position, and is the timing structured in a way that reflects it?
• And if your children cannot buy, or choose not to, what does a sound long-term financial plan look like for them, and how does your own estate planning need to account for that reality?

None of these questions has a universal answer. Each depends on circumstances that only a detailed, personalised conversation can address. What they share is that they require the whole balance sheet: not just the generosity you want to extend, but the liabilities you have not yet priced in.

The Bank of Mum and Dad has always been open. The question is whether anyone has checked the reserves.

Sources

Duffy, B. (2021). Generations: Does When You’re Born Shape Who You Are? Atlantic Books.

Acharya, I. and Broome, M. (2024). Housing Hurdles: The Changing Housing Circumstances of Young People in Britain. Resolution Foundation. resolutionfoundation.org/publications/housing-hurdles

Broome, M. et al. (2023). An Intergenerational Audit for the UK. Resolution Foundation. resolutionfoundation.org/publications/an-intergenerational-audit-for-the-uk-2023

Resolution Foundation (2024). An Intergenerational Audit for the UK: 2024. resolutionfoundation.org/publications/intergenerational-audit-2024

Resolution Foundation (2022). Intergenerational Rapport Fair? Intergenerational Wealth Transfers and the Effect on UK Families. resolutionfoundation.org/app/uploads/2022/02/Intergenerational-rapport-fair.pdf

Brewer, M. (2025). The UK’s Generational Wealth Gap. Gresham College. gresham.ac.uk/watch-now/wealth-gap

Resolution Foundation (2018). A New Generational Contract: The Final Report of the Intergenerational Commission. resolutionfoundation.org/advanced/a-new-generational-contract

Campbell, A. and Spratt, V. (2025). Divided or Dependent: The Real Gen Z Story. The Rest is Politics. therestispolitics.com

Davis, E. (2025). ‘Was the baby boom generation really the luckiest in history?’ BBC News. bbc.co.uk/news/articles/cj6pyk7e3w4o

The ideas in this article are intended to inform, not to advise. Everyone’s financial position is different, and the questions raised here deserve answers that are specific to you. If you’d like to talk them through with a qualified adviser, please do get in touch. We welcome your thoughts and concerns.