News

Legacy income falls not as drastic as predicted

Fundraising | Celina Ribeiro | 16 Dec 2009

The legacy market is unlikely to fall as drastically as economists first predicted, according to the latest report.

In the spring Legacy Foresight predicted that the value of legacies could fall by as much as 12 per cent from its height in the third quarter of 2007, but the group has been forced to revise its prediction down to a 5 per cent drop.

Meg Abdy, director of Legacy Foresight, told Civil Society that the revision is the result of economists becoming more optimistic about the trajectory of the recession. “The general consensus is that the economy is picking up more than had been predicted, although it’s still going to be quite a slow and painstaking recovery, even though the recession hasn’t been quite as deep as it was thought six months ago.”

However, she warned that the near future is not all bright for legacies.

The Legacy Market Monitor released this week by Legacy Foresight reported a combined legacy income of £864m for the year ending September 2009 for its 38 consortium members, just 1.2 per cent below the previous year.

The report authors warn, however, that this “better-than-feared performance” is due to a bounce back in share and house prices, and predict that prices of both are likely to fall again next year. On the back of this bounce, residual bequests, which account for 85 per cent of the total legacy income earned, came in at an average of £53,000 – just slightly under highs recorded in the first quarter of 2008.

“It’s too early to say that it’s all over and just going to be rosy from now on," she said. "It’s likely next year that house prices and share prices will fall back a bit. So this could be a quite a short-term uplift, and then it will fall back a bit, but it won’t be as bad as we originally predicted.”