Housing market drives legacy income to record £4bn, experts report

20 Nov 2023 News

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Charities in the UK are likely to have received more than £4bn through legacy income for the first time last year, driven by a buoyant housing market, according to new research.

Legacy Foresight’s latest annual market briefing estimates that money donated in wills reached £4bn in 2022-23, with almost 140,000 bequests made, marking an annual income growth of 6.5%.

However, it predicts that the increase will be short-lived due to the housing market falling, lowering the average value of legacy gifts to charities.

Last year’s estimated increase came despite around £900m pledged to charities being held in probate backlog, it says.

‘Short-lived boost’

Legacy Foresight warns that current economic conditions are likely to negatively impact growth in the coming months. 
Jon Franklin, economist at Legacy Foresight, said: “Recent growth in legacy incomes has been helped by a buoyant housing market that supports the value of legacy gifts.

“However, this is likely to be a short-lived boost, as the housing market has already started to fall, and we expect to see this negatively impact average legacy values over the next year.” 

Falling house prices not only impact average gift values but can also affect the time taken between notification and money being received by charities, due to people delaying house sales and holding out for prices to rise. 

This can create a short-term challenge for charities in terms of cash flow and budgeting.

Over the next four years, it predicts that legacy income will drop by around 5% to just under £3.9bn in 2025-26.  

Kathryn Horsley, director of insight at Legacy Foresight, said: “It’s worth noting that this reduction is fairly small and comes at a time when other forms of fundraised income are under even more pressure due to donors feeling the squeeze of the cost-of-living crisis. 

“Given this, legacy income will remain a resilient source of income during the challenging next few years.” 

Administration issues delay £900m reaching charities 

Despite high numbers of deaths in the year to March 2023, the expected increase in bequest numbers did not follow, Legacy Foresight reported.

This was largely due to the number of cases in probate processing at His Majesty’s Courts and Tribunal Service (HMCTS). 

Legacy Foresight’s research indicates an estimated 70,000 cases, equating to £900m in legacy income, are caught up in the backlog and have not yet been passed to charities.

This is despite HMCTS recruiting more than 100 employees between November 2022 and March this year to help clear the backlog.

With deaths predicted to reach 700,000 per year by 2030 and 800,000 by 2050 due to the ageing baby boomer population, a further challenge will be presented to the probate administration service, it adds.

Longer term growth

Beyond 2026, Legacy Foresight predicts a return to accelerated growth. 

It expects legacy income to reach over £6bn by 2050 due to an expected rise in deaths, along with a return to house price growth from 2025-26. 
Lucinda Frostick, director at Remember a Charity, said: “Particularly in such tough economic times, charitable legacies have never been more valued.

“Fundraisers, finance teams, CEOs and trustees at any charities with established legacy fundraising programmes will no doubt be thankful that their predecessors had the foresight to invest in legacies in years gone by, helping them weather the current storm. 

“We can’t control the economic environment, but what we can influence is the propensity for giving and the way in which we inspire people to leave a gift in their will. Currently, we’re seeing appetite for legacy giving reach record levels.

“In challenging times, it’s all more important that we continue to collaborate within the sector and beyond, building on legacy growth to normalising charitable gifts in wills.” 
Legacy Foresight’s research is based on its annual benchmarking research programme, which gathers data from over 80 charities, accounting for almost 50% of the charity legacy market. 

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