SPECIAL FEATURE: The ‘clipped wing’ generation
With gross mortgage lending reaching its highest point since October last year, you could be forgiven for thinking that all in the UK property market is rosy.
Sure, the impact of MMR is being felt and the interventions announced by the Financial Policy Committee in June is tipping the UK towards a more conservative lending environment, but consumers appear to have more confidence in the economy. The last lot of figures released by the Council of Mortgage Lenders at the beginning of July showed that lending to first-time buyers was up and the number and value of loans to home movers has also increased.
However, as demand increases so property prices rise – particularly in hotspots such as the South East – which also pushes up the cost of renting in these areas as demand outstrips supply.
According to the charity Shelter, this is condemning nearly 2 million young adults aged between 20 and 34 years old to live with their parents as they cannot afford to either rent or buy a home.
As Shelter’s research only focused on young employed adults in England, it’s likely that the nationwide picture is worse. Figures published by the ONS at the beginning of the year revealed that more than three million young adults were living with their parents last year and I wouldn’t be surprised if that number has grown since then.
While we used to talk about ‘empty nest syndrome’ as young adults left their childhood homes, a new phrase has been coined to lump together these young adults who can no longer afford their independence and are returning to the parental home – the ‘clipped wing’ generation.
Arguments continue to rage about government housing policy … whether Help to Buy is really helping first-time buyers, whether more needs to be done to help build new affordable homes, whether we’re on the cusp of another property bubble about to burst.
However, putting those wider market issues to one side, there is another practical issue for parents now finding themselves having to provide a home once again for their adult children. Many parents may well have adjusted their home contents policies so that they were not over-insured once their children flew the coop. If the wings of their adult children have been clipped and they’ve returned to the nest, are those parents now woefully under-insured?
While these young adults may not be able to afford to rent or buy and may well be saving hard in order to do so, it’s likely that they will still have a fair amount of valuable personal possessions. For example, how many 20 year olds do you know that don’t have a smartphone and a tablet and probably a laptop as well? If they’re involved in a sport such as cycling or tennis or golf, they could well have some pretty valuable equipment to store in the garden shed or garage.
Many may well have an expensive watch or item of jewellery – and for those of you with fashion conscious daughters, don’t even think about the number and value of their shoe wardrobe!
Being accurate when it comes to the value of possessions is essential to not only paying the right premium, but also ensuring that large parts of any claim won’t be turned down. It’s equally important to specify each individual item valued at £1,500 or more (and sometimes the limit can be less for items such as bicycles).
Some insurers won’t cover more than a certain amount of valuable items. Where an item has not been specified, it’s likely that a policy won’t cover it. And if high risk items are greater than one third of the total content sum insured, a claim could be reduced, rejected or a policy cancelled altogether. According to market sources, about one in ten claims is rejected because the customer doesn’t have enough insurance cover.
It may well be an idea to do some research to find out if many of your clients are providing a roof over the heads of their adult children once more. If they are, you could help to prevent potential heartache and anxiety by reviewing their contents cover with them and making sure they’re properly insured.