Legacy Foresight has updated their UK legacy market forecasts, incorporating latest information for the vaccine rollout, the recent performance of the housing market and the latest evidence on delays across the estate management system.
Due to the rapid changes in the legacy environment over the past year, Legacy Foresight is updating its market forecasts whenever the situation changes significantly or when meaningful new information comes to light.
Key findings
Charitable bequests are still expected to spike in 2021
- Preliminary data suggests there were 690,000 deaths in the UK in 2020 – this is the highest level seen since the Spanish Flu epidemic and conclusion of the First World War in 1918.
- This spike in the number of deaths, combined with the delays still affecting estate administration processes, mean that bequests could peak at record levels in 2021 – around 35%-36% higher than in 2020.
- However, this growth depends on the resolution of delays experienced during 2019 and 2020 in the estate administration process.
Average residual bequest values are likely to hold up
- Average residual bequest values are likely to be sustained in 2021 due to the continued growth in house prices.
- There is potential for them to decline by around 1% in 2022 if the housing market does begin to decline as expected.
Legacy income fell by 11% in 2020, but recovery is likely in 2021
- The sustained shortfalls in bequests over the last two years contributed to the decline in legacy income.
- Legacy Foresight expects legacy incomes to recover in 2021, with a central growth estimate of 27%, as income starts to flow from the anticipated recovery in bequest volumes.
- This growth will continue in 2022 with further growth expected at a rate of 7%.
The 5-year outlook remains positive
- Over the five-year period 2021-2025 Legacy Foresight expects legacy income to be 18%-24% higher than it was over the equivalent five-year period 2016-2020, reaching between £3.7bn and £3.9bn by 2025.
- Likewise, they expect to see around 15% more charitable bequests over the 5 years 2021-2025 compared to the previous 5 years 2016-2020, driven by the impact of COVID-19 and long-term demographic changes on the number of deaths.
- However, significant short-term uncertainty remains due to both the ability of the whole estate management system to resolve ongoing administrative delays and broader external factors related to the pandemic and the wider economy.
Jon Franklin, economist at Legacy Foresight, says:
“The prospects for the legacy market in 2021 are promising with an expectation of an increase in the numbers of gifts, recent house price growth driving up the value of these gifts and, ultimately, more legacy income.
He continues:
“However, charities need to consider the significant risks to this growth posed by the ongoing delays throughout the estate administration process and consider how they will manage uncertainty over both the volume of legacy administration work they will need to deal with as well as the cash they receive.”
Legacy Foresight will continue to monitor developments relating to the coronavirus pandemic, the UK economy and estate administration processes over the coming weeks and will provide further updates on the potential impact on the UK legacy market when appropriate.
