New research has revealed that legacy income has continued to grow at a rapid rate over the 12 months leading up to the end of June 2022.
Quarterly results from Legacy Foresight’s Legacy Monitor have shown that bequest numbers were slightly lower over the three months to June 2022, while bequest values increased, supported by continued rapid growth in house prices. However, a potential slowdown in the housing market may dampen ongoing income growth, Legacy Foresight have warned.
Legacy incomes rising
The legacy income received by the 82 leading charity consortium members is continuing to rise quickly, totalling £1.69bn over the 12 months to June 2022. This maintains the previous reported trend and is 15% higher than the level reached over the prior 12 months, thanks to healthy rises in bequest values.
Higher value of residual gifts
The analysis shows that the average value of residual gifts received across the consortium has increased by 7.3% over the last 12 months, bolstered by continued rises in house prices.
HM Land Registry data showed that house prices rose a further 1% in June, resulting in a 9.7% total rise over the prior 12 months. This ongoing rise in prices should continue to support strong growth in residual gift values over the next 12 months.
However, rising interest rates and falling consumer confidence could impact on property prices in 2023 and 2024, which may result in more measured legacy income growth over the medium term – though mortgage approvals climbed in June, an indication that the market is remaining resilient despite the turbulent economic environment.
At the moment the cost of living crisis, whilst being a concern to charities, is unlikely to have an immediate impact on legacy giving behaviour. However, as part of a more generalised sense of uncertainty, it could result in longer-term shifts in giving patterns.
“With house price growth set to slow, and potentially even reverse, the sector should prepare for a period of more sluggish legacy income growth through 2023 and 2024,” said Legacy Futures Economist, Jon Franklin.
Number of bequests drops
Bequest numbers were around 1.3% lower over the three months to June 2022 compared to the same period last year. However, this was broadly in line with expectations, given the number of deaths and volume of grants of probate issued over the period.
Latest analysis suggests that there remains a backlog of around 24,000 probate cases at HM Courts and Tribunals Service (HMCTS). It does appear that HMCTS has made some progress over the last three months, although not substantially, reducing the cases still to be dealt with by around 3,000. However, the overall level of the outstanding cases has remained at a similarly high level since mid-2020.
Legacy Foresight estimate that clearing the case backlog could generate around 11,000 further charitable notifications over the coming months.
Franklin commented:
“The last few years have been challenging, so this long-term trend of growth is positive to see. Bequest numbers are high, although lower than we might expect, and if the backlog from HMCTS is reduced, there could be a real boom in numbers and income.”
