Multi-generational living

With many young people struggling to buy their first home and the older generation living longer and worrying about the cost of care, could the answer be multi-generational households? A growing number of people seem to think so.

Russian Nesting dolls in a line, reducing in size towards the left - Rathbone Investment Management

Christopher Stanley-Smith, Investment Director, Rathbones

Novelist Saskia Sarginson was preparing to be an empty nester. The last of her four children was about to complete his A-levels and her three other children were in their 20s and at university.

She had visions of a bathroom always clear — soft clean towels hanging neatly on the rail — food in the cupboards and an air of calm descending.

Then one by one her children began moving back, bringing their friends, squabbles and cacophonous chaos to the sanctuary of her kitchen.

Today she chronicles the tensions — and also the joys — of sharing her home with adult children each week in the family section of the Guardian. Her column has gained a popular following, resonating with the circumstances and, perhaps, fears of many other householders around the country.

She calls it an “upside-down extended family” — the type often seen in the Mediterranean where property ownership is less common and children take a lot longer to detach themselves from the comfort and security of the parental home. In Italy, two thirds of those between 18 and 34 live with their parents. They even have a name for them: ‘bamboccione’ — ‘big babies’. 

In the UK, 40% of those aged between 15 and 34 — 6.6 million people — live with their parents, but the number is growing as rising house prices put the first rung of the property ladder further out of reach.

"There is so much joy in living in a large group. Everyone is supported. No one has to struggle alone."

The average deposit on a first home is now £32,000 and in London it is more than £100,000 — twice what it was 10 years ago according to Halifax’s First-Time Buyer Review.

When fewer than half of all working-age households have incomes over £30,000 it is not surprising if the average age of a first-time buyer has risen to over 30. For many, staying at home is the only way to save enough towards a house — even when they’re married.

Move in the grandparents

Multi-generational living is not just a young adult phenomenon. Longevity and care costs are encouraging older people to rethink their living arrangements too.

Fewer than half of UK homeowners aged under 60 are confident they will have sufficient money to choose where they live and are cared for in old age, even if they sell their property. Many fear being put in a care home more than they do death.

Even if care is affordable, a common financial worry is that the costs will destroy any chance of passing on a healthy inheritance.

The anxieties are not without foundation. Rising life expectancy is one of the blessings of modernity but it also presents financial challenges for individuals and communities. A 65-year-old in the UK can on average expect to live for about another two decades. That is significantly more than it was for previous generations. Around 40% of people aged over 65 have a longstanding illness — nearly 60% for the over 80s — so more of us will need care at some point.

In our recent TalkingPoints we addressed the issues of care costs. We believe financial planning for old age need not be a source of anxiety. With the right guidance, a strategy can be put in place to prepare for the costs of care — while striking an appropriate balance with other aspirations, such as passing on wealth efficiently and enjoying life in retirement.

For some, multi-generational living — pooling the family resources — might solve a number of issues in one fell swoop. It can also create new ones and professional advice is recommended, but it is a solution that has appeal for a growing number of people.

The Office for National Statistics estimates there are 419,000 households spanning three or more generations in the UK — up from 325,000 in 2001. Many believe the numbers will rise sharply in the years to come. There are 1.5 million households with two or more generations and the insurer, Aviva, estimates this will grow to 2.2 million by 2025.

For those considering a merger of households there is a lot to contemplate. Some families will opt to sell both homes and buy one larger property together. Others may sell or rent out one home and build a ‘granny flat’ or annex at the other.

"If family circumstances change, for instance because of divorce… another difficult move may be required that involves disentangling shared assets."

It can be a big upheaval and if family circumstances change, for instance because of divorce or remarriage or a job move, then another difficult move may be required that involves disentangling shared assets.

It can complicate problems on the death of elderly parents if they have sunk all their assets into a home shared with one of their children and the others then want their inheritance.

Thought has to be given as to how the local authority would view the assets in the event of care costs being incurred too.

And yet, there are also many benefits to the arrangement. Most care for older people is not provided by the state or private agencies but by family members, at an estimated value of £55 billion annually. Some would argue that the burden of caring for older family members is reduced if they are under the same roof. In three-generation households the grandchildren can share the responsibilities and it might mean older generations living semi-independently much longer.

In younger multi-generational homes, it may be that it is the grandparent/s providing the care — childminding to enable the grandchildren’s parents (or if separated, parent) to go to work. Their expertise and time doing jobs like gardening or maintenance might be a precious help.

The multi-generational solution may enable the purchase of a much larger, nicer living space that all can appreciate, improving the quality of life for everyone in the family. It can be a way for older people to reduce their long-term care worries and to help their children and grandchildren at the same time.

For those who find themselves on their own, it could also be a solution to the challenge of loneliness. Over 7.5 million people live alone in the UK and one in 10 people experience feelings of loneliness, according to the Mental Health Foundation.

Saskia Sarginson’s own parents are no longer alive. Maybe if they were she might find herself accommodating them too. She tells readers: “In England, we seem to prefer small family units. It’s part of our culture to put elderly relations into care homes and encourage children to move out as soon as they have finished education. But there is so much joy in living in a large group. Everyone is supported. No one has to struggle alone.”

And there lies the biggest advantage of multi-generational living. It might have its tensions and challenges but at its best it offers the chance for families to support each other, sharing joys and sorrows in a closer, more intimate way than is possible when living apart.

Find out more

TalkingPoints “Getting on: planning for later life” 


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