Our thinking has shifted dramatically as we gradually move towards a post-pandemic era. This change is most evident in how and where we choose to live. During lockdown, many families moved in together. They shared resources to save money, cared for older generations, or looked after sick family members. They also isolated together to maintain face-to-face human contact.
Industry Insight | The rise in families living together
In today’s industry insight, intergenerational living has been the norm in many European countries. Particularly in Southern Europe, this lifestyle dates back centuries. It continues today and might become more popular in the UK.
In Italy and Spain, the 2008 economic downturn forced many younger unemployed individuals to live with their families. They weathered the financial storm by staying with parents and relatives of various ages. During the decade after the global financial crisis, the share of Italians aged 25 to 29 living with parents rose from 61% to 67%, according to Eurostat. In Spain, the same group expanded from 51% to 63%.
With the Bank of England predicting the worst recession in 100 years, intergenerational living could become part of the ‘new normal’ in the UK.
Even before COVID-19, Office for National Statistics figures showed that households containing multiple families were the fastest-growing type. This type of household increased by three-quarters to 297,000 over the last two decades. These households now represent 1.1% of all households. The pandemic has likely added to these figures.
Industry Insight suggests we may see a rise in intergenerational living in the UK. This model could offer financial stability and family support during tough economic times.
Industry Insight | Buying property to fill the need
Over the past few months, Harpenden has seen a rise in enquiries for intergenerational purchases. Families are increasingly buying properties together. Factors like long-term financial planning drive this trend. Additionally, thoughts of being closer to ageing parents play a role. Both parents and adult children often sell their homes to buy a larger property together.
The new property typically includes an annexe or a separate dwelling in these scenarios. Both living spaces appear on the same property title. We are happy to consider these for mortgage security purposes. Specialist lenders like us offer individual underwriting for each mortgage application, so we are more willing to accept this property type. In contrast, mainstream lenders often avoid properties with multiple dwellings on one title.
These intergenerational purchases may require up to four parties named on the mortgage. All four incomes are used to assess affordability. When older parents are involved, lending into retirement is often a concern. However, this does not present a problem for us. We ensure the term is appropriate for the individuals. Other lenders are often less flexible with the maximum lending age.
We recommend choosing a lender that considers various income sources. This includes salary, dividend, net/retained profit for Ltd Co self-employed, and up to 100% of other income like commission and bonus. Unearned income such as pension, rental, investment, and maintenance should also be accepted. This comprehensive financial assessment offers more flexible mortgage options. It is particularly beneficial for complex intergenerational property purchases.
Industry Insight
Understanding the growing trend of intergenerational property purchases is crucial. Families are combining resources for better financial planning and closer living arrangements. Specialist lenders provide more flexible options compared to mainstream ones. This flexibility is essential for accommodating the unique needs of intergenerational living. Choosing the right lender can significantly impact the success of such purchases.
In conclusion, families should look for lenders that consider diverse income sources. This ensures a thorough financial assessment and offers more mortgage options. Such a strategy is vital for navigating the complexities of intergenerational property purchases.
Industry Insight | Creating relevant options
As we develop intergenerational mortgage products, we carefully assess the opportunity for the customer, the mortgage intermediary, and ourselves as the lender. Part of this development process is speaking with people from our local community to understand their situations and future needs.
Gary Cooper, who lives in Hertfordshire, where our Society is based, created an intergenerational property two years ago. Gary told us, “Our situation was probably like many. We wanted to care for my mother-in-law, Molly (96), personally. She sold her own place, allowing us to arrange finances to share a property with an added Granny Annexe. Since moving into the adapted property, Molly has her own bedroom, lounge, and wet room, affording her privacy and the opportunity to join us for family meals and the like.
As carers, we are seconds away from her when we’re needed. This set-up has allowed us to live more relaxedly, knowing Molly is safe. My mother-in-law enjoys being surrounded by family, including spending time with her granddaughters. We can look after her however we want. As a family, we can spend additional, precious time with her, which is priceless. I think intergenerational living will only increase in popularity.”
All signs point towards an increase in intergenerational living. Partnering with an experienced lender in this specialist field is a strong option for mortgage intermediaries looking to grow their business in this sector.
Industry Insight
Credit: Graeme Aitkin, Harpenden Building Society
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