As we gradually edge towards a post-pandemic era, we’ve all been forced to think differently – no more so than how and where we live. During lockdown, we saw numerous examples of families moving in together to share resources and save money, care for older generations or sick family members and isolate together so face-to-face human contact could be maintained. The question is, could this become a more permanent arrangement?
Industry Insight | The rise in families living together
In today’s industry insight, we observe that intergenerational living has been the norm in many European countries, particularly in Southern Europe, dating back centuries. It’s a lifestyle that continues today and could become a more widely adopted model here in the UK.
In Italy and Spain, the last economic downturn of 2008 forced thousands of the younger unemployed to weather the financial storm by living with parents and wider families of various age groups. In the decade after the global financial crisis, the share of Italians between the ages of 25 and 29 who were living with their parents rose to 67 per cent from 61 per cent, according to Eurostat. In Spain, the same cohort expanded to 63 per cent from 51 per cent.* With the Bank of England predicting the worst recession in 100 years here in the UK ** intergenerational living could also become part of the ‘new normal’ here.
Even before COVID-19 took hold, figures from the Office for National Statistics stated that Households containing multiple families (which represents 1.1% of all households) were the fastest-growing type of household over the last two decades, having increased by three-quarters to 297,000 households. From what we see, the pandemic has only added numbers to these figures. Industry Insight
Industry Insight | Buying property to fill the need
Over the past few months at Harpenden, we have noticed an increase in the number of enquiries for intergenerational purchases and families buying a property together.
The factors that may drive this included earlier, longer-term financial planning or future thoughts of being closer to parents as they get older and caring for them. Often, both the parents and their adult children with their partners are selling their current homes to fund the purchase of a new, bigger property that can accommodate everyone.
In scenarios like this, the purchased property will likely comprise either an annexe attached to the main house or a separate dwelling. Both living spaces will appear on the same property title. In either instance, we are happy to consider these for mortgage security purposes. Specialist lenders, like ourselves, who provide individual underwriting for every mortgage application, are more readily willing to accept this property type. In contrast, we know from our experience that other, more mainstream lenders often shy away from property where more than one dwelling appears on the same legal title.
This type of intergenerational purchase may also require, for example, up to 4 parties to be named on the mortgage and property title, with all 4 incomes being used to assess the affordability of borrowing required.
When this includes older parents, the aspect of their ages and lending into retirement is often queried. Again, this does not present a problem for a specialist lender like ourselves, provided that we are satisfied that the term is appropriate for the individuals involved. Many other lenders are less flexible about the maximum age to which they will lend.
We recommend that mortgage customers choose a lender that considers salary, dividend & net/retained profit for Ltd Co self-employed; includes up to 100% of other income, including commission and bonus; and accepts unearned income such as pension, rental, investment and maintenance. This deeper dive into a customer’s financial circumstances gives them more flexible options when considering a mortgage for this more complex, intergenerational property purchase. Industry Insight
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 2 years ago. Gary told us: “Our situation was probably like many. We wanted to personally care for my mother-in-law, Molly (96). 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.
For us as carers, we are seconds away from her when we’re needed. This set-up has allowed a more relaxed way of living, knowing Molly is safe; my mother-in-law enjoys being surrounded by family, including spending time with her granddaughters, and 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 the 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 on industry insight