22 January 2016

Making multi-generational living work for your finances

Multi-generational living is on the rise in the UK from ‘boomerang kids’ in their 20s and 30s choosing to live with their parents to older parents living with their adult children.

A report by Savilles shows that since 2005, the number of young people living at home has risen by 25%. Figures from the latest census in 2011 (PDF) show that around 289,000 households now consist of more than one family. Some of it is down to rising prices keeping younger people off the property ladder.

On the other side of the generation gap, there are the older people who choose to live with their adult children, sometimes because they need more care or anticipate doing so in the future.

There are lots advantages to multi-generational living such as being closer to children and grandchildren, sharing the childcare and household chores and, always having someone to walk the dog. But there are disadvantages too, and many families find that there are issues that need considerable negotiation.

Points to consider before buying a multi-generational home

There are financial matters to consider when living across the generations. Read our pointers below to help make multi-generational living work for your finances.

Who pays the bills?
Pooling finances can make a big difference to household bills, plus you can benefit from economies of scale if you all contribute to the shopping kitty. If you’re setting up home together, it makes sense to decide who is responsible for which bill at the outset and to feel that everything has been allocated fairly.

Who does the house belong to?
An ordinary family home may not be big enough to accommodate a multi-generational household. That’s why, when the generations move in together, many choose to extend, sell separate properties and buy together or move to a property with a granny flat or annexe. If you're joint tenants (you all own the property jointly), and one of you dies, their share of the property would be divided equally among you.

It’s worth considering that circumstances can change. Scenarios to think about include:

  • Changes in health – what would happen if one of the property owners needed to move into a care home?
  • Divorce – no one likes to think about splitting up. But what would the financial implications be if the property had to be sold in a divorce settlement?
  • Changes in work – what happens if one of the property owners needs to move for work? Other people in the household would be faced with moving with them, something which could cause considerable problems, particularly if older people have to leave their friendship network.

Getting independent financial advice can help you resolve some of these issues before you take the plunge.

Buying a multi-generational family home

Please note, new Nationwide mortgages are available for a maximum of 2 borrowers.

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