In the ever-evolving landscape of the UK property market, the dream of homeownership for the younger generation often feels like a distant reality. The soaring house prices of today, compared to the more affordable era of the ‘baby boomers,’ have led many to grapple with the challenges of renting or residing with family well into their 30s.
But amidst these hurdles, a heartening trend has emerged – a beacon of hope for those striving to make that crucial step onto the property ladder. It’s the story of parents and grandparents becoming the unsung heroes, affectionately dubbed the ‘Bank of Family,’ stepping in to bridge the generational gap.
According to new research from Legal & General and the Centre for Economics and Business Research (Cebr), a remarkable 42% of parents and grandparents aged over 55 have played a pivotal role in funding their family’s property dreams.
To meet these significant costs, many have used a combination of their savings (68%), investments (22%) and even their pension (14%), but some parents and grandparents have also made use of their own property wealth to help family members.
There is more than £3.5 trillion in housing wealth held by the nation’s over 55s and an increasing number of parents and grandparents are turning to this to unlock support. Nearly one in five (18%) have used their own home to generate the money their loved ones need to make a purchase; this could be via equity release, downsizing or re-mortgaging.
Despite their caring gestures, a staggering 72% of parents and grandparents choose not to seek formal advice. The lack of financial guidance raises concerns among experts, emphasising the need for a reliable roadmap through these uncharted territories.
To guide these unsung heroes through giving, Legal & General has unveiled the ‘Guide to Gifting.’ A tool designed to empower parents and grandparents with the knowledge they need to provide unwavering support on their loved ones’ journey to homeownership. This can be found here: https://www.legalandgeneral.com/retirement/equity-release/guides/bank-of-family/guide-to-gifting/
Craig Brown, CEO, Legal & General Home Finance says “For families across the country, property is often one of the most significant financial assets they have. We know that many parents and grandparents feel there is no better use of that asset than to provide for the future of their loved ones, helping many younger people overcome the huge challenge of getting on the first rung of the property ladder.
“However, it’s really important people take a considered approach when providing support like this. Our research shows many parents and grandparents do not seek any guidance or advice before parting with significant amounts of money, unless of course it’s a requirement of the product, as with lifetime mortgages. This is a big decision and people should carefully consider how and what they gift to ensure they don’t risk their own financial difficulties later in life.
“While not for everyone, later-life lending products, such as lifetime mortgages, might be suitable for some people over 55 to help family members step onto the ladder, but these should only be considered following a conversation with an adviser about all the options available to provide family with support.”