A shift in attitudes to using the home to fund family support has been picked up by new Legal & General Home Finance research which found that, while the vast majority of grandparents are willing to financially help their grandchildren to get onto the property ladder, younger grandparents are more likely to use their home to fund this.
"With house prices remaining high, many homeowners will look to the value tied up in their property as a way to pass on a living inheritance to their grandchildren"
The research from LGHF found that 79% of grandparents are providing financial support for their grandchildren 8% have used the value locked in their homes to do this.
However, the survey of 2,000 UK grandparents also revealed that younger grandparents (aged 50-64) are twice as likely to use property wealth to gift to grandchildren (10%) vs 65-74-year-olds (5%), indicating that the next generation of grandparents is becoming more likely to consider the value of their homes as part of their financial planning.
This follows Legal & General’s previous Equity Economy report which found that whilst one in 20 homeowners currently used equity release to fund retirement, it is anticipated to almost double to one in 10 (11%) based on the anticipated plans of younger homeowners.
How grandparents help
Grandparents look to provide financial support for a range of reasons, for example, helping in times of a crisis (13%). They are also contributing to their grandchildren’s one-off big-ticket expenses such as holidays (17%) or a wedding (5%). Grandparents are also looking to support younger family members with their homes, either to get onto the property ladder or provide support for rent (5%).
The last time Legal & General ran its wide-ranging Bank of Mum and Dad research it found that more than half (56%) of those under the age of 35 received a financial gift to help them step onto the housing ladder. Accessing their own property wealth can be one of the ways that grandparents look to generate the money to provide this help.
According to the findings, grandparents in London are most likely to use property wealth to gift to grandchildren (15%), possibly due to the region’s higher than average property values, alongside the significant increase in equity they will have seen over time.
Recent statistics from the ONS showed that, at the end of last year, London's average house prices remained the most expensive of any region in the UK, at £543,099 on average. With LGHF customers releasing 24% from their homes on average, this could see Londoners accessing more than £130,000 from a lifetime mortgage5.
Craig Brown, CEO, Legal & General Home Finance, said: “While grandparents have a wealth of life experience to pass on, they are also choosing to provide financial support to younger generations. With house prices remaining high, many homeowners will look to the value tied up in their property as a way to pass on a living inheritance to their grandchildren.
"This might be in the form of a large gift, such as a contribution to a deposit on a first home, or as regular financial support to meet rising living costs. For some, a lifetime mortgage will provide a practical solution to accessing the wealth found in their home but we also know that, where financial support isn’t possible, extended family are often providing help in other ways, such as unpaid childcare or allowing adult children to move in to help them save for a home of their own.”