Over the last decade we have seen a significant increase in the number of individuals and couples living with their parents/parents-in-law. While often seen as a short-term solution in which the individual/couples can save money for their own home purchase deposit, this may not necessarily be the case. There are a number of issues to consider with regards to extended family living and in all honesty a lot of them make perfect sense.
Cost of living
If we look at inflation relating to the costs of goods and services in the UK we see that over the last decade prices have increased by 35.15%. This equates to average inflation of around 3.1% per annum at a time when wage inflation was stagnant at best and negative in real terms. So, looking purely and simply at the cost of living it makes perfect sense to spread the cost of shared services across a greater number of family members. In reality, from a practical point of view, this is a win-win for all parties but there is also more to consider.
Cost of property
If we now take a look at the cost of property in the UK, over the last decade data from the https://www.globalpropertyguide.com/ website shows an increase of 35.37%. While this is nowhere near the cost of properties in Estonia and Iceland, which have both doubled over the period, it is still a significant rise. Let’s not forget this period takes in the aftermath of the 2007/8 US mortgage crisis which led to a worldwide economic downturn the likes of which have not been seen since the “great depression”.
If you put this into further perspective, this performance also occurred during a period of uncertainty relating to Brexit and the U.K.’s eventual exit from the European Union. Yes, there has been a short-term bounce since Boris Johnson became Prime Minister but it has been challenging for the UK property sector over the last decade.
Care in later life
While UK governments have often talked about using the collateral of taxpayers to pay for their long-term assistance in later life, this is certainly not a vote winner and has been dropped. At some point the NHS in its current form (and local services) would become untenable and we will no doubt face further calls about funding care in later life. So, if extended families live in one property there may be a way to gradually transfer part ownership of the property to sons, daughters and their spouses. This could be a way to mitigate what could be huge cash calls in the future for those in their later years.
There is also the potential for extended families to work together in the future and effectively care for their parents in later life. This could avoid potentially huge medical bills going forward and, as research shows, care at home is much better for an individual’s physical and mental wellbeing.
Lots to consider
The cost of living and sharing bills, to the cost of property and unaffordable deposits, not to mention care in later life, there is certainly a lot to consider. We regularly hear of families extending their homes with extensions to create stand-alone independent units for different family members and their extended families. For many this makes perfect sense and will also increase the value of the property going forward. The idea of living with your parents in later life has been the subject of many jokes in years gone by but looking at the pros and cons in the cold light of day, is it worth considering?