Bank of Grandma and Grandad

New research has suggested that there is a growing tendency among older Brits to use the wealth held in their property to help younger generations become first-time buyers, Bank of Grandma and Grandad

The research from Aviva looked at spending and saving levels, as well as attitudes towards funding retirement. Homeowners, particularly those who are mortgage-free, are planning to use investments, as well as their property, to help other family members move onto the property ladder.

The 2022 research shows that the average age people pay their mortgage off is 51. After this, property and other wealth tends to start being spread through the generations.

In 2022, 14% of respondents say they have already helped their children to become first time buyers, with a further 19% saying they will “definitely or probably” do this. In 2016, more respondents (19%) said they had already helped their children to become first time buyers, yet fewer (13%) were “definitely or probably intending to” compared to now.

The research also shows an increase in the number of people ready to help other family members, not just their own children. In 2022, 5% say they have already helped their grandchildren become first time buyers, with a further 20% saying they are definitely or probably going to.

This proportion has shifted upwards in the last six years. In 2016, 3% had already helped their grandchildren to get onto the property ladder and 14% intended to.

The same pattern emerges when it comes to helping members of the wider family to buy a home. In 2022, 3% say they have already helped with this, and a further 9% intend to, compared with 2% and 3% respectively in 2016.

The amount of money older relatives are giving to younger generations has also increased, with the typical total amount given now standing at £31,398.63, 25% higher than in 2016.

Matt McGill, MD, Aviva Equity Release, commented:

Bank of Grandma and Grandad

There is also a noticeable shift towards using property wealth over other sources of income to provide help to other family members hoping to buy a home. The the use of financial help sourced through property wealth has more than doubled compared with six years ago, with 40% using property assets in a number of ways, led by downsizing and Equity Release.

In 2016, most financial help was sourced through using savings and investments to provide money for a deposit (71%), or to buy a property outright (10%). A further 3% cashed in pensions or used pension savings to enable this. Property wealth was used to help other family members in 17% of cases, mostly by releasing capital through downsizing or Equity Release. McGill concluded:

“It’s striking that more and more people are willing to use their property wealth in a variety of ways, and that this is starting to become the norm for those wanting access to cash to help other family members. Six years ago, fewer than 1 in 5 people used wealth held in their property to assist other family members – and this has now grown to 40%.

It is becoming increasingly accepted that wealth held in property should be considered part of someone’s total assets, and can be used for a variety of purposes – including to help younger family members buy a home like their parents and grandparents did.”