Extended families Home | News Release | Issues and possible solutions
News release
Thursday 29 April 2004
EXTENDED FAMILIES TO MAKE A COMEBACK
Pension under-funding, the spiralling cost of residential care and pressures facing first time buyers will lead to radical changes in the way families live and the revival of the multi-generational household – where three generations will live under the same roof.
Analysis by Skipton Building Society in its ‘Financing Your Future' report identifies that the number of extended financial families1 (EFFs) in the UK will treble over the next 20 years. The report projects that in the next two decades there will be around 200,000 EFFs in existence – compared to the current estimated 75,000.
This new social phenomenon will significantly shape the dynamics of future households. According to the report, over the next ten years one in 50 new households2 in the UK will be an EFF, rising to one in 25 in the following decade.
The report states that pension under-funding, coupled with increasing life expectancy, will play a key role in this renaissance and force many to consider more communal living arrangements. Previous research by Skipton Building Society3 revealed that a third of grown up children are prepared make the ultimate sacrifice and invite their mums and dads to live with them to guarantee their comfort in later life.
Further influencing this comeback will be personal privatisation, whereby responsibilities originally held by the state, including health, education and welfare will be transferred to individuals. The cost of residential care will hit Britons particularly hard, with many facing bills to the tune of £20,000 per annum or more, quickly wiping out inheritances and providing an incentive for a ‘granny flat' – an attractive alternative to state care.
But it's not just retirees shaping the restructuring of future households – homebuyers are also playing a part. The high cost of property and the impact of graduate debt are delaying first time buyers entering the market by three to four years, resulting in many staying at home longer to save for a deposit.
Also highlighted as a factor influencing families to pool their resources under one roof is the cost of childcare. According to the Daycare Trust, the typical cost of a full-time nursery place for a child under two is £128 a week, more than £6,650 a year; up 6.7% in the last year. For many parents this can be one of the largest monthly outgoings, restricting mortgage spending and preventing people from moving up the property ladder, which in turn will prompt parents and grandparents to buy one large home and have free child-care on tap.
Jennifer Holloway, head of media relations, Skipton Building Society, said: “Extended financial families are set to become a familiar phenomenon, with three generations of family living under the same roof to help cope with the strain on their finances posed by falling pensions, rising levels of debt and the high cost of property. Looking forwards, these issues are likely to get worse and so combining incomes and sharing mortgage repayments may well be the only alternative for some families.“
Ends
Editor's Notes
1 An extended financial family refers to three generations of family, including grandparents, parents and children living together under the same roof for financial reasons
2 Household formation arises from a wide range of changing circumstances (leaving home, getting married, divorce, death, etc) Government projections show that there are likely to be between 1.75 and 2 million more households in the UK in 10 years rising to 3.5 – 4million in 20 years
3 Skipton Building Society, Pay Back for Parents research, September 2003
Methodology: The research was undertaken by worldtocom.com futures network on behalf of Skipton Building Society in March / April 2004.
Key factors influencing the growth of extended financial families:
- Pension under-funding
- Child care costs
- Personal privatisation (personal costs of health, education and welfare)
- Housing ladder problems – getting on and moving up
- Debt burdens
For further information journalists should contact the Skipton Press Office.