How equity release can help the growing number of young people still living at home

11 September 2019

Stuck at home 

Figures released recently by the Office for National Statistics (ONS) show that around 25% of 20 to 34 year olds still lived at home with their parents last year – around 3.4 million people. This is a rise of 24% on the 2.7million who were still living at home a decade earlier. 

Not surprisingly, homeownership among this section of the population has declined. 

The number of young homeowners has fallen dramatically

Two of the contributing factors to this have been rising house prices against slow wage growth; the ONS reports that, on average, first-time buyers are today purchasing properties 4.5 times their annual salary, compared to only two or three times their salary between 1971 and 1999

Of course, the higher property prices are in comparison to average incomes, the harder it is for young people trying to get on the property ladder to save the necessary minimum 5% deposit to secure a mortgage. 

How equity release can help young adults get onto the property ladder 

Intergenerational wealth is changing. We used to inherit directly from our parents, but with more of us living for longer, many people are into retirement themselves before their parents pass away. For this reason, more and more people are choosing to help the younger generations while they are still alive, with the bank of mum and dad’ now the 11th largest lender in the UK.

A recent study by Legal & General and the Centre for Economics and Business Research found that older generations are on average lending £24,100 to children and grandchildren this year, compared to an average of £18,000 last year. Figures from the Equity Release Council show that 27% of equity release schemes in 2018 were to help friends and family, up 3% on 2017.

Exploring the pros and cons of equity release to help children and grandchildren

For many younger adults today, trying to get a home of their own is a real challenge,” sympathises Jan Johnson, director of 55+ Equity Release. For parents and grandparents who own their own property, equity release can provide viable way to help, enabling them to gift some of their assets while they are alive. 

It’s not always the most appropriate solution and you need to make sure you find an adviser who will talk you through both the disadvantages as well as the benefits. But the growing popularity of equity release schemes for gifting to friends and family shows that for many it is a useful way of enabling them to help their loved ones.” 

If you’re considering equity release to help your child or grandchild onto the property ladder, our independent equity release experts will make sure you all understand the implications before you make a decision. 

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