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One in 12 grandparents use property wealth to support grandchildren
There's no denying that grandparents have a wealth of knowledge and life experience to offer their grandchildren, but increasingly, they're also able to provide much-needed financial support. With housing prices remaining sky-high, many homeowners are turning to the value in their homes as a way to give their grandchildren a living inheritance.
This could take the form of a substantial monetary gift towards a first home or the regular financial support necessary to meet the ever-rising costs of living. For those who cannot afford to give money, extended family members are also helping out, whether that means providing unpaid childcare or letting adult children move in to help them save up for their own home.
Financial support to their grandchildren
A recent study found 79% of grandparents have provided financial support to their grandchildren and identified that this type of support is becoming more common, with 8% of grandparents using their property wealth to fund this help.
Interestingly, younger grandparents are more likely to use their property wealth to fund financial support for their grandchildren. This suggests that attitudes towards using homes to support family members are changing.
Helping with day-to-day costs
There are many reasons why grandparents choose to give financial gifts to their grandchildren. Some grandparents provide help with day-to-day costs, while others give one-off gifts for big-ticket expenses, such as holidays or wedding celebrations.
Notably, grandparents in London are the most likely to use property wealth to provide financial support to their grandchildren. This is likely due to the region's higher-than-average property values.
Important part of financial planning
Overall, the study highlights the important role that grandparents play in supporting their families both emotionally and financially. Whether through regular financial help or one-off gifts, grandparents are making a big difference in their grandchildren's lives.
The survey revealed that younger grandparents (aged 50-64) are twice as likely to use property wealth to gift to their grandchildren than those aged 65-74. This suggests that the younger generation of grandparents are beginning to view their homes as an important part of their financial planning.
‘Bank of Mum and Dad’
Grandparents are offering financial support to grandchildren for a range of reasons, including helping during times of crisis (13%), contributing to one-off expenses such as holidays (17%) or weddings (5%), and providing support for rent or getting onto the property ladder (5%).
Previous research found that over half (56%) of those under 35 received a financial gift from the Bank of Mum and Dad to help them get onto the housing ladder. Grandparents are increasingly accessing their own property wealth to provide this type of support.
Making a big difference
According to the ONS, London's average house prices are the most expensive of any region in the UK, at £543,099 on average. Financial support from grandparents can make a big difference in the lives of their grandchildren. If you're considering giving money to your grandchildren, it's important to consider your own financial situation first.
Make sure that you can afford to give without compromising your own financial stability. You'll also want to think about how best to structure your gifts: will you give a lump sum, contribute to a university savings plan or give a monthly allowance?
Considering providing financial support to your grandchildren?
Ultimately, there are many ways that grandparents can provide financial support to their grandchildren. Whether it's through a one-time gift or ongoing contributions, this kind of support can be a true head-start for youngsters as they grow into adulthood. If you would like to discuss your options, please contact us.