Research from Legal & General Home Finance (LGHF) has found that grandparents are providing financial support for their grandchildren (79%) and one in 12 grandparents (8%) have used the value locked in their homes to do this.
29 Mar 2023
A survey of 2,000 grandparents in the UK, found that younger grandparents (aged 50-64) are twice as likely to use property wealth to gift to grandchildren (10%) vs 65-74 year olds (5%). This indicates the next generation of grandparents are becoming more likely to consider the value of their homes as part of their financial planning. This follows Legal & General’s previous Equity Economy report which found that whilst one in 20 homeowners currently used equity release to fund retirement, it is anticipated to almost double to one in 10 (11%) based on the anticipated plans of younger homeowners.
Grandparents look to provide financial support for a range of reasons, for example, helping in times of a crisis (13%). They are also contributing to their grandchildren’s one-off big-ticket expenses such as holidays (17%) or a wedding (5%). Grandparents are also looking to support younger family members with their homes, either to get onto the property ladder or provide support for rent (5%). The last time Legal & General ran its wide-ranging Bank of Mum and Dad research it found that more than half (56%) of those under the age of 35 received a financial gift to help them step onto the housing ladder. Accessing their own property wealth can be one of the ways that grandparents look to generate the money to provide this help.
Regionally, grandparents in London are most likely to use property wealth to gift to grandchildren (15%), possibly due to the region’s higher than average property values, alongside the significant increase in equity they will have seen over time. Recent statistics from the ONS showed that, at the end of last year, London's average house prices remained the most expensive of any region in the UK, at £543,099 on average4. With LGHF customers releasing 24% from their homes on average, this could see Londoners accessing more than £130,000 from a lifetime mortgage.
Craig Brown, CEO, Legal & General Home Finance: “While grandparents have a wealth of life experience to pass on, they are also choosing to provide financial support to younger generations. With house prices remaining high, many homeowners will look to the value tied up in their property as a way to pass on a living inheritance to their grandchildren. This might be in the form of a large gift, such as a contribution to a deposit on a first home, or as regular financial support to meet rising living costs. For some, a lifetime mortgage will provide a practical solution to accessing the wealth found in their home but we also know that, where financial support isn’t possible, extended family are often providing help in other ways, such as unpaid childcare or allowing adult children to move in to help them save for a home of their own.”
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
*as at HY 2023
Legal & General Retail helps create brighter financial futures for all our customers. The division covers the savings, protection and retirement needs of our c.13 million retail policyholders and workplace members.
In 2022, we had total individual annuity sales of £954 million, and issued £632 million of Lifetime Mortgages and Retirement Interest Only Mortgages. Our Workplace pension platform served 4.9 million members, while our Protection businesses gave peace of mind to more than 6.3 million UK life insurance, 1.8 million group and 1.5 million US customers, taking in £3.1 billion of gross written premiums.
*at 31 Dec 2022