As the UK’s population is set to exceed the 70 million mark and house prices continue to rise alongside interest rates, solicitors at JMW warn a property crisis will result in more multi-generational households in 2018 than ever before.
The cost of childcare is also rising, at the same time as fees for nursing and residential care for the older people are increasing, leading many families to consider housing three generations under one roof and building granny annexes to do so.
According to the latest release from the Office for National Statistics, population growth in the UK will surpass 70 million by mid-2029. There will be an increasing number of older people accounting for this, with the proportion of over 85-year-olds expected to double during the next 25 years.
Yet the average annual care fees have risen above £33,000 this year, the fastest rise on record, according to Prestige Nursing and Care, which many pensioners simply cannot afford.
Research from the TUC also reported that the cost of childcare for young children in England has risen up to seven times faster than wages since 2008, putting working families in a difficult position.
Elaine Roche, partner at JMW, says: “When you consider all of this data as one, you see that a perfect storm is brewing where families are forced back into one household in order to manage their budgets. Building granny annexes so that parents can live alongside their adult children but still maintain their independence is one of the most common ways of dealing with this, and we have seen more clients seek legal advice in this area than ever before.”
Many were hoping that the recent Autumn Budget announced by the Chancellor would contain measures around reducing the cost of childcare and care for the elderly. Instead, the main headline was regarding Stamp Duty, which the Chancellor cut completely for all first-time buyers of properties under £300,000. Many commentators have since suggested that this could push property prices up for other buyers.
Elaine Roche says: “Those who are considering building granny annexes should have an open and frank conversation with the whole family before doing so, as well as researching the most effective way to do this without incurring unnecessary tax penalties. Decisions should include whether to allow the person living in the granny annexe to pay rent, which gives them security on their living situation but possibly incurs tax penalties for the homeowner, or whether an agreement can be reached without requiring payment, such as providing free childcare in return for their accommodation.
“There are also other ways to save money for later in life, such as inheritance tax planning, and it is never too early to start considering measures that help you to plan ahead.”