Door opens to the age of the extended financial family

Three generations under one roof
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The Independent Online

You might not jump at the idea of living under one roof with a multitude of family members, but inter-generational homes are making a comeback. Bucking the long-term pattern of preserving their independence, more people are living together to solve financial and social problems such as finding childcare.

The two-generation, or "2G", phenomenon where elderly parents move in with their grown-up children is well known. More than 850,000 adults aged between 35 and 64 (4 per cent of all households) now have one or both parents living in their home, says Economic Lifestyle, an equity release company.

But there are signs that three-generation, or "3G", families are also increasing. Poor pension provision, the spiralling cost of residential care and high house prices for first-time buyers have fuelled a small but growing trend for three generations to pool their resources and live under one roof.

According to Skipton building society, this is the "extended financial family", where grandparents, parents and children live together for financial reasons. It predicts that the number of 3G families could treble over the next 20 years to around 200,000.

Lack of pension saving and longer life expectancy - along with rising council tax, heating bills and home maintenance costs - are forcing many older people to consider communal living arrangements with their families. In addition, the rising cost of residential care is set to hit particularly hard, with many facing bills of some £20,000 a year or more, says the Skipton.

Meanwhile, graduate debt and escalating house prices are combining to delay first-timers - in their twenties and thirties - from entering the housing market. An increasing number spend more years with their parents as they try to save for a deposit.

"Extended financial families are set to become a familiar phenomenon," says Jennifer Holloway from the Skipton. "These issues are only likely to get worse, and so combining incomes and sharing mortgage repayments may well be the only alternative for some families."

This view is shared by Nick Gardner, director of Chase de Vere Mortgage Management. "It is becoming much more common for families to pool resources and buy a big enough property to accommodate grandparents, parents and children," he says.

More and more are remortgaging their property to build a granny flat, or finance a deposit on a larger home - to accommodate three generations.

In October, the Beltons became a 3G household when Martin's 78-year-old father, Reginald, moved into their home in Boston, Lincolnshire.

Martin, 49, and his wife Deborah, 48, have their two children - Daniel, 22, and Caroline, 17 - staying in their four-bed home. "My father had lived on his own for many years, " says Martin. "But his health has deteriorated and he is no longer able to support himself independently."

Having Reginald with them means Martin and Deborah don't need to worry about care funding. And having their children at home means the couple can save more - by not needing to help with rent - to support them through higher education and buying their first homes.

Daniel has just graduated from university and has moved back while he takes control of his student debts. Caroline is planning to leave home in February, when she starts her nursing training.

"But until then, we can save up money to supplement the grant she gets from the Government," says Martin.