Renovation

Is creating a multigenerational home something many of us think about?
Multigenerational homes were once very common where grandparents helped care for grandchildren and, as the grandparents aged their children looked after them. Are we seeing a resurgence and what does it mean for the homeowner?

The ABS predicts that by 2036 about 3percent of Australia’s population will live in multigenerational homes. Some other studies predict that it may be as high as 20 percent given the increasing challenges of homeownership for a growing number of Australians. The current pandemic situation has put even more focus on this type of household.

A multigenerational household can be made up of any combination of parents, adult children, grandchildren and siblings.

The benefits and challenges of multigenerational households.

Surprisingly, finance is not the only reason people live in this arrangement. According to Dr Liu from the University of New South Wale City Futures Research Centre, many choose to live in multigenerational households for companionship.
There are many other advantages to multigenerational homes including:

  • Splitting of bills among adult residents
  • Increased ability for young adults to save because they are not incurring full rent or utility costs.
  • Some older Australian’s can’t afford to rent or own a property alone so sharing the costs with children makes it easier.
  • Purchasing property together makes it more affordable for all.
  • Reduced childcare costs.
  • Reduced aged care costs and the ability to age in place.

While these are all attractive reasons, buying a property in common can cause confusion around structuring of loans and future sale of the asset, so you should seek professional advice before you head down this path. It's also important for younger members of the household to understand how their future lending capacity may be affected if they jointly purchase a home with their parents or siblings.
After having made the decision that you want multiple generations living under the same roof, the key question then is whether you can make this work in your current home, do you need to make modifications or maybe you need to buy a new home? There are different costs and potential arrangements for shared loans for each of these options, so before committing you should seek advice on how much to borrow and what kind of value any renovations make to the home.

Creating the best multigenerational space for your family

The key consideration to multigenerational homes is to design spaces that make sense and that enable everyone to live under the one roof in harmony. You also need to plan for future needs, unless you are planning to make additional renovations or move again.
Here are some things to think about:

  • Grandparents might be quite mobile now but think ahead to when they might need a walker or wheelchair. Open-plan designs are always more conducive to free-flowing movement in a home.
  • If the home is on more than one level, can you have the older residents’ bedrooms on the ground level? If not, you may be facing the costs of elevators down the track. Splitting bedrooms across levels also creates a feeling of privacy and sense of space.
  • Think about designing spaces that have a dual purpose. It’s easy to convert a bedroom into something else. But a room with no windows or storage isn’t as easy to convert.
  • Think about creating spaces that allow everyone to have privacy. If possible, a dedicated space for each generation living in the household is a great option. This allows them to have their ‘own space’ to use and do whatever they are interested in. Just because you all live in the one home, it doesn’t necessarily mean you always want to be together.
  • Utilize all the space wisely. Every square foot of your home costs money to renovate or modify so think about the value it adds to both comfortable living and the home itself. Think about creative uses for those often-wasted spaces like attics or storage spaces. Maybe these can be converted into study areas or reading nooks. Again this is about enabling everyone to feel that they can have their own space.
  • If you are building from scratch you may want to think about a series of interconnected living quarters with shared communal spaces. This way everyone has his or her own private living area.
  • You may also want to think about separate entrances so those that get up early or those that like to come home late don’t disturb the rest of the family. The idea of living together doesn’t mean that you all live the same life.

Whatever the design, it is about adaptability and working together to come up with the best design that works for your family unit. This also applies to how you finance the build or renovation. It’s important to seek financial advice early on. You also need to keep in mind that you will still have an asset that may be sold at some stage. It, therefore, needs to appeal to other potential buyers. Getting advice on how best to finance this decision is key to reducing the stress when trying to get multiple borrowers to agree and be able to move ahead. Speak to the friendly team at ActonLendingSolutions.