Multi-generational living makes cents

More families are now sharing living spaces to cope with rising costs and unaffordable property prices. By Bonny Fourie

Humans, by nature, are a resilient species and when the going gets tough they rise to meet the challenges. They also often band together and this survival tactic is fast filtering into the property market, with families living together more frequently to combat rising living and property costs.

The latest figures from Statistics SA's General Household Survey 2018, released in May, show that 37.6% of the country's 16.7million households consist of two generations and 14.2% contained "at least" three generations.

The report estimates that:

• 39.1% of households could be classified as nuclear (parents or parent with children).
• 32.9% of households could be classified broadly as extended households (a nuclear core combined with other family members such as parents or siblings). 2.3% of households were classified as complex, meaning they contained non-related persons.
• Nuclear households were most common in Western Cape (50.9%) and Gauteng (46.3%).
• Extended households were most common in Eastern Cape (42%), KwaZulu-Natal (40.4%) and Limpopo (39.3%). In Cape Town, it is estimated 10% of families is engaged in multi-generational living, says James Jooste of Dogon Group Properties.

The trend is spread across areas and is seen most in households with elderly parents from lower-income LSMs. It is also more prominent "across the board" among middle-income earners, believes Graham Ross, Just Property's general manager for the region.

"There has been an increase in this trend, jumping in the last decade from 3.5% to around 8%," he says Economics seems to be the driver of the multi-generational living trend, which has increased in recent months, according to Jacqui Wood and Roz van der Walt, Greeff Christies International Real Estate areas specialists.

"(Pockets in) Constantia are predominantly family-focused and hence the increase in demand," Wood says. Van der Walt says: "This has also been seen in areas such as Bergvliet, Meadowridge and Diep River, where it is more affordable."

Young families are supporting older relatives in some cases while, in others, older couples are supporting their young adult children who cannot afford to purchase their own properties, they say. Nick Gaertner, COO of Knight Frank, believes this "prominent" multi-generational living trend is a full circle cycle.

"When budgets are squeezed (and the economy is not growing), you definitely start to get an increase in multi-channel generational living. You see more of it now with homeowners' ability to build second properties onto their erven. That is great for older parents."

Areas such as Hout Bay, the southern suburbs, the City Bowl and those more family-orientated, are seeing this growing trend more. The Atlantic seaboard however, is not popular for such living, as it consists mostly of sectional title and investment properties.

Security and lifestyle reasons are also behind the multi-generational living trend which, Craig Mott, regional sales manager for Rawson Property Group Western Cape, says is growing among younger and older people who often live under one roof with three or more generations.

Older residents aged 55 to 75 are faced with increasing medical and daily living costs, so they move in with their children.

Due to the high unemployment rate, the younger generation is more likely to live with their parents for longer. "In both instances, multi-generational living is practical and makes financial sense. It's also a way for them to simultaneously take care of each other," Mott says.

Properties with flats are in demand

Many looking to live with family are adjusting their properties to make space for everyone. This often means building a separate cottage with its own entrance and carport, says Knight Frank's Nick Gaertner.

"The more separate the accommodation is, the better. It can also be used to generate a second income if it is not used by a family member." Accommodating additional family members is becoming a growing consideration when people develop or build homes, he says.

For families renting, Helen Oosthuizen, rental manager at Knight Frank, says there is a 50-50 split between those who adjust their living arrangements to accommodate additional people and those who seek new rental properties to do so.

Greeff agents Jacqui Wood and Roz van der Walt say most people seek to move into properties that meet their dual-living requirements. In some cases, people pool their financial resources to do so. For example, they sell two homes to buy one. Woods says such properties are usually family homes with cottages or flatlets on the premises.

"Privacy is often a requirement so all parties can co-exist without encroaching on one another." Those adding on to their properties are building granny flats with separate entrances and additional parking, says Van der Walt.

Buyers do not appear to be fond of sharing bedrooms and are specific about how many bedrooms they require properties to have, the agents say. The rental market is "very robust", with many people looking to rent homes with space for elderly parents, says Dogon's James Jooste.

Reflecting the trends in the buying market, properties with granny flats are "very popular". "It seems to be more popular for families to create a separate space for additional family members to live in, rather than them all living under one roof, if financial circumstances allow for this."

Jooste says more families appear to be making space for elderly relatives than the other way around. Living together and pooling funds takes some financial pressure off families and also offers the opportunity to rent or buy larger, more comfortable homes, says Rawson's Craig Mott. However, most people opt to build on and adjust their current homes to suit the needs of additional family members.

"They would be looking at adding on additional bedrooms or possibly converting a garage or staff accommodation into a suitable flatlet." While most agents say the trend is more for adult children to accommodate elderly parents Just Property's Graham Ross sees more cases of parents making space for their children to move back home.

"As the children start growing their families, often parents move into the flatlets while their children and grandchildren take up residence in the main house."  

Joint ownership requires legal agreements

The National credit act, with its "strict requirements", has resulted in more family members jointly applying for bonds or pooling their resources, says Just Property's Shaun Dubois.

"Recently, we have found many pensioners using their lump sum pension payouts to contribute to the funding of a family home for themselves and their younger children and grandchildren," he says.

Owning a property jointly is "usually a better choice" than paying rent to one family owner and anyone contributing to the bond should be co-registered as an owner.

Regardless of which option is chosen, Dubois says a clear, written agreement stipulating everyone's rights and responsibilities must be drawn up. He says: 

"Situations, such as if one of the parties passes away, should be carefully considered. "Initially, there may be much excitement about buying a new property together but differences of opinion, and individual circumstances changing over the years, are inevitable and these must be very carefully considered." 

Although many families are pooling their resources to buy property, most of the time one party appears to be taking financial responsibility for the purchase, says Greeff's Jacqui Woods. Co-ownership, however, does offer the benefit of allowing families to purchase more expensive properties in better areas. In cases of co-ownership, Greeff's Roz van der Walt says agreements must be put in place to deal with death or parties wishing to sell their shares.

Dogon's James Jooste says pooling of resources is being seen "from time to time", mainly in cases where elderly parents who might not have enough money to buy on their own assist younger family members to purchase more expensive properties with cottages or flatlets.

Jooste says: "By pooling resources through co-ownership there is relief for both parties by sharing the burden of the bond costs, if there is one. One also reduces risk in a falling market in the short term, with gains in the long term when the market changes and turns again."

Although deciding whether to co-own or pay rent to one family owner depends on individual circumstances, Rawson's Craig Mott says there are frequently scenarios where one member or couple purchases a property and other family members pay rent or contribute towards paying the rates and/or services accounts.

"It can cause complications when family members in different cycles in their life purchase property together," he says. There is "a lot" of parent-and-children joint financing, says Knight Frank's Nick Gaertner.

The decision about whether to co-purchase or pay rent to one family member "comes down to ownership and having a say as opposed to paying off some else's bond". For those who are deciding, Gaertner advises: "People can always fall out, but if you want ownership in your life, go for it. Legal agreements are in place. Make sure you are really good friends or close family."

Lend a hand: Grandparents help

Multi-generational living means there are more people to assist with the day-to-day household activities, such as cooking and cleaning, says Tony Clarke, managing director of the Rawson Property Group.

"In today's times, work can place heavy restrictions on parents and make it difficult for them to drop and fetch children from school and so on. "We see many cases where granny will help with the day-to-day activities and running around after the children in order to allow the parents the opportunity to work and make a living."

Having more people living in a home also provides a sense of security and can be a deterrent for crime, he says.

Living together is safe and affordable

The high unemployment rate, and rising living costs, are having an effect on families throughout South Africa and many are choosing to live under one roof to cut costs, says Rawson's Craig Mott.

Families are choosing affordable and safe suburbs in which to live. These include Midrand and Centurion in Gauteng, Bluff and Westville in KwaZulu-Natal and Pinelands and the northern suburbs of Bellville and Kuilsriver in Cape Town.

"Depending on affordability, lifestyle estates are also becoming a popular choice as they provide facilities that cater for all age groups." Mott says secured lifestyle estates in close proximity to schools, shops, medical care facilities and sport and leisure activities, and freehold homes, are generally the preference when it comes to multigenerational living.

"Freehold homes have less restriction on building than sectional titles. They will often allow for additions or alterations and, in some cases, a second dwelling may be added to the property."

Plan ahead: Cover all angles

Joint property buyers should always think of the ownership as a business agreement. Therefore, it is good to have a plan of action in case life surprises you, says Rawson's Tony Clarke. "Just be sure you cover all the possible contingencies in your agreement."

These, Clarke says, include:

◆How the bond payments will be made.

◆How ownership and financial contributions will be apportioned.

◆How costs such as insurance, maintenance, rates, taxes and home improvements will be split.

◆What happens if one partner fails to fulfil their contributions.

◆What happens if one partner dies.

◆What happens if one person wants to move out, or sell their interest. 

Source: Property360