The bidirectional impact of intergenerational transfers for entry into the property market: Understanding wellbeing implications for donors and recipients

Project lead: Louise Overton

Part of the CHASM International Visiting Research Fellowship Scheme, this research seeks to address the under-researched area of the impact of intergenerational financial transfers on donors.

It does so by conducting qualitative, interview-based research with donors and recipients to enhance understanding of the impact of intergenerational transfers for entry into the housing market on the subjective wellbeing of both parties. The study of the bidirectional impact of this practice within families is framed by the concept of ‘linked lives’, which has risen to prominence in life-course research and has been used to aid movement away from individualising perspectives, and towards approaches that are able to conceptualise the relational determinants of considerations such as wellbeing.

 

Research team

  • Julia Cook, The University of Newcastle, Australia
  • Louise Overton, University of Birmingham

Outputs and impact

The collaboration will lead to:

  • A joint publication submitted to Sociology.
  • A companion study of the impact of intergenerational wealth transfers on recipient and donor wellbeing in a post-industrial Australian city (that provides a field site echoing Birmingham), allowing for secondary use of the data collected during the fellowship, and for further joint publications.  
  • A CHASM  seminar on the research.

CHASM International Fellow Scheme collaboaration with Dr Julia Cook – Intergenerational transfers for entry into the property market project:

Louise Overton offers an account of the collaboration:

I was delighted to work with Dr Julia Cook from the University of Newcastle as part of this year’s CHASM International Fellows Scheme.

There was very little time for Julia to acclimatise as we hit the ground running with fieldwork on day 2 of her visit, and completed 30 in-depth interviews in just over a week! We interviewed parents and their adult children about the financial support they had given/received for the purpose of entry into home ownership. This research was made possible by the College of Social Sciences Quality Output Support Scheme (CoSS QoSS) as well as the CHASM International Fellows scheme.

Initial key findings included:

  • The biggest barrier to purchasing a home without parental assistance was the size of the deposit required by lenders, and the cost of legal and administrative fees.
  • All of the young adults in our sample had saved some money towards the cost of purchasing their first home, but were unable to save enough to meet their housing needs and preferences. They had employed multiple savings strategies and in some cases made sacrifices such as ceasing pension contributions. While some considered other means of meeting the shortfall (such as using their overdraft) none felt that other means of financing would be viable for them, meaning that they commonly framed their options as either accepting financial support from relatives or waiting to save more money before purchasing a house.
  • While many of the donors and recipients considered the option of waiting to accrue savings before entering into the property market rather than providing/receiving a gift or loan from family, the idea that the rising costs of property could outstrip the rate at which young adults were able to save was commonly cited as a motivation and justification for both giving and receiving funds. 
  • Financial support from parents was used to meet the upfront costs of house purchase, as well as for home improvements to a lesser extent.
  • The sums of money gifted or loaned ranged from £2000 to £34,000. For the most part, parents had gifted the money.
  • Some donors were well placed to provide this support, reporting that it made very little or no difference to their ability to meet their own financial needs.
  • Others were much less well off, and had used modest pension savings, pay-outs from life insurance policies, and other means, to help their child buy their first home. This meant some participants were exposed to potentially significant income shocks and financial risk and uncertainty.
  • There was an overriding consensus among the younger and older participants that home ownership was a sound investment; the best kind of investment. This was underlined by the widespread aspiration among first time buyers to own multiple properties in the future. It was also connected to the centrality of home ownership to peoples’ long term sense of (material and symbolic) security. Having a home of one’s own appeared to provide certainty in an otherwise uncertain future.

So far, we have used this preliminary analysis to respond to the FCA’s discussion on Intergenerational Differences (DP19/2), but our analysis is ongoing and we have planned two journal articles which we will submit to the Journal of Social Policy and Sociology. We will also be considering further opportunities for collaboration in our shared area of interest related to changing intergenerational dynamics.

Dr Cook and Dr Druta delivered a joint CHASM seminar while they were here on the theme ‘Shifting responsibilities: homeownership and life-course transitions in a comparative perspective’ which was very well attended and prompted interesting and stimulating discussion from the audience.

It was my pleasure to host Julia, and I very much look forward to our ongoing and future work together.