Adult children living at home could cost parents £17bn a year
Key Equity Release has warned that the rising number of adult children living with or returning to their parents could be adding significant financial pressure for older homeowners approaching retirement.
Adult children living at home could be costing parents as much as £17bn a year, according to Key Equity Release, as older homeowners face additional pressure on retirement saving and mortgage repayments.
Government data cited by Key shows that more than 3.8 million families have adult children living at home, representing around one in four families in England and Wales, with 4.9 million adult children still living with their parents.
Around 23% of parents with adult children at home are living with children who had previously moved out before returning.
Key estimates that the additional cost of food and utilities for an adult child living at home is around £3,400 a year, potentially taking the total annual cost across households to £17bn where parents do not charge rent or ask for a contribution towards household expenses.
Parents aged between 54 and 62 are the most likely to have adult children living at home, meaning the additional costs can coincide with the period when homeowners are trying to clear mortgages and increase pension saving ahead of retirement.
Adult children living at home are more likely to be male, accounting for 61% compared with 39% female, while London has the highest proportion of families with adult children at home at 27%.
Nearly half of lone-parent households, at 46%, have adult children living at home.
Key also noted that many adult children provide unpaid care for older parents, with Government data showing around one in four are unpaid carers.
Will Hale, chief executive officer of Key Equity Release, said: “Adult children living at home is a long-term trend across the UK with the recent tough jobs market for graduates and rising rent costs as well as the struggle to raise deposits for mortgages and meet lender affordability requirements adding further pressure.
“Parents inevitably want to help out children and that is demonstrated by the numbers of adult children returning to live in the family home. Helping children can come at a cost however and parents need to consider their own financial situation.
“They are most likely to face the added financial costs of adult children living at home at a time in their lives when they are looking to pay off their mortgage and maximise pension saving for their own retirement.
“Many over-55s homeowners will have substantial property wealth which they can put to use easing the immediate financial pressure resulting from a child returning to live at home which may include using equity release to pay off their own mortgage so reducing monthly outgoings.
“Products such as modern lifetime mortgages can also be used to make gifts to help adult children with deposits so they can eventually move out and begin their own home ownership journey.
“As always, specialist advice is critical to ensure all appropriate options are considered and that any assistance provided for children does not compromise the customer’s own financial resilience.”
Key said later-life lending products, including lifetime mortgages, could be used by over-55s to manage household costs or provide financial help towards deposits for adult children.
Related
Key Partnerships urges wider use of later life lending in IHT planning
EXCLUSIVE: April Mortgages enhances Interest Only, adds options for over-50s
LV= launches interest reward lifetime mortgage
Private renting adds £8,000 a year to minimum living costs for families, research finds
more2life forms exclusive partnership with Verified Building Services
TMG Group agrees acquisition of Later Life Money
88% of brokers report rise in holiday let enquiries
UK house prices fall annually for first time since November 2023
Remortgage searches rise 11% year-on-year – Twenty7tec
DIY mistakes cost homeowners £270 on average, research finds
Scottish house prices rise 1.8% as market outpaces England and Wales
