Rising numbers of adult children living at home and returning home are placing increasing financial pressure on older homeowners saving for retirement and clearing their mortgage, according to Key Equity Release.
The equity release adviser said the total annual cost of adult children living at home could be as much as £17 billion if parents do not charge rent. It is estimated that parents aged between 54 and 62 are most likely to have adult children living at home.
Government data has shown that more than 3.8 million families have adult children living at home, the equivalent of around one in four, with 4.9 million adult children still in their parents’ homes. Around 23% of parents have adult children living with them who had previously left home.
Men (61%) are more likely to still live at home than women (39%) and more likely to be living in London, where 27% of families have adult children living with them.
Key Equity Release said additional costs for parents with adult children at home are estimated at around £3,400 a year from food and use of utilities, adding up to as much as £17 billion for all households.
Will Hale, CEO 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.”
Key Equity Release says later life lending solutions such as lifetime mortgages which enable older homeowners to release property wealth can help over-55s better manage the costs, as well as allow them to provide financial support.
Hale added: “Many over-55 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.”
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