Half of parents return rent paid by adult children to help them buy a home

More than half of parents who charge rent to their adult children use the money to help their offspring buy their first home, according to new research from Nationwide.

The findings highlight the increasingly important role families, and the family home, are playing in helping the next generation onto the housing ladder, with many parents using rent payments as a way of building a future deposit while their children continue living at home.

The surveyed parents charge their adult children living at home an average of £303 per month in rent – equivalent to more than £3,600 a year. However, the amount of rent paid varies considerably across the country, with parents in Greater London charging an average of £415 a month (£4,980 a year), compared with just £187 a month (£2,244 a year) in Yorkshire and The Humber and £211 in the East Midlands (£2,532 a year).

According to the poll of more than 2,000 UK parents with adult children living at home and paying rent, 54% return some or all of the rent paid by their children to support their homeownership ambitions, effectively turning rent into a savings mechanism for a deposit. The research also found that a third (34%) of adult children remain at home specifically to build savings for a future house purchase.

Many parents are also providing additional flexibility to their children. More than two in five (45%) parents have waived rent payments for their child once in the past year, while more than half (52%) say they’ve let children off rent payments between two and six times in the last year.

While the journey to homeownership is taking longer for many aspiring first-time buyers, the family home is increasingly becoming an important stepping stone towards that goal. More than eight in ten (82%) parents say rising housing costs are making it more likely their adult children will continue living under the family roof for longer, while four in ten (40%) say their adult child remains at home because they cannot yet afford to move out.

The research suggests the traditional parent-child relationship is evolving as adult children spend longer living at home, with nearly half (45%) of parents saying they feel like a landlord to their own child.

More than six in 10 parents (61%) have increased the rent they charge their adult child. The London versus Yorkshire dynamic also continues when it comes to increasing the rent, with three quarters (75%) of Greater London parents saying they’ve done so, compared to less than half (46%) of parents in Yorkshire and The Humber.

One in five (21%) parents admit to already having a formal arrangement in place, with a further 14% saying they would consider it. Greater London parents are most likely to have a formal agreement in place (47%), followed by those in the East of England (27%). Parents in Yorkshire and The Humber and East Midlands are least likely to have one, with only 5% (Yorkshire and The Humber) and 6% (East Midlands) saying they have a formal arrangement in place.

However, the arrangement is not always straightforward. Half of parents (50%) say financial arrangements with their adult child have caused tension or disagreements.

Carlo Pileggi, Nationwide’s head of mortgage products, commented: “Behind many first-time buyer success stories are parents quietly helping along the way and it appears they are using new tactics to support their children. As saving for a home remains as challenging as ever, our research shows many of Britain’s parents are using rent payments as a way to help their children build a deposit, turning the family home and time spent living at home into a stepping stone towards homeownership. However, the findings also serve as a reminder that many aspiring first-time buyers do not have access to family support and continue to face significant challenges in saving for a deposit."