Should I ask my grown-up children to pay rent?

Annie Shaw / 12 March 2013

Saga Magazine's award-winning money writer Annie Shaw gets to grips with some thorny financial dilemmas.



Question

Like many older parents I find I am providing accommodation for “boomerang kids”.

I’ve now got three grown-up children under my roof who have, after university and working away, all returned to the family home.

Luckily they have all got jobs, but they never seem to have much money to spend.

The cost of renting, should they move out, would see their disposable income fall even further and they all have huge student debts. These are fortunately all from the Student Loans Company on a reasonable rate of interest rather than the bank, but it still takes a chunk out of their wages.

My husband and I have long since given up plans for a retirement “à deux” as long as the children are still on our hands. They each have a boyfriend/girlfriend and at weekends the house can be like Grand Central Station.

I suppose we must secretly like having them around as it keeps us young, or we would take measures to throw them out.

My question is: are we doing the right thing by giving them a home, or should we take a hard line and – metaphorically at least – change the locks?

If we let them stay, should we charge them rent?

We don’t need the money and they do, but I do wonder if there is some moral issue here about them living rent-free when they are working and my husband and I are pensioners, albeit not too badly off?

A friend once advised me “Never buy your child a double bed”. If the children have taken root and even introduced their respective partners because you’ve made them so comfortable, you’ve got problems!

Answer

All I can say is, I hope you are not still doing their washing!

But let’s be practical here. According to some recent figures, 4.4 million grown-up children in the UK are receiving financial support from their parents, each of them costing their parents £47,324 on average during their adult years.

These dependent children don’t, of course, all live under the same roof as their parents – although 1.6 million do – but, according to research published last year, subsidising their children’s basic living costs, including bills and rent, is costing parents an average £2,103 per year, or £175 per month for each child.

Of those living at home, more than half (58%) are in their twenties, a third (29%) are in their thirties and an astonishing one in ten (12%) are over 40.

You are clearly not alone with your problem.

If you thought that giving your child a home would save you money in the long run you’d be wrong. Supporting your child at home actually costs more over the years than helping them get a flat, or so the research maintains.

So, what is to be done?

It’s a blessing that you “secretly” like having your children around. I suggest it’s not a very well kept secret, as you’ve certainly let your children in on it. Pity those other parents who have grown-up children at home and hate it.

We know that, in these difficult economic times, children have never found it harder to get on the housing ladder. They are saddled with student debt and the cost of basics, such as running a car and travelling by public transport. Even lunches at the office have gone stratospheric. That’s before they’ve bought work clothes, had a bit of fun, like a Saturday night out, treated the girlfriend to a weekend away or actually taken a holiday.

Parents also quite like a bit of control: knowing what their children are up to, who they are dating, what they are eating and the hours they keep. That’s probably a bad thing, but as well as enjoying your children’s no doubt charming company, it probably contributes to the explanation about why you haven’t actually changed the locks or moved out yourself.

Don’t, however, beat yourself up about the fact that your children haven’t flown the nest. Watching your children move out of the family home as soon as they’ve left school is a relatively new phenomenon, occasioned for our generation by the increase in university education (going away to study provided a natural moving out point of no return) and cheap mortgage lending, which has now dried up.

It became the norm for us baby-boomers but certainly isn’t the norm everywhere.

Set some rules

Multi-generational families are quite usual in many, if not most, cultures, and indeed were in ours until about 50 years ago. There’s no reason that they shouldn’t become the norm – at least for some families – once again, so there’s no need to feel self-conscious about your situation per se.

The mores of living together have, however, changed. You need to decide whose home it is and who calls the shots.

You can’t be expecting your working children to be home at a certain time, or get upset if they don’t turn up for supper because they’ve gone for an after-work drink with their friends. Nor should you be doing their darning and washing.

Perhaps an arrangement more like flatmates would work better, when you have to respect each other’s comings and goings? How you work this out is going to be up to you – but work it out you should.

Thinking about signing your house over to your children? Here's what you need to know.

Don't become a hotel

Forget cooking and shopping rotas. Offer them a meal if you’ve cooked one and there’s some food to spare, but turn a deaf ear to the question “What’s for dinner?”. You are not offering hotel service. They should buy their own food and cook it – and indeed offer you some of their dinner on the same basis as you would offer yours to them.

Charge them a share of the bills and insist they keep common parts of the house clean and tidy. It’s none of your business if their bedrooms are a tip – they are adults after all – but they should keep them clean, as dirt travels to other parts of the house. If they don’t want to clean them themselves, on no account step in. Hire a cleaner and charge them a share of the cost.

The big question is: do you charge them rent when they are apparently so hard up? I’m afraid the answer has to be yes, even if it makes them skint and you don’t need the money.

There are two reasons for this: the first is that paying your way is what adults do, and picking up the tab so your children can treat their wages as pocket money for spending is infantilising them.

The second reason, which is really part of the same thing, is that it’s good practice for the day that will surely come when they DO have to pay rent or a mortgage. It is simply good discipline.

You are doing your children no favours by letting them become accustomed to a high level of disposable income, and indeed are making a rod for your own back. They will never become independent if they think they can’t afford their own place. If you charge them a market rent they will realise that they can afford it, because they just have to swap one rent (yours) for another.

What should you do with the rent?

Finally, what do you do with the money that you have accepted in rent?

Many retired people would welcome the extra income, and you will find articles on this website about people making money from their home by renting out rooms simply to make ends meet.

You are lucky, in that you don’t seem to need the money.

In which case, open a savings account and put the money aside. It will soon mount up and you can give it right back to the children when you eventually decide to downsize to that little place in the country you’ve always dreamed of. It will make a great deposit on a flat for them.

Find out about the rules on giving money to your children

Read Annie Shaw's money articles every month in Saga Magazine.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.