Millions of parents across Britain are unable to get rid of their “boomerang” children, those who have either moved home after finishing their studies or never left.
One in four young people aged from 20 to 34 still lives with their family, according to the Office for National Statistics (ONS). That figure has leapt by 24 per cent over the past 10 years – bringing the number of young people living with parents up to 3.4 million.
The cost of allowing your grown-up children to live at home has risen by 83 per cent in a year, according to MoneySuperMarket. It calculated that the average cost of having an adult child live at home is now £1,640, with most parents footing the bill for water, heating and electricity as well as meals out, toiletries and food. Children are also making the most of the Hotel of Mum and Dad for longer: now staying for over 10 months on average.
With the pressure piling on the Bank of Mum and Dad, more parents are having to raid their pension pots and make sacrifices on their own retirement to cover the cost of their boomerang children.
Andrew Montlake, of mortgage broker Coreco, blamed the news on a “fundamentally broken property market” which is leaving young people unable to afford their own home. “In the capital only young people with high paid jobs and easy access to the Bank of Mum and Dad have got a chance of owning a home,” he said.
But for parents looking to give their children a gentle nudge out into the world, there is help at hand. Here is Telegraph Property's list of the five best ways to help your children financially – and get them to move out.
Take out a ‘family springboard’ mortgage
These products allow a first-time buyer to qualify for a mortgage even if they have a smaller than average deposit. The lender is given reassurance that they will get the money back by a parent or other family member of the buyer, who puts 10 per cent of the property's total value into a savings account with the lender (where it earns interest).
If the buyer keeps up with their mortgage payments, the family member will then get their funds back after a set period of time, usually around three to five years. Lenders offering family-backed mortgage deals currently include Barclays, Lloyds Bank, and Family Building Society.
If you don’t fancy locking away your savings, you can help out with a guarantor mortgage. The Post Office offers a Family Link deal that allows a person to buy a home with no deposit at all, instead using a family member’s home as security (which they must own outright). Parents should seek advice when considering these types of mortgages.
Convince them to set up a Lifetime or Help to Buy Isa
Over the past few years the Government has launched a number of schemes to help first-time buyers on to the property ladder. These include the Lifetime Isa and Help to Buy Isa.
Each of these tax-efficient savings accounts offers a generous 25 per cent top-up on any money you put in – as long as those funds are put towards buying a home. Each initiative has its own rules and eligibility criteria. You can read all about how both the Lifetime Isa and Help to Buy Isa work in our ultimate guide to buying your first home.
Gift or loan them the deposit
According to non-profit advice service The Money Charity, parents help out with around one in four house purchases each year. However, warned Penny Gordon, head of residential property at law firm Prettys, parents gifting or loaning money to help children buy a home should bear in mind the legal and tax implications.
“When you gift money for a deposit, the mortgage lender would usually require the donor to sign a declaration that they do not want the money back and that they do not wish to hold any legal or equitable interest in the home,” she said. “The gift would reduce a parent’s estate for inheritance tax (IHT) purposes, but IHT may have to be paid on the gift if the donor dies within seven years of making it.”
Parents loaning rather than gifting money to their children can protect these funds by securing them against the legal title of the property as a private loan. If your child repays the loan with interest, you will have to pay tax on that interest. Gordon added: “A loan agreement containing all the terms of the loan should be drawn up and incorporated into a Land Registry form.”
She advised any parents wishing to give money for a deposit to a child to first seek legal advice.
Help them find a new job
In some parts of Britain, young people have to find more than 10 times their annual salary to get on to the property ladder. One way for them to solve the problem is to boost their income with a new, better-paid job.
ONS figures show that pay growth is slow for those who stay put in their current job, with wages rising by just 3 per cent last year. By contrast, those who switch jobs secure an average pay rise of more than 7 per cent.
“For a lot of people, if they want to get a pay increase, the obvious option is to move [jobs] rather than wait to progress internally,” said Tom Hadley at the Recruitment at Employment Confederation, an industry body.
Alternatively, you could encourage your child to approach their boss and ask for a pay rise.
Jo Garside, a coach at SEVEN Career Coaching, advised those doing this to show their employer that they know the value they bring to the company and what someone at their level should be paid. “Don’t threaten them - this is an opportunity for you to demonstrate that you want to continue adding value and for them to recognise that.”
When you can enjoy living rent-free at home, with meals cooked for you and your laundry done as if by magic, there’s not much motivation for young people to look for their own place.
Yet having extra people in the house increases energy and water usage and the cost of groceries. According to Energy Helpline, the switching site, an extra person living in your home adds around £100 a year to your energy bills.
Sarah Coles, of wealth manager Hargreaves Lansdown, suggested parents start by charging their children a nominal rent. “After a while, you can increase their rent to the kind of money they’d pay for a room in a shared house,” she said. “This will help make the transition away from home more manageable, because they’re used to having to budget. It may also help persuade them to make the move.”