Parents in the UK are saving their children thousands of pounds a year by allowing them to live at home with them well into their 30s. With property prices so high in some areas of the UK, young adults are reluctant or simply unable to get a mortgage and onto the property ladder. And with rental costs also high across the country, many are opting to live at home with Mum and Dad.
So what are the benefits of living at home with parents at the so-called Hotel of Mum and Dad?
Low rent or even no rent - Many parents will charge no rent at all but those that do usually ask for a significantly lower amount than the average equivalent rental cost in their area.
Little or no overheads - With bills and other overheads covered by parents (either fully or in part), monthly outgoings will be kept to a minimum. Lower debts will help you borrow a larger mortgage, calculate how much you can borrow here.
Home comforts - Although it shouldn’t necessarily be the case, having parents around to do the washing, cleaning and cooking is a big incentive! That’s not to say that young adults living with their parents shouldn’t be doing their fair share of household duties, but most likely the reality at The Hotel of Mum and Dad is that they will be looked after to some extent.
SAVE FOR A MORTGAGE! Ultimately, the biggest benefit of living at home with Mum and Dad is that it provides young adults with the opportunity to save money. And assuming it is not their intention to live with their parents forever (let’s hope not for their parent's sake!), it is a great way to save for a deposit for a first-time mortgage.
House prices in the UK are forecast to increase by 2.5% in 2019 according to PropertyWire and by 18% over 5 years (2018 -2022). And with Brexit negotiations continuing, it is causing uncertain political and economic conditions. The Hotel of Mum and Dad is therefore set to continue as a popular housing solution for young people but it should be considered a short to medium term solution only, because getting a mortgage is still within reach for many. There are some good Government schemes available to help people with their first time mortgage such as Help to Buy, Shared Ownership and Right to Buy. All these schemes help first-time buyers get onto the property ladder. Parents can further help their children by acting as a guarantor with a guarantor mortgage. This can give first-time buyers access to mortgages with better rates because the risk to the lender is reduced.
So young people should continue staying at the Hotel of Mum and Dad, if the opportunity arises to do so, long enough to save for that all important mortgage deposit. But once enough money has been saved, it is worth looking into suitable mortgage options and moving onto the exciting phase of purchasing a property.
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