Adult children living with their parents could add as much as £17 billion to household costs each year if they do not contribute rent, according to Key Equity Release.
Parents aged between 54 and 62 are the most likely to have adult children at home, adding to financial pressures at a time when many are saving for retirement or paying off their mortgage.
Government data shows that more than 3.8 million families in England and Wales have adult children living with them, equivalent to around one in four families. A total of 4.9 million adult children remain in their parents’ homes.
Around 23% of parents living with adult children said their children had previously left home.
The additional cost of food and utilities is estimated at about £3,400 a household each year. Across all affected households, the annual bill could reach £17 billion if parents receive no contribution towards rent or other costs.
Key said some adult children provided valuable support to their parents, with government figures showing that one in four acted as unpaid carers. However, the adviser urged older homeowners to consider the effect of the additional costs on their finances.
Men account for 61% of adult children living at home, compared with 39% for women. London has the highest proportion, with 27% of families having adult children at home.
Lone-parent households are also more likely to include adult children, with 46% having at least one living at home.
Key said later-life lending products, including lifetime mortgages, could help homeowners aged over 55 to manage the cost of children returning home or provide financial support to help them buy their own property.
Lifetime mortgages allow homeowners to release wealth from their properties while retaining the right to remain in their homes. Customers can choose to pay all or part of the interest, make regular capital repayments or allow the interest to accumulate.
Will Hale, chief executive 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.”
Hale said: “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.”
He added: “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.”
Hale said: “Many over-55s 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.”
He added: “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.”
“As always, specialist advice is critical to ensure all appropriate options are considered and that any assistance provided for children does not compromise the customer’s own financial resilience.”
