John and Julie Tullock with Daughter Danielle — Julie and John Tulloch with their daughter Danielle, who moved back home after university. Photograph: Gary Calton for The Observer

The hidden cost of the boomerang kids, back at home with mum and dad

This article is more than 9 years old

There are now nearly two million adult children living with their parents in the UK. But what are the financial implications?

Lodgers who use up all the hot water, come home at all hours, and argue about housework don’t sound very appealing; but for the parents of nearly two million adults who have moved back home the scenario may sound familiar.

Unable to stump up the £215,000 required on average for their first home, a quarter of all 20- to 34-year-old working adults in England now live with their parents, according to housing charity Shelter.

Yet when a child returns to the family nest it can have major unforeseen financial implications for parents. Insurance costs can shoot up, as well as household bills, and they could find it harder to borrow against their home.

After a report last week from Lloyds revealed that parents are increasingly being relied on, stumping up £4.1bn in rent payments for their children in 2015, we asked three sets to tell us about their experiences:

In training

John, 74, and Julie Tulloch, 51, live in Preston, Lancashire. Their daughter Danielle, 21, moved back home after getting a job as a primary school teacher.

“We charge her a nominal £50 a week in rent, about half of what I’d charge a lodger on the open market. That covers the extra cost of her living at home,” John says. “Depending on how well she saves, we may decide to put this money towards helping her with a deposit on her first home.”

Since Danielle moved back in, their home insurance premium has shot up by £200 a year because of additional possessions and added wear and tear. “But we’re mortgage-free and financially we’re much better off now than when she was at university,” he adds. Danielle’s three years at Scarborough University cost the Tullochs more than £52,000. “We paid all her bills, including her accommodation, food, pocket money and £27,000 tuition fees. I’d retired so I used money from my pension and worked 60-hour weeks to earn some extra money.”

It was her idea to move back home afterwards: “She earns the lowest rate of teaching pay at the moment because she’s not fully qualified. I’ve suggested she stays for another year, until she can get a mortgage,” he says.

“By the time she has completed her two years training and probation, I’m hoping she should have sufficient money for a deposit. The house is very untidy and this can lead to intense discussions. We also have less privacy. But we love seeing our lovely daughter, and when she moves out, we will miss her.”

Saving up

Basma, 54, and Mohamed Hailan, 55, live in Enfield, north London. Their daughters Reem, 25, and Sara, 24, who both work in marketing, moved back home after they finished university to avoid sky-high rents, at £650 a month for a room in a shared house.

“They’re trying to save for deposits so they can get on the property ladder,” says Basma. “I have no idea how long they’ll stay, but I think they’ll try to move out in a year if they can.

'They have to spend a lot of money commuting into central London for their jobs.' — ‘They have to spend a lot of money commuting into central London for their jobs.’ Photograph: Kevin Coombs/Reuters

“Our electricity usage has gone up, because of their tablets and hairdryers, and our food bill has doubled – but they’re not contributing anything towards bills. I don’t ask them whether they’re saving that money. They do go out but not as much as when they were at university, and they have to spend a lot of money commuting into central London for their jobs.”

She adds that her daughters are “very comfortable” living at home. “I do all the laundry and housework. I don’t mind – now I’m retired it gives me something to do.

“They cook and iron sometimes or will do the food shop for me if I ask them to.” Basma says she realises the financial difficulties young people face: “In my day, you got married when you were young and bought a house. Not any more.

“We’re going to try to help them financially with their deposits and give them a few thousand pounds. I want them to be independent.”

Between homes

Tim Foster, 62, and his wife Susan, 60, live in Croydon, south London. Their daughter Claire, 34, who works in PR for Direct Line insurance, moved back home three years ago after selling her flat.

'We’re happy to have her, but we’d also like the space …' Claire returned home with a flat's worth of stuff. — ‘We’re happy to have her, but we’d also like the space …’ Claire returned home with a flat’s worth of stuff. Photograph: Alamy

“It was supposed to be a temporary arrangement so she could look for her second home, chain-free,” says Tim. “We’d just built an extension, which was going to be my study. That’s become Claire’s bedroom.

He says that Claire is desperate to move out, “but the market keeps running away from her”. “We’re happy to have her, but we’d also like the space. Inevitably, there’s bickering about washing and household chores. I should charge her rent, but I don’t. I’d much prefer to see her put that money into her savings account. Letting her live here rent-free is my contribution to her deposit.”

He adds that Claire returned home with a flat’s worth of stuff. “Luckily, even with all her possessions, we haven’t exceeded our £100,000 of cover.” The couple say they’re happy for their daughter to stay for as long as she likes. “We need faster broadband and use more hot water, but otherwise there are no noticeable extra costs.

“She takes us out for dinner or to the theatre occasionally – she’s a generous girl so it’s not a one-way thing.”

Pitfalls for parents

■ If you are applying for a new mortgage or for a further loan on your mortgage and your child is over 17 and lives at home, you must declare this to your mortgage lender - even if they are not party to the application, says Sat Singh, of financial adviser Contractor Financials. Anyone over the age of 17 with exclusive possesion of the property without the owner’s consent can potentially claim squatters’ rights. Your child will be asked to sign a “consent to mortgage” form, waiving their right to live in the property if it’s repossessed.

Check with your insurer that the gadgets your children bring home with them are covered under your policy. Photograph: Christian Sinibaldi/The Guardian

■ If your child has no income, the lender will consider them a financial dependent. “Anyone looking for a mortgage will be asked how many dependents they have,” says Pete Mugleston of Onlinemortgageadvisor.co.uk. “If your child works and you don’t declare them as dependent, the lender may ask for evidence of the child’s income.”

■ Your affordability calculation for a mortgage can also be affected if your child pays you cash for food and lodging.

■ If your child moves back home - particularly if they bring valuable gadgets with them - you should always contact your home insurer. “It could mean you’re not adequately covered by your current home insurance policy,” a spokesperson for LV= says. “Young adults in particular may own high value technology,” says David Rochester, of Halifax Home Insurance. “Check what your policy covers you for.”

■ If you’ve taken out an equity release plan, you have a legal obligation to tell the provider if an adult relative moves in, says Dean Mirfin from Key Retirement Solutions. It will ask your child to sign a “waiver of occupancy”, which states that “if the owners of the property die and the property needs to be sold, the property will be vacated.” However, he says it would have no impact on how much you can borrow or how you will be assessed.

Thanks to Yorkshire Building Society and Direct Line for help with this article.