The cost of moving out
How expensive is it, really, for your children to move out and how can you help them to live independently?
It’s no wonder children are living with their parents well into adulthood. With the cost of living rising to new heights and salaries lagging behind, the cost of moving out has become unaffordable for many young people.
In fact, as recently as last year, around 42% of all adults under 35 in the UK still lived with their parents. Some had even moved out already, but felt the need to return due to money worries.
This doesn’t mean they’re not trying their best! Our research last year found that, while most people want to save, as many as a fifth of young adults in the UK can’t afford to put away any money at all, and many are living paycheck to paycheck.
Even when your child seems to be earning a good salary, it can be hard to believe that they can only just pay their rent, with nothing left over to save for their own home.
So, what’s going on?
We’ve taken a closer look at the real cost of moving out of your parents’ house - and how you, as parents, can help your children to support themselves.
How much does it cost to rent in the UK?
You might think it’s easy to move out of your parents’ home as long as you put your dreams of owning a home to one side and stick to renting at the start. But, the truth is, even renting has become unaffordable for most, and we’re not just talking about London.
The average monthly cost of living in Bristol, for example, adds up to around £2,493, including a rent of £1,200 for a one-bedroom flat. This means your child would need to have a salary of roughly £38,451 per year just to be able to live in a small flat, pay their bills and stock their fridge.
So, is the answer to just move to the north?
Sadly not. It’s not much different in other UK cities. The cost of living in Leeds, for example, is around £2,079 per month, including a rent of £850. It may seem much cheaper, but your child would still need to earn around £31,145 per year, in a city where the average salary is £23,000.
On average, the cost of renting a one-bedroom flat in the UK is around £1,279 per month, while the average salary is £34,963, which gives take-home pay of around £2,391 per month after taxes (the exact figure depends on things like pension contributions and student loan repayments).
Regardless of where your child might choose to live, that means they’ll still be spending over half their monthly salary on rent alone!
What about the cost of renting a room?
As you’d expect, renting a room in a shared property can be a good way to reduce the cost of moving out, and might give your child more of a chance to put some money away every month.
Currently, the cost of renting a room in the UK is around £745 per month. This number goes down to £666 if you don’t count the cost of renting a room in London.
Of course they’ll still have to pay for their share of the household bills and even renting a room might not allow them to save to buy their own property in the future.
How much does it cost to buy a house in the UK?
We’ve covered the average cost of moving out into rented accommodation, but what about buying a house?
You might think that if your child is strict with themselves and saves regularly, they’ll be able to build up enough for a mortgage deposit - all they have to do is cut down on ordering takeaways and cancel a subscription service or two surely?
Well, it’s not that simple!
Currently, the average house price in England is £305,879, dropping down to £218,184 in Wales and £199,318 in Scotland. Meanwhile, the average house deposit in the UK is £53,414 - and an eye-watering £108,848 if you’d like to buy a home in the Greater London area!
On an average salary of £35,000, it might take more than cutting down on lattes to get the keys to your first home, especially if your child’s income is already going on rent.
As house prices have gone up in recent years, salaries haven’t really kept up. This is not only making it harder for your child to save up a deposit to buy their own home, but it’s also making it harder for them to be eligible for a mortgage.
We used MoneyHelper’s mortgage eligibility calculator to see how much someone earning an average salary of £35,000 could borrow, while having no expenses, and the results were bleak - anywhere between £98,000 and £147,000.
With the average cost of monthly bills being around £400 for a two-person household, that number could be even lower when you start adding in expenses.
How can I help my child move out earlier?
With these kinds of numbers, it might seem impossible for your child to move out unless they’re happy to rent for the rest of their lives. But, there are ways to help them move out into their own home earlier beyond giving them enough money to cover a large mortgage deposit.
Motivate them to save while they live with you
Of course, one of the best ways to help your child with the cost of moving out is by encouraging them to save while they’re living with you. Charging them less for rent and bills, as long as they’re putting as much money as they can towards their savings, can go a very long way.
Show your child how to save
Does your child understand interest rates? Do they know to look for schemes and accounts to help first-time buyers? They might not!
You can help them by educating them on all the options available to them when it comes to boosting their chances of buying their own home. Not everyone has heard of the replacement for the Help to Buy ISA, which is the lifetime ISA.
How can a lifetime ISA help with the cost of moving out?
By putting their savings in a lifetime ISA, instead of a savings account or a regular ISA, your child can get a 25% bonus on everything they save or invest. But they must use the money towards buying their first home (or they can leave it in the account until they turn 60), otherwise they will be charged a hefty withdrawal fee.
They are limited to paying in no more than £4,000 each tax year, but that means your child could get up to an extra £1,000 for their mortgage deposit every tax year just for choosing to put their money into this type of account.
There are a few rules they need to be aware of before choosing a lifetime ISA, we recommend giving them a read before committing to avoid that withdrawal fee.
It’s not just for single buyers, either. If your child has a partner they’re serious about, they can both use the money in their lifetime ISAs to buy a home together.
Knowing you can get a bonus on top of your savings can be a great motivator to making plans to move out!
So, next time you sit down for a family dinner, why not take a moment to talk about their plans and give them a little hope that one day they could be eating in their own place?
OneFamily Lifetime ISA
Ready to start saving for your first home?
Our lifetime ISA could help! You'll gain a 25% boost from the government on top of your savings, as well as any potential stocks and shares returns.
The OneFamily Lifetime ISA invests in stocks and shares. This means your money has good potential to grow, but the value of your investments could go down as well as up and you could get back less than you've paid in.
Helping your child find their perfect place
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