Should you charge your kids rent?

Children are living in the family home for longer, some well into adulthood. It can help them avoid spending money on rent and save for a deposit. But isn’t it only fair that they contribute?

Between 1997 and 2017 the number of 20 to 34 year olds living with their parents in the UK rose from 2.4 million to 3.4 million according to a report by think tank Civitas.

Parents and grandparents in our intergenerational lending survey estimated that adult children still living at home cost £260 per month on average. 53% admitted that they hadn’t planned financially for having their children at home for so long.

It’s time to ask: should parents charge their kids rent?

Intergenerational family finance

OneFamily research found that most adults living with their parents helped with households bills and/or mortgage payments. It indicates that the one-way ‘Bank of Mum and Dad’ can evolve into intergenerational family finance.

It might be hard for you to consider charging your kids rent, as your children may have got used to the ‘Bank of Mum and Dad’ situation. You might feel guilty about making them pay their way but remember paying rent will teach them good lessons about budgeting and will encourage them to save and become independent.

How much is fair rent to charge your child?

If you don’t already have one, start by drawing up a realistic family budget. There are apps available for this, but a spreadsheet or notebook should do just fine. As family finances becomes intertwined it’s important everyone understands the budget and is transparent about their income and expenditure.

OneFamily’s research reveals that two thirds of UK families now talk openly about their finances. Sitting down around the kitchen table once a month to go over the budget could be a great way to improve communication in your family.

Once you know what expenses you need to cover you can work out a fair amount to charge your kids for rent. There are a few ways to do this:

  • Arbitrary amount – this is useful for parents who want to charge rent but also help their children save for the future.
  • Percentage of earnings – This means the rent will rise as their earnings do. Good for encouraging them to leave when they can afford to do so.
  • Budget split – splitting expenditure equally between members of the family.

The right way to charge is up to you and should depend on your individual circumstances.

What is the average rent paid to parents?

According to a survey by My Job Quote people over the age of 18 and living with their parents pay on average £230 per month to their parents in rent – 65% less than the £690 median rent in England in 2018.

Regionally the savings get even greater, with those in London and Manchester making 90% and 81% savings compared to the local median rent.

Location Average rent paid Median rent Saving
London £150 £1,473 90%
Manchester £145 £775 81%
Southampton £260 £750 65%
Nottingham £200 £575 65%
Bristol £360 £900 60%
Newcastle £240 £600 60%
Birmingham £300 £675 56%
Norwich £290 £625 54%
Leeds £340 £650 48%
Stoke £275 £450 39%

Parents can choose not to charge their kids rent

You don’t have to charge rent. For some it just doesn’t feel right.

Pragya Agarwal, an academic and designer living in the North West, has one year old twins and a 19 year old son. She says she would never charge her eldest rent to live under her roof.

“I feel that, as a parent, my home is always their home and so they’re always welcome here. My kids have a great sense of responsibility and understand the value of money so I don’t need to charge them rent to teach them this. People’s circumstances, of course, differ.”

Alternatively, charge kids rent once they’re earning

Tasha lives in East Anglia with her husband and three children and writes a parenting blog called Mummy & Moose. When her son turned 16 the family agreed he would contribute to the household once he got his first job. They gave him the choice to either paying a ‘family rate’ of 30% of his wages and continuing to help out with chores, or a 50% ‘lodger rate’ where he didn’t have to do housework.

“We figured a percentage was fairer than a set amount as he will be at college so probably won’t be working set hours,” said Tasha. “He would prefer to live for free, as we all would, but what would he learn about being an adult? I’ll let you in on a secret though, we are banking half and we’ll be giving it back when he comes to leave home.”

Tasha’s point about banking half is a particularly good way to help a younger child save for the future, if you can afford it.

Getting rent from your children may happen naturally

Believe it or not, children even volunteer to contribute.

Emily Palmer, aged 19 and a newly published author, said she volunteered to contribute towards household costs.

“I am a young adult and I offered to pay rent. I started paying rent after releasing my kids’ book on mental health. From my perspective, I couldn’t expect to be costing my parents money once I was earning.”

Although some parents would be surprised – or even reject – such an offer from their kids, it does happen. But whether this is something you want or not, it shows that keeping your children in the loop about how much things cost really can reap the benefits of a more unified household. Even if it’s just a quick chat around the kitchen table every now and then.

Find out more about teaching your kids the value of money or helping them onto the property ladder.

Note: We take care to ensure Talking Finance content is accurate at the time of publication, but individual circumstances can differ so please don’t rely on it when making financial decisions.