- Number of ‘parent landlords’ in the UK likely to increase in the coming years, with 1.4 million current and prospective owners of properties rented by their children
- One in 10 of those living in their parents’ property are allowed to live there free of charge, with only five per cent charged the rental market rate
- Parents are unable to let go of their offspring, with a quarter wanting to keep them close by
- However some parents have their own financial interests in mind, with a quarter buying their second property as an investment to sell in the future
More than 1.4 million ‘parent landlords’ in the UK are willing to take on their children as tenants, with almost three-quarters of a million (730,000) already renting second properties to their offspring, reveals a report from Post Office Money Mortgages*.
Soaring house prices across the UK have left a generation questioning if and when they will take those first steps onto the housing ladder, with the average first-time buyer (FTB) expecting to be in their mid-30s before owning their first home**. As a result, a growing number of parents are looking for other ways they can provide assistance.
While some parents choose to dig deep and help with a deposit – in fact 12 per cent of FTBs expect this from their mum and dad – others have explored the option of buying a second property for their children to live in.
Many ‘parent landlords’*** want to provide a helping hand financially, with a quarter (26 per cent) renting a second home to children who are unable to get on the ladder themselves, and 24 per cent doing so to help them save money. Others want to provide children with a safe property (27 per cent) – while one in four (24 per cent) are struggling to let their children fly the nest and want to keep them close by.
Some parents have their own financial interests at heart, with a quarter (25 per cent) buying their second property as an investment to sell in the future, and a further fifth (21 per cent) simply wanting to avoidtheir children living at home longer than is necessary.
Parents are generous landlords when it comes to the financial arrangements they have in place for their offspring tenants, with just five per cent charging the rental market rate. Instead, a third (30 per cent) allow their children to only pay what they can afford, and 12 per cent even paying the bills for the property.
John Willcock at Post Office Money Mortgages said: “As both the cost of renting and buying a property increases, homeownership remains a distant dream for a significant number of today’s younger generations. With many parents wanting to do as much as they can to help their children, this is a challenge that affects the whole family.
“Our research shows that an increasing number of parents are considering buy-to-let both as a means of helping their children, and of securing their own financial future. By becoming a ‘parent landlord’ they are able to provide this support – without necessarily having to compromise on their own space at home. This not only provides their children with the opportunity to save for the future, but can act as an investment can help with their own long-term financial planning.”
From a tenant’s perspective, there are numerous benefits to having mum or dad as your landlord. Two out of five (42 per cent) children expect to pay less in rent than they might otherwise have to, while 38 per cent look forward to having someone friendly and helpful who can help them out in the event of property problems.
However, being a ‘parent landlord’ doesn’t come without its drawbacks. One in three (30 per cent) worry about clashes regarding rent, while a quarter (24 per cent) question how well their child will take care of the property. A fifth (19 per cent) worry about the home being used to host parties with friends.
John Willcock at Post Office Money Mortgages added: “At Post Office Money we’re constantly looking of ways to improve our mortgage offering. We’re focused on supporting all types of borrowers and our Buy-to-Let mortgage range is designed to help those who are looking for more. If parents are considering whether or not to buy a home to rent out to their children, we offer fee free options, available on all LTVs and we are continuing to challenge other providers within the Buy-to-Let mortgage market.”
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