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Should you charge your kids rent?

They've been living in your home rent-free their whole lives. Now they could be earning their own money, is it right to charge your children rent?

According to the Office for National Statistics, adult children are living with their parents for longer. Only half of young people in England and Wales had moved out of their family home by age 24 in 2021. This is up from age 21 in 2011.

Given the rising cost-of-living and increased house prices, this isn't necessarily surprising.

Barclays' First Time Buyer Index revealed that it takes first-time buyers roughly eight years to save for a deposit. In addition, UK rent prices increased by a staggering 9.1% in the twelve months to November 2024.

While your children might simply not be able to afford to move out, there are still a few things to weigh up when thinking about how much rent to charge.

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 you can use for this, but a spreadsheet or notebook will do.

It’s important everyone understands the family budget and is open about their income and spending.

Your child might be more open to this idea than you think. In fact, our survey of 1,000 young people aged 14-17 found that teens are actively engaging in money talks at home. Popular topics include saving for their future (59%), budgeting (49%), and the costs of bills (47%).

Talk openly about your finances. Sitting down around the kitchen table once a month to go over the budget could be a great way to keep the conversation going.

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:

A fixed amount that you choose – this could work for parents who want to charge rent but also help their children save for the future.
Percentage of earnings – this means the rent goes up as their earnings do. Good for encouraging them to leave when they can afford to do so.
Budget split – splitting costs equally between members of the family.

Of course how you end up charging your children rent is personal to you, and should depend on your individual circumstances.

Factors to consider when deciding how much rent to charge your kids

How much rent will teach your child to budget

It can be hard to think about charging your kids rent, especially if they're used to the ‘Bank of Mum and Dad’ situation.

But paying rent will help them to form the vital habit of paying for essential expenses before splurging. They might even learn the benefits of writing a budget each month, setting them up for financial independence.

You could do some research into how much it would cost to rent a room in a shared house with bills and food included. You might decide not to charge them as much as that but it could be helpful for both you and your child to know what a bargain they're getting!

By making life more like the real world, you help them to prepare to manage their own money while they still have the safety net of the family home. Making it less of a shock when they do decide to fly the nest.

How much money they need to save

As lovely as your home might be, it's likely your child will want to fly the nest at some point.

If they find it hard to resist spending, you could suggest charging less rent if they put some money away as well.

For example, you could "charge" them £300 a month in rent, but pay £150 of that money into a savings or investment account.

A helping hand onto the property ladder

Once they're 18, your (adult) child can open a lifetime ISA to help them save up for their first home faster. The government adds an extra 25% on to everything that's paid in (you can pay in up to £4,000 each tax year). So they could get up to £1,000 free money from the government each year!

Lifetime ISAs are available to 18-39 year-olds to help them save for their first home, or to save extra money for retirement.

They're a great way to boost a first-home deposit fund, but there are specific rules about how they can be used. Not sticking to these rules can mean having to pay a penalty charge when withdrawing from the lifetime ISA.

OneFamily's Lifetime ISA invests in stocks and shares. This means the value of your investment can go down as well as up. So you may get back less than you put in.

How much it costs you to have them living in your home

It can be hard to work out exact numbers, but having one fewer person showering and raiding the fridge will make a difference to your bills.

If you're a single parent, you might also need to pay more council tax if you have an adult child living with you (unless they're still a full-time student).

You could guesstimate how much you're paying for them to live with you, or simply work out how much you pay and charge them a percentage.

What will you do with the money your children pay you in rent?

You might choose to put some of your child's rent money aside for their future.

But don't forget to think about yourself as well.

With our Stocks and Shares ISA, you can start investing from £25 a month for your future goals.

As it’s an investment product, your money has good potential to outgrow interest rates, but you need to be aware that there is a risk that its value could go down, which would mean you getting back less than you’ve paid in.