My 21 yo son and 19yo GF plan to rent a house together

[Menomaddness]

This is a good thing generally, they've been together 2 years, spend a lot of time sleeping here and it's time. They both work but not in especially well paid jobs. About £45k income between them, but DS is on a decent career path. GF less so but she's very young.

Rent will be £1200 pm plus bills.

They do not have £1200 left at the end of the month currently, both spend money like water, but I guess when they have to they'll sort that out. DS pays keep of £200pm currently.

What worries me is the future. If they spend all this on rent, they'll never buy anything, but I also recognise that feels like an impossible dream anyway. An ex council flat is about £250k to buy here, so even if they saved 10 or 20% deposit, they wouldn't get the mortgage on their income.

However, I also know that as someone close to retirement with the mortgage paid off, buying young has made my current situation much better than it would otherwise be. I really can't imaging paying £1200 pm rent throughout retirement (more if they don't stay in a starter home forever).

Where will generation rent live as retirees?

Obviously it's a really long way off, but is there something of a time bomb for this gernation of young people?

Social policy analyists have been talking about this for some years.

The relentless rise of rents and lack of social housing means that the cost of housing for the increasing number of pensioners who aren't homeowners will be massive. It also means that the cost of funding social care will rise, because fewer and fewer pensioners will have homes that can be sold to cover care costs.

It's regarded as something of a ticking time bomb.

My MIL is in social housing and her housing benefit is £125 pw. If she was renting privately, her rent would be in the region of £250-300 pw.

In my opinion there is a massive ticking time bomb and it doesn't just impact people approaching adulthood. I know of many people in their 30s and 40s who have no hope of buying. They also have hardly any pension savings and no capacity to save much. Back in the day people would pay off their mortgage and not having to pay housing compensated for their lower income in retirement. That isn't the case anymore and we are going to have a generation of very poor people in retirement soon.

I'm retired. I wouldn't be able to pay rent...

Rent prices are so different across the UK...1200 seems ridiculous to me especially if that's the cheaper end ! Honestly thankful where I live the rent seems like a drop in the ocean compared to that 🙈😂

£1200 rent plus bills.

I know they will be keen to have their own place and privacy, but how about this....

Ask them if they would consider staying with you for 12 months and paying you £1500 per month.

You would save this money for them and at the end of the year they would have adjusted their spending to accommodate that amount on housing, and you would hand them back a deposit of £18,000 (plus some interest).

If they did that for two years they'd have double that, and still very young.

It would be a very good move for them financially, but if they are impatient there's not much you can do. Might as well offer though.

A house at 19 and 21 seems like quite a lot to expect. One bed flat would be more usual?

The key is that they learn to budget and, as their wages increase, they save the surplus. This is an excellent life skill they should acquire ASAP.

When my DH and I moved in together (late 20s), we rented a flat for 7 years. Initially the rent was a large proportion of our income but as we got promotions we saved and saved. We bought our first house (I was 36), it was a 4 bed detached home in SE. We were able to jump many rungs of the property ladder just by saving. With hindsight, 10 years on, this is the best financial decision we made and has set us up for hopefully a fiscally secure future.

I’d encourage them to live together at one of the parents house for a year ot two. It will give them chance to get used to living together but also give them money for furniture. I’m moving and the cost for new furniture is huge. Also worth them saving towards a deposit as circumstances change. I’m in the SE and on 59k after a recent promotion and could buy a 2 bed flat but mortgage repayments currently very high so I’m renting for a year and will rethink (been living in a family members home recently)

It sounds like maybe they need to step back and look at finances and be a bit practical. Not many people can rent a 'small house' as their first place. A studio flat or a cheap 1br in a less desirable area or further out from work might be more realistic. You should have seen the hovel I got with my boyfriend when I was 18! £1200 is more than dh and our 2 dc were paying for a 4 bedroom house with a big garden a year ago in the SW. So there absolutely will be cheaper places to rent. They just need to get creative and also sit down and do a budget and work out what they will need to give up to live comfortably.

That said, £45K jointly is a huge income for their age. It's more than dh and I were making when we first got married in our late 20s (him with a uni degree and me with a master's!).

I rented when I was young and it was crippling but we did it. I do understand your concerns about them buying but I didn't buy until my late 30s and that was on my own.

I would let them rent it and see how hard it is to budget when you run your own place. Your DS may be back with you fairly soon and he can then save.

I wouldn't be happy if my about this. Why can't they stay at home with each set of parents or one set while they save for a mortgage? It is very difficult to save for a mortgage while renting.

I’d offer them the option of living at home for a year, paying £1500 a month in board (much less than they’ll be paying in rent and bills) and you’ll put £1200 of that away for their deposit.
In a year’s time, they will have £14,400 to put towards buying a house. They can explore 5% deposit options at that point.
Also, it gives them a year to get used to paying out £1500 every month without the threat of their gas being cut off or getting bad credit which will affect them majorly in the future.

But, this is a very big ask of you.

It wasn’t for the price of housing but I moved SE to Midlands because surprisingly there are jobs and careers out of London and the SE and have relocated again. I would be probably be like my siblings if I had not moved around and that is really quite poor as they still live in the rural backwater we grew up in.

Did you not teach him about money and budgeting ?

I was pretty harsh with my take on money, I grew up in poor circumstances due to my parents having too many children. So DS was told about finances from a very young age and choices having huge consequences.

I just had a quick look at stats and it said that 74% of retired people own their homes so that means even now 26% are renting. It will very likely increase.

Financial comfort has so many permutations. You can be extremely well educated but have poor communication skills, health issues and relationships issues and right time right place or wrong time wrong place. All you can do is make them as resilient as possible but financial planning can be taught.

But you might be able to get housing benefit, if your private pension was low enough.

I get state pension and a private pension that would be £290 a month if I wasn't still working. If I was renting, I'd only have to pay around £50-60 a week towards my rent, unless it was more than the maximum allowed for the area.

It is a crisis. I have no hopes of being able to afford my own home, and my plan, though I don't have much time to focus on it, is to keep improving my career prospects and perhaps once the DC have moved out, rent a tiny room for me and DP and both of us save save save over a handful of years. That's around 15 - 20 years for me though. Maybe the landscape will have changed by then (doubt it though)

£900pm for uni accom is a lot! Was around £400 for me last year and a nice house too'

Why don’t they move into a house share?

you can get young professionals house shares - plenty of them available

why do they have to have their own house?

Have you guided him on opening a help to buy Lisa for him? A pension? Educated him on his financial future and compound interest? As soon as mine turn 18 I will open a LISA and stocks and shares ISA and then try to help them understand saving a little and compound interest. They already have 10k in their child trust fund which was invested in stocks and shares. My DH and I had parents that did nothing but moan about the economy and never helped either one us financially in our teens because they were not educated in finance either. We are not rich by any means but we have a cushion and good pensions which are accessible at 55. Instead of doom and glooming try and help your son navigate his financial future more.

@SunshineLoving

they probably want their own space and independence you know being adults

Are there properties in the area available to buy?
when my daughter wanted to get her own place, but didn’t earn enough to get the mortgage, we made a joint application. I was in the same situation as you, mortgage paid, still working, so it passed all the affordability criteria and got her on the ladder.

That's insane rent on those salaries.

I rent at 600pm and we have a combined income of over 60k. Granted we also have childcare costs but factoring in food, bills, cars and maintenance, phones, travel and clothes for work, we literally just about break even every month.

They'd be better in a house share initially whilst so young until their salaries start to increase with experience. They still get the grown up experience. Without running up huge debts before their mid 20s.

I strongly suspect all the people with all the answers don't have adult children.

Yes they'd provably be better off in a houseshare or staying at home until they've saved some money, but that's not my decision.

Yes, I'd rather he'd live a bit before settling down with a teenager, nuybim not about to tell him and potentially the mother of my GC they'd be better off apart.

But really the point of my post was a discussion re the societal change which will see many more retirees renting.

Thank you so much for this information!

Hmm. Have you talked to him about this all? Both of them being so blasé about money and spending it like water. I would want them both to change that attitude.
I would/may offer for a dc to live at home for a set period, say a year, but only if I truly believed they were going to do everything in their power to save every penny towards a deposit.

They should live rent free with you and save the 1.2k a month. They’d have a decent deposit in 18 months If they put the money into a LISA in addition to earning interest they’d each get an addition £2k from the government if they save at least £4k each. They could save about £25k this way including interest and government top-up.

With that deposit they could buy a flat using a mortgage (via shared ownership if they don’t qualify for a large enough mortgage for what they want).

Overtime they would build equity (via mortgage repayments and house price growth) which would allow them to move up the housing ladder.

Renting a house at 19 and 21 is a waste of money and they should get used to putting that much aside for a while before committing to such high outgoings.

They should also look into the First Homes programmes as another option in addition to shared ownership.