Are the majority of millennials still living with their parents? Yes, they are. A study published in May 2016 has found.
Rising house prices, recessions and a greater personal freedom have meant that, unlike any generation that has come before, the youngest generation of adults is taking longer to settle down, have kids and move in with a partner – and many are choosing to remain at home with their parents in the meantime.
If you are one of those millennials still living with their parents, deciding on a living arrangement in your twenties can be a difficult decision – there are lots of things to consider. Do you start saving for a mortgage now or do you move in with your partner to save on rent? Do you rent a property on your own, with friends or with a group of strangers?
Millennials still living with their parents: living arrangement options
When you’re in your twenties and faced with a decision on how you want to live, it can feel difficult to see the wood from the trees. More than that, it can often feel like renting is your only option – more and more, twenty-somethings are coming to the realisation that they may never own their own house.
So what are the options for living arrangements in your twenties? Is owning a house even a possibility? We have a look at the options.
Living with your parents in your twenties
OK. Let’s start with this one. As scary as the thought may seem, increasing numbers of 18-34 year-olds are sacrificing some of their independence for cheaper rent and the opportunity to save up for a mortgage deposit. In the UK, it’s estimated that 3.3 million 18-34 year-olds still live with their parents.
If you’ve just finished university, are in-between jobs or are just getting started in your career, living with your parents can be a great way of waiting until you’ve built up a financial cushion before setting off into the big bad world of renting and property ownership.
Plus, what’s not to love about your Mum’s cooking, home comforts and not having to worry about bills, electricity and whether there’s food in the fridge?
Couples living with their parents to save money
There’s also an increasing number of couples moving in with one set of parents while they save up for a mortgage. This can be a happy medium – you live with your partner, but are given the opportunity to save for a mortgage deposit.
However, moving back in with your parents or your partner’s parents is not easy, and often takes a period of adjustment. After gaining a degree of independence at university or on your own, it can often be a bit jolting to live back under somebody else’s rules.
If you’re thinking of moving back in with your parents, check out our guide to dealing with any potential problems that may arise.
Disadvantages of renting a home in your twenties
Generation Y. Millennials. Generation Rent. Whatever you want to call yourself, the under-thirties are becoming a generation that is increasingly defined by a dependency on landlords and parents to provide living arrangements.
Unlike the golden generation, many of whom are buying-to-let to build up their pension or being incentivised by the government to downsize, Generation Rent face the stark possibility of renting for the foreseeable future – perhaps even for the rest of their lives.
In fact, it is estimated that, on average, a twenty-something will spend £66,800 on rent between the ages of 20 and 30 – more than double the deposit needed to get a mortgage and buy a house. And that’s just outside of major cities – in London, you can expect to fork out over £100,000 over the course of your twenties to landlords.
It’s a false economy, perpetuated by rising house prices, buy-to-let schemes, a lack of new housing and a lack of rent control and it’s preventing the younger generations from the same prosperity and opportunities that every generation that has come before has had.
Advantages of renting a home in your twenties
However, despite the fact that renting is a false economy, renting in your twenties does have some advantages.
You can be mobile – free to move anywhere, live with anybody and take any job. You’re not rooted to one spot or bound by a property. One month you can live in London, the next a small seaside town, the next abroad. You can chase your dream job, no matter where it is.
And you can live with friends. There’s nothing better than living with a group of close friends in your twenties – whether you throw crazy house parties or sit around and hang out with your friends on a daily basis, you’ll have the time of your life.
Plus, you’re not responsible for fixing anything that goes wrong. If you own a house and your washing machine gives up, it needs decorating or your pipes burst, you’re responsible for fixing them. When you’re renting, just give your landlord a quick call and they’re legally responsible to get the problem fixed as soon as possible.
Not sure of your rights as a tenant? Read our handy guide to make sure that you’re clued up.
Millennials still living with their parents: How to get a mortgage?
At this stage, you’ve probably dismissed the idea of getting a mortgage in the near future. Unless your parents can help out with the deposit, or you’ve moved back in with them to save, you’re probably spending most of your wages on rent and the thought of saving up the £20,000 or more needed for a deposit seems crazy.
However, now is the time to consider a mortgage. Yes, it is a big decision. It is the biggest debt you’ll ever take on and it does root you to one spot. However, it does mean you’re starting to build up equity and will improve your credit history. On top of that, it’s an exciting thing to do. There’s nothing quite like buying your own property and making it your own. Of course, property prices can drop and your equity is always at risk.
There are so many things to consider when getting a mortgage – from whether you want a fixed or adjustable rate to how much you want to borrow to whether you want to make this level of commitment – and it’s important that you make an informed decision.
However, if you’re happy where you are, don’t have any plans to move and would like to buy a house and invest in your future a mortgage might be the way to go.
The deposit might be the tricky bit – and is often the reason people are put off saving. When you’ve only just got enough money left after rent, bills and food to have a couple of evenings at the pub, how on earth are you going to save thousands and thousands to buy a place?
How to save for a mortgage deposit?
Moving in with your parents and saving on rent is one option (you’ll be part of those millennials still living with their parents). If that isn’t for you, perhaps consider making small savings – you’ll be surprised at how soon small sacrifices (such as giving up smoking, or one night at the pub) add up.
Alternatively, you might want to consider getting a guarantor mortgage. During the recession, guarantor mortgages weren’t widely available, but as the economy is picking back up, they’re becoming a bit more popular now. Basically, a guarantor mortgage allows a parent, close family member to vouch for you and agree to cover your debt, if you miss a payment.
Obviously, it’s not without its setbacks and risks, but it’s a great way to get on the property ladder early on.
And don’t forget, the Government also have a Help to Buy scheme to help people to get on the property ladder.
Millennials still living with their parents: Co-buying in your twenties
Want to have all of the benefits of owning a house while also living with friends? Or perhaps you want to buy a house with a partner?
Joint tenancies and tenancy in common are two options for people to co-own a home with a partner or friends.
In a nutshell, if you co-own a property as tenant in common, you’ll own a percentage of the home, split evenly with between up to four people (including yourself). This option allows you to split the deposit amount and to reduce the amount you’ll need to save up yourself and to co-own a property with friends or a partner.
You’ll own the house by law, but there are a few complicated legal things that you’ll need to sort out (What happens when one wants to move out? Can the others buy them out?) with a lawyer.
For a great some great advice on co-buying, check out the Home Owners’ Alliance’s guide.
Are you one of those millennials still living with their parents or are you considering buying, co-buying or renting? Are there any tips you’d give your fellow readers?
If you’d like to know more about renting and making it fairer, read about the call to ban letting fees.