54% of parents ‘return rent paid by adult children to help them save a deposit’

Katie Horne, banks relationship manager at Flagstone, believes parents should be putting rent into high interest savings accounts.

She said: “Parents who charge rent teach their children valuable life lessons about saving, budgeting and building financial resilience.

“But parents who charge rent and put that money into high interest savings accounts are potentially doing even better.

“High-interest savings accounts increase the value of that rental income and help your child to appreciate the power of compounding interest, even over what might be a relatively short period of time.

“If the average £303 monthly rent is saved in a high-interest savings account paying 4.9 per cent a year, it’ll earn £352 in interest for your child after two years.

“That’s more than a month’s extra rent, earned with very little effort. And £352 can come in very handy in a first flat – head to IKEA and it could cover the cost of your child’s first bed and sofa.

“For many of us, the concept of taking money off our kids will be a hard one, but at the same time, it’s not cheap to cater for and keep warm a household of adults.

“We should celebrate the high proportion of parents who charge their grown-up children rent to live with them. These parents are doing the right thing for their children’s sake, without placing more financial burden on themselves at a time when future retirement and later-life costs might be increasingly front of mind.”