Should senior parents collect rent from children who stay home?

For parents whose adult children stay in the family home, making them earn their keep could be worth considering

Should senior parents collect rent from children who stay home?

As members of the younger generation cross the threshold of adulthood, they face an array of factors that make it hard to get on their feet. Some face difficulties with expenses, others with income, and still others with debt — and many end up staying in the family home.

The most recently released census data from Statistics Canada show a continuation of the concerning trend. Over the past 20 years, the number of adults who still live with a parent has risen by 14% (women) and 16% (men). Looking at the data by age, the magnitude of the increase tends to go down with age: 18- to 19-year-olds registered the sharpest spike (81% for women, 90% for men), followed by 20- to 24-year-olds (51% for women, 68% for men) and 25- to 29-year-olds (20% and 32%).

The decision to stay at home is not so surprising in hot housing markets like Toronto and Vancouver, where homeownership seems to be getting further out of reach and rents are continuing to climb — good for property investors, not so for aspiring residential property owners and tenants. Other factors could also prompt children to return, such as student debt or difficulties in getting a job. Whatever the case, more parents are extending help by letting their adult children extend their residence in the family home.

In the spirit of helping their adult children out, such parents let their offspring stay without charging them for room and board. But according to some financial experts, parents should dial back their financial support by collecting rent from their returning progeny.

“By collecting rent you’re teaching your kids to budget, to prepare for life,” Kim Luu-Tu, a private wealth advisor with Ameriprise in the US, told The Wall Street Journal.

Luu-Tu related the story of one client whose son dropped out of college and moved back in with his parents. He didn’t pay rent, and used his income from employment to buy a luxury car. Six months later, his parents agreed to buy the car from him so that he could get a sports car.

The tendency to freeload isn’t universal, however. Children who return home are often judged as lazy or entitled, according to Jason Houle, an associate professor of sociology at Dartmouth College. But based on his work studying so-called “boomerang children,” he said that view is “completely unfounded in the data.”

“Most people who end up on their parent’s doorstep tend to do so for a year or two,” Houle told the Journal. “They’re just getting back on their feet.”

According to financial experts, adult children who are trying to find their financial footing shouldn’t be exempt from contributing. Luu-Tu recommends that parents ask for a 10%-30% cut of the child’s take-home pay; they should also refrain from helping with other expenses, such as car insurance, health insurance, and student-loan repayments.

Parents and children should also clarify other obligations. These could include household chores the children could cover, as well as consequences they’ll face for failing to pay rent.


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