Cost of living: Adults and children moving in with parents to save money

Divorce, unaffordable rents and home deposits, the high cost of living: These are just some of the reasons adults – now more often with their own children or a partner
in tow – are moving back in with their parents. Catherine Sylvester speaks with people in the Bay of Plenty about the benefits and pitfalls of flying back to the nest, and how to make it work.

“I’m going to have no money left at this rate.”

It was this realisation after six weeks of paying rent on one income, that made Tauranga woman Kathryn decide to take her teenage children and move back in with her mother.

Kathryn, who spoke on condition her surname was not used, went from owning her family home to renting when her marriage ended last year.

“We had some savings that we … split up. I pretty much used a lot of that towards my rent,” says the mum-of-two, who is in her 40s. She said most of her pay also went towards her rent.

When a friend suggested in January that she move out and “bunk down” with her mum, she knew it was the smart thing to do, and has been sharing a room there with her 13-year-old since.

Kathryn’s situation is not unique in the region.

The Rotorua Budget Advisory Service’s manager Pakanui Tuhura said adult children moving back in with their parents was not new, but greater numbers were now moving home with their children in tow as well.

He advised those returning to the nest to ensure they were not overloading their parents with debt, and suggested considering a written rent-to-buy contract arrangement with them.

He cautioned against overextending the budget: “Don’t take on a mortgage if you know you can’t afford to service it, as being forced into a mortgagee sale means you lose [your] deposit and any repayments made”.

Tauranga Budget Advisory Service manager Shirley McCombe said they are seeing a lot of clients move home as a result of unaffordable or unavailable housing.

“Sadly, it is not usually a planned or intentional move.”

McCombe said families working together to help their children get ahead was a wonderful thing.

“The difficulty we see is when the family returning home does not contribute to the household income, pushing the parents or grandparents into financial hardship.”

Mortgage repayments cheaper than rent

With her family home now sold, Kathryn saw herself living another two or three months with her mother before buying a new home.

“This is where it just becomes ridiculous because I’m going to have a mortgage of probably $200,000, and my payments [will be] half of what my rent payment would have been.”

Kathryn acknowledges she is “super lucky” she’s been able to live with her mother, but that it’s also “definitely hard”.

For others, moving back in with the folks was only way to get on the property ladder.

This was the case for Whakatāne couple Maaike Kuhn, 28, and Clement Lambert, 31, who were inspired by a British TV show.

Kuhn said they had wanted to own a house before getting married and having children and had a three to five-year plan to reach their goal. But finding a rental property was difficult and, knowing there were other things they wanted to do within that timeframe, they had to adjust the plan.

“We were watching an episode of Location, Location, Location [which showed] couples moving back with mum and dad,” said Kuhn. “I [said] to my partner: we need to do that, and two weeks later we moved into my parent’s place.”

The couple contributed to the grocery and internet bills and increased their KiwiSaver payments while putting aside whatever else they could afford, and within nine months, had saved $85,000. With a gift of $20,000 from Lambert’s mother in France, the couple were able to start searching for their own home.

Kuhn was clear she was lucky and privileged to be able to move home with a partner but said there were also some challenges along the way.

“Her house is beautifully maintained,” said Kuhn, while acknowledging hers was not always so.

“It was about having a bit more open dialogue … [and] more of a compromise for both sides.”

Kuhn and Lambert were able to buy a home about a year ago and said they could not have done so without the help from their parents. They are now expecting a baby later this year.

“It might have taken us an extra five years I would say.”

KiwiSaver ‘most common source of deposit for first home buyers’

Tauranga Mortgage Brokers director and financial adviser Tracey Robinson said an increasing number of people are moving in with parents to reduce their outgoings to save for a house deposit. KiwiSaver was “the most common source of deposit for first home buyers”.

Robinson explained that a couple contributing 3 per cent of an annual income of $50,000 would have $30,000 to $40,000 combined KiwiSaver available for deposit, including employer’s contribution and interest, in five years. Add personal savings of $10,000 per year and they would have a 10 per cent deposit on a $80,000 house.

Increasing KiwiSaver contributions to 5 per cent or more could cut the savings period to three years.

Robinson said it was very common for parents or family members to help by gifting cash as part of the deposit.

He had also seen more instances of family members or friends grouping together so they can get a foot on the property ladder, or taking in boarders to help meet costs.

Catherine Sylvester is a multimedia journalist at the Bay of Plenty Times and Rotorua Daily Post. She has a background in feature writing, radio and television, and has taught media at a tertiary level.