The real cost of having another child

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Once you have one child, you've already taken the plunge. You've learned how to live on less income or pay an arm and a leg for childcare. You know how to go without sleep and swap beers in the evening for coffee in the morning. So having another child seems a bit of a no brainer. After-all what do you have to lose?

However, a new study reveals there is a massive hidden cost in having a second child.

Hidden cost

It's not the childcare. Most people factor this into their sums and either one parent is already off work, or they know how they are going to meet the extra cost. The surprise that could seriously hurt your finances is finding somewhere to put the new addition to your family.

Most people don't think beyond the cot in their room, or a second bed in the children's room. However, once they get a bit older, HSBC warns that a third bedroom becomes a pressing necessity - and one that few families can afford.

The cost of that bedroom

HSBC surveyed 1,000 parents with two children or more and discovered that 60% of parents have moved house as a result of having their first or second child, with 35% moving from a 2 to a 3 bedroom property, 11% from a 1 to a 2 bed and 13% from a 3 to a 4 bed.

It says that the cost of third bedroom adds an average of £59,500 to the price of a typical property. A three bedroom property costs 38% more than a property with two bedrooms. To put that in perspective - it's 1.6 times the average income, which is a massive extra commitment.

Where is it worse?

In some parts of the country the maths is even more painful. Not surprisingly, London is the most expensive place to house a second child: the average cost of a third bedroom in the Capital is £163,270 or 3.6 times gross annual household income. That's an astonishing additional cost. It begs the question of whether anyone in London can ever really afford that second child, or whether it becomes a catalyst for the vast majority to leave the area altogether.

Mind you, even a move to the suburbs isn't going to help a great deal, because the third bedroom in the South East still costs £75,048 more.

It's a bit of a commute for the capital, but the figures also revealed that the cheapest place for a third bedroom is Yorkshire, where the third bedroom costs £31,467 - which is roughly equal to household income in the region and is about five times cheaper than London.

Meanwhile, possibly the least affordable place to have a second child is the East Midlands. That third bedroom here costs 42% more than a two bedroom property.

Can you afford it?

Clearly the third bedroom is a massive consideration. And while it may be able to wait until after the expensive pre-school years, it cannot wait much longer, and needs to be factored into your sums. There's every chance that once you've finished spending half your income on childcare it will have to be redirected into the mortgage for a bigger property.

The survey showed that this wasn't the only additional hidden expense. Some 51% bought a bigger car, 10% added an extension to their home and 6% had to do a loft conversion.

Having a second child may seem like a relatively small step when you've taken on the massive cost of a first child, but the costs are still astronomical and need to be planned for carefully.

Cost of third bedroom versus income

South East 3.6 times income
East Midlands 1.8
North East 1.5
East 1.4
North West 1.4
West Midlands 1.4
Scotland 1.4
Wales 1.4
Yorkshire 1
Overall figure 1.6

Most expensive counties for a third bedroom

London £163,270
Hertfordshire £110,771
Windsor & Maidenhead £102,395
Surrey £101,974
Rutland £98,857
Edinburgh £89,599
Dorset £88,903
Berkshire £85,669
Hampshire £83,838
Herefordshire £80,670

Least expensive counties for a third bedroom

Swansea £8,147
Orkney £11,900
North East Lincolnshire £15,755
Rhondda Cynon Taff £16,218
Bridgend £21,057
Neath Port Talbot £21,816
Western Isles £22,327
Aberdeenshire £27,047
Merseyside £28,237
Pembrokeshire £28,701
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