Renters in far worse financial health than home owners

Private renters go on fewer holidays, save less money and are more likely to make forced cutbacks than those with a mortgage, according to the latest Financial Wellness Index from financial management app Momentum UK.

The report, using data from the English Housing Survey and the government’s recent Housing White Paper, as well as research with the University of Bristol, found the average renter was in far worse financial health than someone with a mortgage.

According to Momentum UK’s Index, 31% of private renters have less than £100 in savings, compared to one in seven people with a mortgage on their home.

Mortgage borrowers are also twice as likely as private renters to view their income as sufficient.

Private renters currently “send roughly half their salary” to their landlord each month, according to the index, with one in five having cut back on food in the past year to get by, compared with one in ten mortgagors, as the table below shows.

Similarly, 19% of renters have gone without a holiday in the same period, compared with 15% of those with a mortgage.

Action taken in the past year

Private renters

People with a mortgage on their home

Cut back on food to get by

19%

11%

Cut back on heating to get by

11%

4%

Cut back on essentials to get by

14%

4%

Cut back on non-essentials to get by

30%

21%

Sold possessions to earn extra cash

8%

6%

Borrowed money from friends or family

14%

7%

Increased credit card limit or overdraft

6%

3%

Dominic Baliszewski, director of consumer strategy for Momentum UK, said: “The average private renter loses around half of their pay cheque on rent at the beginning of each month, and for those living in London, it can be even higher.

“This not only limits their ability to save, but also means they have to cut back on expenses such as gym memberships, holidays and socialising just to get by.

“With home ownership in decline, the number of people facing these financial challenges and seeing their living standards fall is only going to grow. That’s why it’s so important that the government delivers on the pledges made in its housing white paper.

“For those who have only recently moved into private rented accommodation and are not used to living on a budget, there are now apps and online tools available which can help to make your money go as far as possible.”

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3 Comments

  1. waco79

    Curiously I think one also finds that the people that sit in first class are better off than those in economy class.

    Yacht owners are wealthier than those that hire a towing boat.

    its true- the department of studies for stating the bleeding obvious proved it….

    Report
  2. lettingsguru

    …. and this is only set to get worse, as agent fees are band, and the rent increase filter through to market statistics over the next 24 to 36 months following a all out fee ban.

    Report
  3. ringi

    Some people rent as they don’t have the skills and/or willingness to manage money needed to save for a deposit……   (And it shows in the rest of their life.)

    Report
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