Tenant-400x310.png)
A business consultancy’s so-called “resilience barometer” says renters are amongst the most financially vulnerable groups in society.
The consultancy, Hargreaves Lansdown, measures financial resilience through five key metrics: Debt Control; Financial Protection for the individual and their family; Savings; Planning for Later Life; and Investment to make the most of their money.
Hargreaves Lansdown says that while renters’ resilience has increased in step with the national average since before the pandemic, it was lower than the resilience of those with mortgages from the start.
And it highlights what it calls “worrying signs” such as the percentage of renters with arrears rising 3.5% and the percentage worried by debt rising 10%.
It claims there are certain groups of renters in particular trouble. Almost all renters with children among the lowest fifth of earners (99.6%) have poor or very poor resilience. And the average household in this group has emergency savings to cover just two weeks’ worth of essential expenses – when advisers recommend a minimum of three to six months’ worth.
Those who are renting over the age of 50 are also struggling, with almost two thirds (64%) scoring poor or very poor. This reflects the fact that people in this group either tend to be on lower incomes, or have had to wrestle with setbacks through their adult life that have left them on the back foot financially. They also face the prospect of retiring in rental property.
Sarah Coles, head of personal finance at Hargreaves Lansdown, says that while life may get easier for those with mortgages as interest rates ease, the same can’t be said for renters.
She comments: “They’re still facing rising rents, as tenant numbers keep increasing and landlords continue to sell up. It means people need to manage their finances carefully in order to stay on an even keel.
“Drawing up a budget will be essential, so you can see everything coming in and everything you’re spending. As your rent rises, you’re faced with the horrible challenge of either freeing up money elsewhere by cutting back, or making compromises over where you’re prepared to live. By this stage, after rents have risen so far, there’s a risk there are no more costs to cut, so you need to consider real lifestyle changes – either moving somewhere smaller and cheaper, or cutting back on those things you have always considered to be the bare minimum. It's hard enough to manage your day-to-day costs, but you can’t afford to overlook saving for the future too.”
She advises tenants considering buying to give themselves at least a year to plan properly, including opening a Lifetime ISA and setting up a regular payment; everything they up to £4,000 save will be topped up by 25% by the government.
We're excited to announce that we're working on building a shiny new website for readers of Landlord Today! As part of this process, commenting on articles will be temporarily disabled. We look forward to sharing our new and improved Landlord Today website with you shortly!
.png)
(1).png)
.jpg)
