Private renters in Britain are twice as likely as mortgage borrowers to have minimal or no savings. In addition, private tenants spend around half of their salary on rent every month, according to new research from financial service firm Momentum UK.
What’s more, the investigation shows that private renters take fewer holidays and are forced to restrict outgoings more than those with a mortgage.
In all, the report found that the average tenant is in worse financial health than someone with a mortgage. This is highly worrying given the fact that the private rental market is growing and homeownership is falling.
Research revealed that 31% of private sector tenants have fewer than £100 in savings, in comparison to 15% of mortgage holders. 37% of mortgage borrowers see their income as sufficient, as opposed to 16% of tenants.
With tenants spending around half of their earnings on rent, they will be worried to learn that the report suggests rents will rise by an average of 25% in the next five years.
Data from the investigation suggests that spiralling rents are already hitting tenants’ disposable incomes. 19% of renters quizzed said that had cut back on food in the last year, in comparison to 11% of mortgage holders.
11% of tenants also said they had cut down on heating, in comparison to 4% with a mortgage. 14% of renters admitted to borrowing money from a loved one, compared to 7% with a mortgage.
60% of those renting said they did not have a pension, compared to 27% of homeowners.
Dominic Baliszewski, director of consumer strategy for Momentum UK, noted that while overall tenants said that they spent half of their earnings on rent, the figure is likely to be higher in London.
He noted: ‘With home ownership in decline, the number of people facing these financial challenges and seeing their living standards fall is only going to grow.’