Renters are amongst the three groups likely to suffer worst as the cost of living crisis unfolds, an analyst has warned.
Sarah Coles, personal finance analyst at business consultancy Hargreaves Lansdown, says: “Renters, parents and divorcees are set to face horrible challenges as prices rise.
Those on the lowest incomes were most likely to struggle, but those who rent a property, have children living at home, or are trying to recover financially after a divorce also face a real risk of hitting a brick wall financially after massive bill hikes.”
The latest Hargreaves Lansdown Savings and Resilience Barometer, a measure of personal finance produced with Oxford Economics, found that fewer than one in five people on the lowest incomes have enough money left over at the end of the month to be comfortable.
Specifically, three in five renters don’t have enough wiggle room in their budgets to face price rises with confidence, and single people are half as likely to be resilient as couples.
Those with outstanding mortgages have more than those paying rent, according to Cole, who says rents absorb a much larger proportion of income – at 31 per cent compared to the 18 per cent that mortgage holders pay.
Parents with children living at home, meanwhile, face enormous drains on their incomes, from the very early years of high childcare costs to the later years when having teenagers at home essentially means funding the lifestyles of extra adults.
Cole adds: “Divorce hits hard, because suddenly you are funding two households from income that used to fund one. The SL Savings and Resilience Barometer found that single people generally struggle to have cash left over at the end of the month. Divorcees, meanwhile, may well be reeling from the expense of the divorce process, as well as having to fund a new home, and rebuild their finances.”
The data also showed that prices have already started increasing, and that people are having to cut back – almost a third were having to spend less on the essentials.
In the latest report, covering January and February, the biggest rises people noted were in food costs, energy bills and fuel.
Some 51 per cent of those who noted rising prices said they were coping by spending less on non-essentials, 36 per cent were shopping around more, 34 per cent using less energy and 31 per cent spending less on essentials.
Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions.
If any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals, then the post may be deleted and the individual immediately banned from posting in future.
Please help us by reporting comments you consider to be unduly offensive so we can review and take action if necessary. Thank you.
.png)
Join the conversation
Jump to latest comment and add your reply
Sarah Coles, personal finance analyst at business consultancy Hargreaves Lansdown should be aware rent and mortgage isn't the same thing. To imply they are comparable indicates a surprising lack of financial awareness.
Someone with a mortgage also has to pay insurance, property maintenance, servicing and repairs. They have had to pay a significant sum upfront for deposit, legal fees and often SDLT.
Someone who rents needs a maximum of 5 weeks rent as deposit, then simply pays a totally predictable monthly sum to live in the property. That figure includes insurance, maintenance,
repairs, upgrades, wear and tear, safety checks, licensing scheme fees, etc.
Tenants on low incomes or who experience an unexpected financial downturn get higher Universal Credit payments than homeowners as there is an entitlement to rent up to the LHA limit but no corresponding entitlement for mortgage interest or other housing costs for homeowners.
As children get older tenants may be entitled to higher LHA top ups as children in rental properties have specified bedroom entitlements subject to age and gender. Children in owner occupier properties get what their parents can afford.
Hi jo, thanks for putting the record straight with an honest factual response, (also a refundable deposit placed in Security is not money spent).
Jo, summed up perfectly.
I never felt Hargreaves Lansdown deserved being entrusted to get the best return on our investments.
This ( probably very young) lady reinforces my view.
People with no savings or assets (even if they are in the higher rate tax band) earning a decent wage can get UC. People like me on low income, near minimum wage get no help because we have more then 16k assets. It makes me mad.
Hargreaves landsdown have now gone woke, see adverts.
I think its going to get a lot worse for Renters , Especially when the Treasury gets its way and tenants have to find somewhere else to live.
Since the Government started to drive Private Landlords out with regulations , Section 24 , Rubber Stamping whole area Selective Licences applications from Councils with little evidence , Now they want us to evict Tenants and sell up.
Many of us have Tenants that have been with us for years. How Many Tenants do they want us to evict in their latest Master Plan.
Please login to comment