Attention has been focused on the impact of rising mortgage rates, but tenants have suffered more from rent rises.
That’s according to Hargreaves Lansdown, which said that renters are less financially resilient than remortgagors.
The investment platform found that over two-thirds of tenants have poor financial resilience. This compares to a quarter of remortgagors.
They earn less on average too – renter incomes average £31,617 per household, compared to £49,279 for owners and £57,818 for mortgagors.
Lack of savings
Only 43% of renters have enough emergency savings. This compares to 71% of mortgagors and 87% of those who own their home outright.
Renters are also left with less at the end of the month, said Hargreaves Lansdown. They have just £193 left, compared to mortgagors with £353 and outright owners with £398 left over.
Retirement shortfall
The study revealed that not only are renters financially vulnerable now, they are less likely to be on track for a moderate retirement income.
Only 18% of renters are on track for a moderate retirement income, compared to 55% of mortgagors and 51% of outright owners.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Renting ruins your financial resilience even more than having to remortgage at a time of sky-high interest rates. Life was already tough enough for tenants, but with average rents up around 10% in the past year, millions are having the life squeezed out of their finances altogether.
“Average rents tend to be lower than average mortgage payments – and private rents tend to be similar to mortgage payments – but renters are on lower average incomes.
“The average household with a mortgage earns almost twice as much as the average household that rents (83% more). It means their housing costs swallow a much bigger slice of their income.”
