According to research from wealth managers Hargreaves Lansdown, renters are less likely to have emergency savings to cover three months’ of essential spending with around 45% at the threshold.

This compares to around 72% of mortgage holders, who say they have three months’ of essential spending saved.

Sick pay and income protection cover is also more likely to be taken out by mortgage holders as opposed to renters, with 62% of renters surveyed having this in place as opposed to 91% of those with a mortgage.

Just over a third of renters have life cover and this is similar with mortgages.

Around 18% of renters are on track for moderate retirement income, compared to 54% of those with a mortgage.

The report noted that renters earn less on average with average salary of £20,294 compared to a mortgage household at £56,1888. This means rent swallows a “bigger slice of their income”.

Rent is a ‘drain on finances’

Sarah Coles, head of personal finance, Hargreaves Lansdown said: “Rent is such a massive drain on our finances that trying to build anything for the future while meeting monthly rental costs is like trying to run a bath with the plug out. It means the financial resilience of renters is being washed down the plughole.”

She continued that not only was short-term financial resilience suffering but also long-term financial resilience such as retirement income.

“For those who are renting later in life, this causes particular concern, because either they will buy even later, and risk having a mortgage in retirement, or they’ll need to keep paying rent after they retire. In either case, they actually need to save more for retirement to cover higher outgoings,” Coles added.

She noted that those struggling with financial resilience the first priority should be paying down expensive debt, then securing protection and then think about emergency savings.