The first Momentum UK Household Financial Wellness Index revealed that renters are suffering due to a lack of assets and an inability to plan long-term, while those with a mortgage or who own a home outright are more easily able to manage their finances.
This is not just down to lower incomes, as the survey found no significant difference in ‘wellness’ between private and social renters, despite private renters having higher average incomes. It claimed this indicates that private renters are being made financially ‘unwell’ by their living situation.
Renters spend approximately 20% of their income on rent, with this rising to 25% for private renters, Office for National Statistics figures show, up from 10% 30 years ago.
These costs are reflected in the index’s findings, which found that renters are half as likely as homeowners to feel that their income will cover their monthly outgoings. They are also half as likely to feel comfortable with their current standard of living.
In addition, double the number of renters have missed a minimum repayment on a credit card, loan or other debt in the last year, compared to homeowners.
Renters are also far less prepared to deal with unforeseen money worries – being half as likely to have funds put away for a rainy day and twice as likely to not be able to meet an unexpected major expense without having to borrow money.
Ferdi Van Heerden, CEO of Momentum UK, said: “The financial hardships being faced by renters are making it impossible for them to build the deposit necessary to get their foot on the property ladder. Soon we will see a situation where only those who already own or inherit property will be able to own a home.”