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Cost-of-living crisis harder on renters than mortgagors – ONS

  • 25/04/2022
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Cost-of-living crisis harder on renters than mortgagors – ONS
Renters are more likely to struggle to meet housing costs than mortgagors as the cost of living rises, research has shown.

Data from the Office for National Statistics (ONS) in its ‘Rising cost of living and its impact on individuals in Great Britain’ report highlighted that a greater percentage of renters than mortgagors struggled to pay household bills compared with a year ago, with 37 per cent of renters saying so compared to 23 per cent of mortgagors. 

It said property renters are more concentrated in the lower income quintiles than mortgagors and therefore “have the potential to be affected more by changes in their cost of living”. 

Tenants “may be more exposed to increases in rent”, with 34 per cent stating their rent had increased in the last six months. The ONS also revealed that March 2022 saw the largest annual increase in private rental prices paid by tenants in the UK since July 2016 at 2.4 per cent. 

For those paying off a mortgage on a standard variable rate (SVR), housing payments are likely to have increased as the average floating mortgage interest rate has increased 0.2 percentage points. Some 34 per cent of mortgage holders reported rises in their payments. 

The ONS found that among those paying off a mortgage or rent, 30 per cent said it was very or somewhat difficult to afford payments. 

The differences between those struggling to make payments are more evident when broken down by tenancy type, with 39 per cent of renters more likely to report it being somewhat or very difficult to afford housing costs, compared to 21 per cent of mortgagors. 

Despite this, only three per cent claimed to be behind rent or mortgage payments, with less than one per cent of mortgagors reporting mortgage arrears.

Of those currently paying rent, six per cent said they were behind on payments. People living in deprived areas accounted for the majority of this segment. 


Living costs rising 

Aside from housing, gas and electricity bills were the second most common reason reported by adults for the increased cost of living. This was at its highest level with 83 per cent saying they’ve been hit with higher costs. 

Worryingly, this data was collected before the 1 April energy price cap hike where bills rose by an average of 54 per cent, with four in 10 people stating they were struggling with their bills in March. This figure rose to 57 per cent for those living in the most deprived areas. 

For six per cent, they’re already behind on their energy bills, rising to 13 per cent in the most deprived areas. Further, 13 per cent of renters also said they were behind on energy bills, compared to just three per cent of those with a mortgage, and two per cent who owned their home outright. 

Nine in 10 people reported an increase in their living costs in March, a 25 per cent increase on the number recorded in November 2021. 

As such, 23 per cent said it was difficult or very difficult to pay their usual household bills, according to ONS data. 

This is up from the 17 per cent recorded between 3 and 14 November 2021. 

The snapshot data compiled between 16 to 27 March revealed costs have spiralled across food, energy and housing, but rising bills will be felt hardest by those living in the most deprived areas of England. 

This is because housing, fuel and power are the least income-elastic category of spending. 

Here, the proportion of people finding it difficult or very difficult to pay their usual household bills has increased from 25 per cent to 34 per cent, half the number of those in the least deprived areas of England, where those struggling accounted for 17 per cent. 


Borrowing, credit and savings

Meanwhile, 17 per cent of adults reported borrowing more money or using more credit than a year ago, but the ONS said this figure is ‘stable’ considering the cost of living increases. 

One potential explanation is the use of savings squirreled away during the pandemic. A quarter of households said they were using savings which had built up during the Covid lockdowns which meant all but essential retailers were closed to stop the spread of the virus. 

A third of people said they cut back on food shopping, or were shopping around more. 

But for those in the most deprived areas, 23 per cent said they were twice as likely to borrow money or use credit than usual compared to those in the least deprived areas of England, where it was reported as being 11 per cent. 

Adults living in the most deprived areas of England were more likely to report not being able to save in the next 12 months than adults living in the least deprived areas of England. In March 2022, 55 per cent of those living in most deprived areas reported not having the ability to save in the next 12 months; an increase from 39 per cent in November 2021. 

In contrast, 34 per cent of adults living in the least deprived areas of England reported that in view of the general economic situation, they would not be able to save any money in the next 12 months. 



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