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Millions of UK renters exposed to financial risks

  • Almost half of UK renters think they will only become homeowners if they inherit
  • A third of renters aged 35-44 feel ‘embarrassed’ to be renting 
  • Only 20% of renting households have life insurance, potentially leaving 8 million homes exposed
  • Half of renters feel there is a stigma attached to renting
  • Only two in five rented households have home contents cover for their possessions.

A growing number of UK households could be putting their lifestyles and possessions at risk because they aren’t insured for unexpected events.

A study from Aviva finds that the vast majority of renting households do not have protection insurance – life insurance, critical illness cover or income protection – which provides financial support to an individual and their families if an income is lost through serious illness, injury or death.

Image of a paper house with a "For rent" sign attached

The survey reveals just one in five renting households has life insurance, compared to three out of five (58%) households with a mortgage. This suggests almost 8 million(1) renting households could be without life cover. Just 3% of renting households have critical illness cover or income protection, according to the study.

Without protection insurance, families risk being unable to maintain their family’s standard of living, including rental payments, in the event of an unexpected loss of income due to ill health.

36%

UK households live in rented accommodation(2), increasing from 31% in 2007(3)

 

Figures from the Office of National Statistics show that the number of households in the private rented sector in the UK rose from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million (63%) households.

Findings from the Aviva study suggest that the rental trend could be set to continue, with many residents convinced that they will never become homeowners.

  • Almost half of renters (46%) say they would only be able to get on the property ladder if they inherited a property or the money with which to buy one

  • Nearly two out of five (38%) renters expect renting will become the most common type of accommodation for future generations

  • Half of renters (50%) feel there is a stigma attached to renting rather than owning a home

  • In line with this, 22% say they feel ‘embarrassed’ to be renting, increasing to 33% amongst those aged 35-44 years.

The research also reveals that just two out of five households in rented accommodation have home contents cover to protect their belongings, in the event that they are damaged or stolen. This is in comparison to nine out of 10 (88%) of homeowners with a mortgage. This suggests that almost 6 million renting households across the UK, could be without contents cover for their possessions.(1)

Reasons for renting vary, but are mostly financial. Almost two thirds (62%) of renters say they are doing so because they can’t afford to buy, whereas 12% are renting while they save for a house deposit (rising to 28% amongst those aged 25-34). Although a small proportion (11%) say they don’t want the responsibility of being a homeowner.

35%

The percentage of their income that renters, on average, say that they spend on rent

 

25%

The percentage of income, an average mortgage owner would spend on their accomodation


40%

of their income is spent on rent, by those who rent privately

Paul Brencher, UK Health and Protection Director for Aviva says: “More and more households are living in rented accommodation, as house prices continue to be out of reach for many. There are a number of benefits to renting – it provides flexibility and can allow people to have their own space sooner than if they were saving to get on the property ladder.

“However, renters have the same need to be able to pay for their housing as homeowners. The risk of an unexpected loss of income due to ill health, and the potential impacts for families, are the same for renters and homeowners.

“Our research suggests that many renters could be leaving themselves exposed because they don’t have protection insurance or cover for their possessions. Buying a home is often a trigger for purchasing life and contents insurance, so it’s important that people don’t miss this step, simply because they are renting. Whether buying or renting, we’d urge people to consider how they can protect their incomes and possessions, just in case the unexpected happens.”

- ENDS -

References:

Figures relate to a survey of 2,057 UK adults carried out by YouGov on behalf of Aviva in June 2019, unless otherwise stated. This includes 567 respondents living in rented accommodation and 585 respondents who own their house with a mortgage.

(1)     According to official figures, there are 27.2 million households in the UK: https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families

(2)     According to official figures, 36% of UK households live in rented accommodation: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/791271/family-resources-survey-2017-18.pdf

(3)    https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukprivaterentedsector/2018

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Sarah Poulter

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Notes to editors:

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