Financial worries mount for Britain’s renters: survey
Frail household confidence has weighed on the UK economy in recent years, as consumers make up around 60% of gross domestic product
[LONDON] Renters are being left behind as the confidence of UK households shows tentative signs of recovering, according to a Bloomberg Intelligence (BI) report that underscores the economic divide created by Britain’s two-tier housing market.
A BI survey carried out in August found tenants made up the majority of those saying they were very concerned about their finances, a disproportionate amount given they account for around a third of UK households. They were more worried than a year ago, whereas homeowners were less concerned.
“Renters tend to be less resilient to financial stress than homeowners, and the confidence gap widened,” report authors, Lento Tang and Tomasz Noetzel, wrote.
The findings add to evidence that the poorest are bearing the brunt of the latest inflation spike. Lower-income households, who are more likely to rent than own their home with a mortgage, are grappling not only with soaring housing costs, but also higher prices for food, energy and other essentials. Many owner-occupiers, by contrast, are benefitting from Bank of England interest-rate cuts.
It underscores the challenge facing Prime Minister Keir Starmer’s Labour government to deliver on its promise to boost living standards.
There is little relief in sight for tenants, who have seen rents rocket by 30 per cent on average in the past four years. Now, many landlords are selling up in response to tighter regulations, leaving fewer available homes. There is also speculation that Chancellor of the Exchequer Rachel Reeves will target landlords at the Nov 26 budget by subjecting rental income to national insurance tax.
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“Slower rent hikes in recent months could be helpful, though a potential draconian tax policy on rental income might spur another wave of spikes,” Tang and Noetzel wrote.
Frail household confidence has weighed on the UK economy in recent years, as consumers make up around 60 per cent of gross domestic product.
On average, BI found that financial pressures are easing. Twenty-six per cent of Britons said that they were concerned about their finances, down three points from February, according to its poll of 1,000 people aged 25 and over.
However, caution abounds. Savings pots remained stable, and an increasing number of people are shifting money from fixed-term to liquid accounts amid fears about the outlook. Meanwhile, 16 per cent of respondents said that they’d be unable to carry on their day-to-day life for more than a month if they lost their regular income.
“That’s in line with answers about savings, about 19 per cent have household savings of less than £1,000 (S$1,738), and shows a level of financial vulnerability that could quickly turn into debt-payment arrears if unemployment rises,” Tang and Noetzel wrote. BLOOMBERG
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