Renters and mortgage holders are bearing the brunt of the cost of living crisis, research has found.
According to the Office for National Statistics (ONS) renters are five times more likely to experience financial vulnerability than home owner occupiers.
Financial vulnerability
Housing costs are also proportionately more expensive for them as they spend more of their disposable income on rent (21%) than mortgage holders do on their mortgage repayments (16%).
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said that as the cost-of-living crisis continued to squeeze the life out of people’s finances, renters were particularly vulnerable to rising costs, while people in older groups were also struggling with their finances.
She said: “Enormous house price increases over the years have made it hard for people to get on the housing ladder. They either get on it later, or not at all, and this has long ranging impacts for people’s financial resilience at all ages. High housing costs make it that bit harder for younger generations to save, and this includes putting away enough to give them a decent income in retirement. According to data from the latest HL Savings and Resilience Barometer only 35% of households aged 30-34 are on track for a moderate retirement income.”
Although those in older cohorts are far more likely to be owner occupiers, there are still a substantial number of older people who are social renters. while 6.8% of all private renters are retired. Over a quarter of social renters are retired and 7% of owner occupiers aged between 65-74 are still repaying a mortgage along with 2.3% of those aged over 75.
Morrissey added: “Those approaching and in retirement are far more likely than younger groups to have paid off their mortgage but recent English Housing Survey data shows there are many who still have to account for these costs. Those with a mortgage can look forward to a time when payments end but for those who rent the costs continue and alongside already eye watering increases in food and fuel it can make life extremely difficult.”
Costs, costs, costs
Food shopping was the most commonly reported reason for the cost of living increase – 96% – while gas or electricity bills were 57% the price of fuel over a third and rent or mortgage costs over quarter.
“Paying housing costs into retirement has an enormous impact on how much we need to save. Those willing and able to keep working can do so in a bid to save more and boost their income but for those who aren’t able to they face a real struggle.”
