- Private renters have higher weekly housing costs (mean: £237, median: £196) than those with mortgages (mean: £222, median: £185).
- On average, private renters spent 34% of their income on rent, while those with mortgages spent 19%.
- On average, retired households spent 18% of income on mortgages and 38% on rent.
- Only 52% of private renters have savings– compared to 79% of owner occupiers.
Data on renters from the English Housing Survey was published today: English Housing Survey 2023 to 2024: rented sectors – GOV.UK
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“The eye-watering cost of rent is devouring huge chunks of people’s income, making it incredibly difficult to build a deposit – it’s no wonder millions of people risk being stuck in the rental trap.
Private renters spend more on their housing costs than any other group, and because they tend to be on lower average incomes, it takes a punishingly large proportion of their cash each month. Younger renters face a mountain to climb paying the rent each month – and on average, private renters aged 16 to 24 spent half (50%) their income on rent. Tenants in London are struggling too – spending an average of 46% of their income on rent.
They struggle to put money aside for any reason – only 52% have any savings at all – so building a deposit is a real stretch. In fact, separate figures from the HL Savings and Resilience Barometer shows that on average they’re only able to put away 2.7% of their income for the future.
It means that those who are able to free up some money to save for a deposit need to ensure it’s working as hard as possible for them. If they qualify for the Lifetime ISA, it’s well worth considering. If you’re aged 18-39 you can open an account and pay in up to £4,000 a year. The government will top this up by 25% – or up to £1,000 – which is a decent boost for your deposit. The money has to be used for a first property (worth up to £450,000) or for retirement, but if you qualify it can help those who need it most to take their first step on the property ladder for those who need it most.”
Helen Morrissey (pictured above), head of retirement analysis, Hargreaves Lansdown:
“Our retirement reality is shifting – while many of us dream of having paid off our mortgage by the time we collect our pension, the fact is that increasing numbers of us haven’t. This means we need to factor mortgage payments and rent into our figures, and this data shows it takes a fair chunk out of pensioner incomes.
Retired households paid 18% of their income on mortgage costs and a whopping 38% for renters. It’s an issue that isn’t spoken about often enough and it has a major impact on how much people need to save. The latest data from HL’s Savings and Resilience Barometer shows that just 15% of renters are on track for a moderate retirement income. This compares to 47% of homeowners.
Given people will increasingly bring housing costs into their retirement years, it will be interesting to see the role they play in the upcoming government review into pension adequacy. The challenge is that with rents going up, people find it harder to save for their own home and this in turn frees up less money to put away for retirement.
Retirement may feel a long way away, but it’s important to think about what you want that time to look like, so you can get an idea of what it might cost. Checking in with how your pension is doing and using tools like pension calculators to get a sense of what you might end up with is really useful. If you are on track with your plans then great, but if not, you have time to put a plan in place to do something about it. Making small changes, like increasing your pension contribution when you get a pay rise, can really make a difference over time if you can afford it. If you are aged 18-39, you can also look at a Lifetime ISA which can help you save for both a mortgage and retirement.”
