• Chris Warner

Generation Rent

Across the UK more and more people are now in private rented accommodation than ever before. There has been a significant shift away from home ownership towards private renting. This could be for a number of reasons: the shortage of housing available on the open market which is pushing house prices ever further away for some, a larger supply of privately rented accommodation from the increased availability of Buy to Let mortgages to landlords over the last 10 years as well as other societal changes such as a more flexible workforce making renting actually more attractive than the ‘ties’ that come with home ownership for some people.

This has been termed in the media as “Generation Rent” but doesn’t actually mean it relates directly to the younger generation or first-time buyers, for example. Many private renters are in the under 45’s, however there are still around 35% of private renters in the over 45’s age group.

Renting is no longer only seen as a stepping stone to purchasing a property but instead as a permanent living situation as commonly seen on the continent. The standards of rented accommodation have increased drastically over the years too, making more satisfied tenants that now see this as their long-term alternative to owning a home. The average renter has been renting for over 10 years* in total, this does vary with age, with older renters (55+) renting on average for 14 years.

The biggest issue with “Generation Rent” is the lack of protection advice being provided. Private renters may still have large monthly outgoings that need protecting, but have not necessarily had advice on their requirements, as this is largely advised in tandem with mortgages when purchasing a property. There are now large numbers of private renters who have not sought advice in this area either due to the complex nature or being completely unaware it even exists.

When taking on a new tenancy, why are private renters not being given adequate advice with regards to protection? Research has shown only 8%* of renters were given this type of advice.

If you feel that this relates to you, then I want to be able to give you the information you need to be able to confidently ensure you and your family are fully protected. Do you have enough savings set aside to cover rent and normal monthly outgoings should you be unable to work? Do you have adequate sick pay provision from your employer should you not be able to work for 3 months or more? Do you know what state benefits you may be entitled to should you need to rely upon these?

I have highlighted some areas of protection available below, but these are just a snap shot of each type and this will change in line with your own specific needs and requirements:

Income Protection is the one protection product that would be of most benefit for private renters as it is able to provide you with your own personal furlough scheme of up to 65% of your gross income should you be unable to work due to a long-term illness or injury. If you are unable to work, you would still have to find the money for your rent and monthly outgoings every month.

Life and Critical Illness cover can also benefit renters. You may still benefit from a lump sum in the event of death or critical illness if there is a need for this type of cover.

Family Income Benefit this can provide a monthly lump sum in the event of death and/or critical illness. This relatively cheap life insurance policy could provide peace of mind knowing that should the worst happen, your family will not also have the worry of how they are going to pay the rent and bills when you are gone.

If you think that any of the above sounds like something you would like to know more about you can read more in our specialist protection blogs or contact Matching Finance and talk to an adviser today who will be able to give you as much information as you need.

Committing to a new rental tenancy over say 6 or 12 months is a big financial commitment. Add to this the fact that private rent is now being added to credit reference agency records, so proven track records can affect your credit score now too. It is even more important to make sure that you think about the financial repercussions of not being able to pay your rent and bills and how this could affect you and your family.

Many of my clients, prior to discussing this area think that it will be too expensive or too complex. Amazingly, clients will often have pet insurance or mobile phone insurance and even insurance policies for household appliances but think that they are important enough to consider protecting? YOU are the most important asset, as without you there is no income and therefore no ability to pay the rent or bills.

Get in touch with Matching Finance today and let’s see what the cost of not having adequate protection could be for you.

*Source - Hymans-Robertson rental market research Sept 2019

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