Almost three quarters (74 per cent) of UK renters, more than 11.6mn people, could be vulnerable to “financial shocks” due to a lack of income protection, according to research from Canopy and LifeSearch.
The research found just one in 12 (8 per cent) of the renters surveyed said they had a protection insurance policy designed to protect their home.
Additionally, when asked if they would receive their full salary when being unable to work due to illness or injury, 36 per cent of respondents said their employer would do this for more than three months.
A further 16 per cent said their employer would not pay them anything, while 10 per cent who are self employed don’t receive anything.
Meanwhile, 35 per cent said they did not know how long they would be paid their full salary for.
Canopy chief executive officer, Chris Hutchinson, said these findings underscores the “next critical vulnerability” within the UK rental sector.
“With rents at an all-time high and financial pressures mounting, the absence of income protection for such a significant portion of the population is alarming,” he explained.
“Income protection is not just a safety net for renters that enables them to keep a roof over their heads, it's also a vital assurance for landlords, ensuring consistent rental income even in times of tenant hardship.
“As we navigate uncertain economic times, it's imperative for both renters and landlords to recognise the importance of and support robust financial safeguards.”
LifeSearch chief marketing officer, Justin Harper, added that, with property prices continuing to rise, lack of affordable housing for everyday families and rising mortgage costs, the number of people in the UK rental market has seen a continued and notable increase.
“Almost a fifth of UK homes are now privately rented and with rent now forming an increasingly growing proportion of people’s income, the prospect of financial shocks are becoming increasingly worrisome for renters,” he explained.
Harper also shared his thoughts on a solution to this issue, identifying renters’ access to the “right sort of support and insurance for them” as a key step.
The research follows data from the Office of National Statistics earlier this year which pointed to some of the highest annual rent increases since 2015.
With rent now increasingly forming a greater proportion of people’s income, LifeSearch and Canopy cautioned that renters could become increasingly vulnerable to income shocks in the coming months if rents are to increase, and they are without sufficient cover.
In light of this, when respondents were asked what would persuade them either as an employee or self-employed worker to invest in protection cover, over half felt it would be very useful if it contributed to their credit rating, supporting their financial track record.
tom.dunstan@ft.com
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