While some people actively choose to rent their home, a growing number are being forced into it thanks to a lack of funds. Renting is no longer the realm of the student or young professional, either – the sector that was once dominated by the younger generation is now becoming a growing base for families, and the number of those renting in the private sector is increasing all the time.
According to research from Aviva, the number of families with dependent children living in rented accommodation in England has increased by 13% since 2009. More than a third of those – including 35% of 35 to 44 year-olds and 50% of those aged 45-54 – believe they'll never be in a position to buy their own home.
This highlights the difficulties faced by those seeking to get on the housing ladder, with affordability remaining the primary reason for choosing to rent. Over half (56%) of those surveyed said they couldn't afford to buy a home, and although 15% were saving for a deposit, 41% had lived in rented accommodation for more than five years.
The proportion of older renters is also growing: the private rented sector has increased by 889,000 households since 2008/09, including 434,000 additional households in the 25-34 age group. In 2008/09, 31% of all households in that age group rented privately, but by 2012/13 this had increased to 45%.
Renting is clearly no longer the preserve of the young, but unfortunately, this shift to renting means that a lot of people are putting themselves at long-term financial risk. The survey found that those living in rented homes are far less likely to have certain financial products (including life insurance, savings accounts or pension savings) than those with a mortgage, and that could put their family's financial future at risk.
The figures show that just 23% of those living in rented accommodation said they had life insurance, while a mere 3% had critical illness cover and 2% had income protection. This contrasts strongly with those in mortgaged properties, where the figures total 51%, 19% and 13% respectively.
Louise Colley, of Aviva, says: "Renting offers many benefits, such as affordability and flexibility, but there's a concern that many renters are being left financially exposed. When someone takes out a mortgage they are often asked to consider how they might pay it if they were seriously ill or if an income-earner was to die. This can often prompt people to take out protection products like life insurance and critical illness cover.
"If a family rents, these conversations may not happen, so there's a risk that if a renting family loses an income, they may not have the protection that could help to pay the rent and cover the bills. Every family should be encouraged to think about the 'what ifs' and take steps to make sure suitable cover is in place."
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