Income protection: a growing necessity for UK tenants

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Steve Bryan is Director of Distribution and Marketing at The Exeter Pinhoe

UK house prices have reached new highs as the ‘space race’ and buyer demand caused by the pandemic outstrips the number of properties available on the market.

According to research by real estate agent Hamptons, that means it’s now cheaper to rent long-term than to buy a house.

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As house prices continue to rise, the average age of tenants is also rising, with more than half of UK private rental households now headed by someone over 35.

HSBC research also predicts that the average age of first-time buyers could reach 40 once the government’s purchase assistance program ends in 2023, meaning more people will likely be stranded in the rental business for a longer period.

As a result, many of these people are likely to have larger financial commitments while remaining tenants, including families to support.

The rental protection gap

Despite this, renters have historically been less likely to have some form of financial protection, such as income protection. Taking out a mortgage has been a traditional trigger for advisors to discuss protection with their clients, but with so many unable to take the first step on the housing ladder, a huge proportion of the population are unable to make the first move on the housing ladder. has no such vital discussions.

In particular, as tenants age, they are more likely to be unable to work due to serious illness or injury. It is therefore essential that counselors approach this demographic to ensure they are protected.

However, research from The Exeter shows that only 15% of the conversations advisers have had with clients regarding protection in the past year have been with tenants.

This puts tenants at serious risk if they find they are unable to work due to poor health, with some people likely struggling to pay their rent and cover daily costs.

Indeed, data from the UK Rental Market Statistics 2021 report found that UK tenants spend an average of 31% of their income on rent, reaching 80% in some London boroughs.

Advice remains essential

Advisors have a crucial role to play in raising awareness of the wide range of protection policies tailored to the needs of tenants, including products whose coverage levels are steadily increasing to keep pace with rising rental costs or for them. people who regularly change rental contracts.

It is also essential to emphasize the affordability of these products when talking to clients, as many are unaware that there are policies available for less than £ 20 per month depending on their circumstances.

As an industry, we need to move beyond the idea that income protection is only valuable to homeowners and realize the opportunities that come with talking to other types of customers such as tenants.

With the housing bubble unlikely to burst, advisers should start conversations with tenants about their protection needs and get them to think about how they will cover rent and maintain their standard of living if it drops. of income.


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