Helping the under-protected back-up their income

14 September 2021
The UK has certainly been through its share of ups and downs recently - arguably more downs than ups – but fingers crossed, things are finally starting to turn around.

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Now that we’re emerging from the Covid-19 crisis, we can reflect on what this period of uncertainty has taught us. One of the things the past 18 months has highlighted is the financial vulnerabilities of certain groups within our society.

In the grip of the first UK lockdown, many people were concerned about meeting the cost of keeping a roof over their heads as businesses closed or they became too ill to work. In March 2020, the Government announced that homeowners would be able to apply for up to three months mortgage holiday – this was later extended to up to six months1.

However, tenants in the UK who were struggling to make rent payments had to rely on their landlord firstly applying for a mortgage holiday, and then passing the relief onto them. It wasn’t until five months into the pandemic, in August 20202, that the Government legislation was passed protecting tenants from forced eviction for six months if they fell into rent arrears due to the crisis.

I know this was an unprecedented time in all our lives, but as a company focused on helping people build their financial resilience, the disparity in the different levels of support available to these two groups - homeowners and tenants - got us thinking. 

And it turns out things aren’t much different when it comes to protection.

A lack of signposting to advice

As advisers, you’ll no doubt have noticed that there’s a lack of routes to advised protection for people who rent in the UK. Typically, the reason most people will initially seek out and speak to an adviser is to arrange a mortgage, and the protection conversation naturally follows on from this. However, as tenants aren’t seeking this type of professional advice, they’re often unaware of their protection needs – leaving them in a vulnerable position.

A report by actuarial firm Hymans Robertson, showed that only 8% of tenants were informed about any protection products as part of the lettings process, with only 2% informed about income protection.3

Changes in the rental market

The same report also showed that there’s a growing rental market in the UK. Since 2007 the number of households privately renting has increased by 61%. And this trend is expected to continue.3 For many people, renting is no longer seen as a stepping-stone to buying their first home. It’s a lifestyle choice, especially in large cities, such as London, where buying is just not seen as a viable option, even for older professionals. In fact, Hymans Robertson found that the average renter has been renting for over 10 years, and the number of middle-aged renters doubled between 2007 and 2017. Furthermore, 50% of all children born in 2018, were born into rented accommodation3.

Plus, tenants tend to spend a higher proportion of their salary on housing costs. For example, in London rent accounts for, on average, 65% of a tenant’s income – 20% more than a homeowner in London spends on a mortgage. With rent costs higher than mortgage costs in many areas in the UK, it may also be more difficult for renters to save enough to cover emergencies.3

So, can we, as an industry, afford to let this growing group of tenants remain under-protected and more at risk of losing their home if they can’t pay their rent and essential bills if they’re too ill to work due to illness and injury?

How we can help

We’re taking steps to address this issue by working to encourage advisers and lettings agents to think about the protection needs of tenants and to have the protection conversation during the lettings process. We’re also working in partnership with the Income Protection Task Force and, as members, we’re supporting their awareness week, which is running now (20-24 September). The event includes a series of live online events, delivering a range of content such as live panel discussions, case studies and useful tools and tips to help you to increase your clients’ awareness of income protection.

In addition, we’ve improved our overall protection offering for renters. Our Cover Increase Options make our Life Cover, Critical Illness Cover and Income Protection more flexible and suitable for tenants. And we have new resources to encourage lettings agents to refer tenants who are interested in protection, and to help you build relationships with lettings agents and approach these tenants.

Find out more

Visit our website or speak to your usual Royal London contact to find out how we can help support your protection conversations with this potential client base.

Sources:
1 Mortgage holidays to continue for homeowners affected by Coronavirus - Gov.UK (www.gov.uk) – accessed September 2021.
2 Guidance for landlords and tenants - GOV.UK (www.gov.uk) – accessed September 2021.
3 Protecting Generation Rent, Hymans Robertson, September 2019. Accessed August 2021.

About the author

Jennifer Gilchrist

Proposition Specialist

Jennifer Gilchrist is Proposition Specialist for Royal London’s intermediary protection business. Having worked in the industry for over 30 years, she has a wealth of experience in marketing and developing protection products and is a frequent press commentator. Jennifer’s had many articles and comment pieces published in the trade press. Outside work, you’ll often find her pounding the Edinburgh streets at 6am on a misty morning. She’s also an avid tennis fan but that extends to watching rather than playing!

This website is intended for financial advisers only and shouldn't be relied upon by any other person. If you are not an adviser please visit royallondon.com.

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.