The seventh annual Scottish Widows Savings and Investment Report, based on a survey of more than 5,000 UK adults, has revealed that the average private renter saved £2,180 in the last year, meaning that it would take 23 years to accumulate the average deposit of £50,845. Even the average deposit for a first time buyer, at £27,984, would take almost 13 years to save.
With property ownership seeming like a distant dream, the research suggests that many renters may have given up on property ownership with just 29% actively saving to put a deposit on a home.
When renters have managed to put money aside they have, on average, less than half the amount (£12,142 vs £29,382) saved by those who are not paying private sector rents. Those who rent privately are 50% more likely than the average to have no savings at all (25% vs 17%) and a third more likely to have total savings of less than £1,000 (20% vs 15%).
Highlighting the difficulty of balancing monthly rent payments with the need to put money aside, 72% of private renters report that having no money available represents a significant barrier to their ability to save. A shocking 35% of renters admit that they are currently not saving at all, with a further one in five (21%) only saving for the short term.
This lack of savings leaves renters dangerously exposed to unforeseen events; one in six believe that their savings would last less than a month if they were unable to work and half say they would only be able to support themselves from their savings pots for ‘a couple of months’ or less.
Commenting on the findings, Iain McGowan, Head of Savings and Investments at Scottish Widows said:
“We live in a society where many strive to own their own homes but, for many people facing high rent and increasing living costs, this isn’t going to be achievable. Whilst this is concerning, what is most worrying is that over a third of renters have no savings at all and are leaving themselves vulnerable in the short and long terms.
“The importance of saving goes much further than getting on the property ladder.as a healthy savings pot can provide an invaluable buffer for the unexpected or tough times. Whilst owning a property is seen for many as something to work towards, we need to ensure that people are able to manage their out-goings, whether rent or a mortgage, and create that safety-net for unexpected bumps in the road. There is no doubt that adding to a savings pot can be difficult in challenging economic times but it is this that we should all be aiming for.”
