"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"
- Chris Hutchinson - Canopy
More than 11.6 million Brits currently renting their homes risk being left unable to pay their rent if they fall sick, are injured or are made redundant.
New research by Canopy and LifeSearch reveals that 74% of renters are without the safety net of income protection, insurance that can provide income for people that are unable to work through sickness, injury or redundancy - covering their essential outgoings. Just 8% said they had a protection insurance policy designed to replace their income.
Amidst rising financial pressures - including unexpected sickness, and a volatile rental market - 47% of respondents are worried about their ability to pay their rent and bills.
When asked if they would receive their full salary when being unable to work due to illness or injury, 36% said their employer would do this for more than three months. A further 16% said their employer wouldn’t pay them anything, while 10% who are self-employed don’t receive anything. More than a third (35%) said they did not know how long they would be paid their full salary.
The research from Canopy and LifeSearch comes as ONS data earlier this year pointed to some of the highest annual rental increases since 2015, and London rents increased 11.2 per cent year-on-year in March 2024.
The Canopy Q2 Rental Affordability Index also highlights the financial pressures faced by renters, with the average tenant in the UK spending 36% of their monthly wage on rental payments, and an astounding 19% spending over half.
With rent now increasingly forming a greater proportion of people’s income, 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 (52%) felt it would be very useful if it contributed to their credit rating, supporting their financial track record.
Justin Harper, Chief Marketing Officer at LifeSearch comments: “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 - particularly through accident or illness - are becoming increasingly worrisome for renters.
“This is perhaps even more concerning for those with pressing financial commitments, including families and those caring for others. Although it can often be overlooked, it’s times like these that insurance cover such as income protection is becoming increasingly important to ensure individuals’ financial security through uncertain times.”
“A big part of solving this issue is to ensure that renters can access the right sort of support and insurance for them and if needed, expert advice. With more and more renters now susceptible to income shocks, LifeSearch is working closely with Canopy to help address this ominous renter resilience gap.”
Chris Hutchinson, Chief Executive Officer, at Canopy comments: "The findings of our latest research underscore what we see as 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.
"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. At Canopy, we are committed to raising awareness and providing solutions that help secure financial stability for all parties involved in the rental market.
"An affordable solution that fits the modern renter demographic is key to increasing the uptake of this type of cover, and decreasing the risks for all involved."
