Oliver shares some insights on the financial impact of living alone. He compares the cost of living alone to other households and provides some tips on renting. The rate of one-person households continues to rise year on year in the UK as increasing numbers of people enjoy the independence and flexibility of solo life. However, those who live alone face more challenging financial situations than those who live with a partner or roommate, which can make the leap into solo living a little more daunting. Here’s what you need to know about the financial aspects of living alone and how to thrive when renting solo.
The Financial Impact Of Living Alone – What You Need To Know
Living Alone | 7th November 2022 by Oliver Pointers
Oliver, writing for CompareTheMarket.com, shares some insights on the financial impact of living alone. He compares the cost of living alone to other households and provides some tips on renting.
The rate of one-person households continues to rise year on year in the UK as increasing numbers of people enjoy the independence and flexibility of solo life. However, those who live alone face more challenging financial situations than those who live with a partner or roommate, which can make the leap into solo living a little more daunting. Here’s what you need to know about the financial aspects of living alone and how to thrive when renting solo.
Renting is more common in solo life
Areport from the Office of National Statistics(ONS) on the costs of living alone found that people are less likely to own their homes when they live solo. 75% of couples without children own their property compared to 50% of single people. Young singles are the least likely to own their home, with just 40% of single 25 to 34-year-olds owning their property compared to 55% of child-free couples in the same age bracket.
Although the rate of home ownership increases with age for singles, the gap in homeownership between single-person households and couples widens with age. 87% of couples aged between 55 and 64 own their home compared to just 57% of singles of the same age.
There are barriers to homeownership for single people
Buying a home in the UK is challenging for many due to high demands for property, limited supply, and rising prices, but it’s particularly tough for single people. Banks usually require a mortgage deposit ranging between 5 and 15% of the property price. Couples can pool their income to save for this deposit, but it’s much harder to save a large lump sum on a single income. Plus, the process of taking on a mortgage alone is often a daunting prospect for singles since they don’t have the reassurance of a partner’s income to rely on if their financial circ*mstances change. All of this makes renting more common for those living alone.
Spending on housing costs is higher for those living alone
According to the ONS, single adults spend a higher proportion of their disposable income on rent or mortgage and other housing costs than couples without children. This goes for those who are renting as well as those with mortgages. Rent or mortgage takes up 26 to 28% of income for singles compared to 17 to 20% for couples. Bills and housing costs, including water, gas, electricity and council tax, take up 11% of income on average for those who live alone compared to just 8% for couples.
Renting can be beneficial for solo living
The ONS found that single adults who rent their property spend an average of 26% of their income on rent, while those who own their homes spend an average of 28% of their income on their mortgage. This goes to show that renting tends to be a little more affordable than paying a mortgage.
There are other financial benefits of renting too. You don’t have to pay out any maintenance costs, there’s no need to find large sums of money for costly repairs when things break down, and you don’t need buildings insurance. Plus, you don’t have to pay expensive solicitors fees when you want to move house. Overall, moving is simpler and quicker too, which benefits those who love solo living for the sense of freedom and flexibility it provides.
Simple habits can cut the costs of living alone
The additionalcost of living alonecompared to living with a partner or housemate adds to the financial impact of living alone but can be reduced for those who arecareful with money. First, talk to your energy provider to discuss tariffs best suited to singles. Tariffs without standing charges may be an option because you only pay for what you use and can focus on minimising your electricity and gas use. Although, the unit cost of energy is likely to be higher on these types of tariffs. If your property doesn’t have a water meter and you pay a standard rate, you could benefit from having a meter fitted, so you only pay for what you use which is likely to be much less than the average household.
Finally, be sure to let your local council know that you’re living alone to get a 25% single-person discount on your council tax bill.
Knowing your rights as a tenant can help you feel more secure
A downside ofrentingis the uncertainty that comes with living in a property you don’t own. Landlords can increase rent, end your tenancy or fail to maintain the property, and it can feel particularly daunting to face these problems alone. You can feel more secure in your rental by educating yourself on your rights as a tenant. For example, you must be given at least two months’ notice in writing if your landlord wants you to move out, which should give you adequate time to find a new home.
If you feel your rental property isn’t safe to live in and the landlord won’t make repairs, you can report them to your local council. The council can then insist the landlord makes the repairs, or they might risk a fine or a ban on renting out their properties.
Attitudes surrounding renting are evolving
Rental rates haveincreased in the UK over the last 15 years, particularly for those aged 35 to 44. In 1997 just one in ten adults in this age bracket rented, but by 2017 this increased to one in three. Rapid growth in house prices is one reason for a growth in the rental market, and gradual improvements to rights for tenants have also played a role.
Thedesire to own property varies across the world, which shows that not all feel that home ownership is essential. For example, in Indonesia, an incredible 95% of people want to own their own home, whereas, in Germany, the figure is just 48%. The desire to buy hinges on factors like property prices, supply and demand, and housing laws. This means you needn’t feel pressure to buy property as a single person if you simply enjoy the benefits of renting.
While the financial impact of living alone means that costs may be more expensive for solos, if you’re smart with your bills, it’s possible to enjoy financial stability in a rented property while maintaining an independent solo life.
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Oliver Pointers
Oliver is a digital nomad and solo traveller. He's lived in Bali for the past year, but he loves the freedom to work where he chooses and regularly returns to see family in the UK. Oliver's always been independent – at 16, he left home to backpack around Europe for six months – and this sense of independence has only grown since he became a digital nomad. He enjoys nothing more than exploring new places on his own and getting lost in a city he's never seen before.
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The financial dynamics of living alone, especially in relation to renting versus ownership, are multifaceted. Here's a breakdown of the key concepts within the article and my expertise in each area:
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Rise of One-Person Households
- I'm familiar with the trend of increasing one-person households, particularly in the UK, owing to a desire for independence and flexibility. This trend has considerable financial implications.
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Homeownership Disparity
- Data from the Office of National Statistics (ONS) reveals a substantial gap in homeownership between single individuals and couples without children across various age brackets. I understand the factors contributing to this gap, such as income limitations and challenges in saving for a deposit on a single income.
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Financial Strain on Singles
- The ONS highlights that single individuals spend a higher proportion of their disposable income on housing costs compared to couples without children. This encompasses both rental and mortgage expenses, emphasizing the financial strain faced by those living alone.
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Renting vs. Owning
- The article illustrates that renting tends to be more financially feasible than owning a property for single adults. This is due to factors such as lower cost percentages on rent compared to mortgage payments and avoiding additional expenses like maintenance, repairs, and solicitor fees.
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Cost-Cutting Strategies
- Strategies to minimize the financial impact of living alone are mentioned, including exploring energy tariffs tailored for singles, installing water meters for more accurate billing, and securing council tax discounts for single-person households. I'm knowledgeable about these cost-cutting measures and their practical applications.
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Tenant Rights and Security
- Understanding tenant rights is crucial for individuals renting property. I can explain these rights, such as notice periods for eviction, landlord responsibilities for property maintenance, and the recourse tenants have if landlords fail to meet these obligations.
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Evolution of Renting Trends
- The article touches on the evolving attitudes toward renting and the increasing number of individuals, particularly in certain age brackets, opting for rental accommodations due to rising house prices and improvements in tenant rights. I'm familiar with these shifts in the housing market and their impact on individual preferences.
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Global Perspectives on Homeownership
- The desire for homeownership varies globally, influenced by factors such as property prices, housing laws, and cultural norms. I can discuss these differences and how they relate to the pressure or lack thereof for single individuals to buy property.
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Maintaining Financial Stability
- Despite the higher costs associated with living alone, the article emphasizes that financial stability is achievable through prudent financial management, especially in a rented property. I can elaborate on various financial strategies to maintain stability while living independently.
Understanding these financial aspects of living alone, including the challenges and advantages of renting versus owning, empowers individuals to make informed decisions about their housing choices and financial well-being.
