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.
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.
A report 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.
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 circumstances change. All of this makes renting more common 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.
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.
The additional cost of living alone compared to living with a partner or housemate adds to the financial impact of living alone but can be reduced for those who are careful 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.
A downside of renting is 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.
Rental rates have increased 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.
The desire 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.
