Three money mistakes renters make
Britons may be obsessed with home-ownership, but there are positives to renting such as not having to sort out broken boilers or cracked roof tiles.
One study also suggests renting is cheaper than owning a home based on upfront and monthly costs alone.
However, many renters are making financial mistakes that could cost them dearly.
Here are three of the main ones:
They don’t have life insurance or critical illness
Homeowners are often urged to take out a life insurance policy or buy critical illness or income protection to cover the cost of their mortgage in the event they died prematurely or were unable to work for an extended period. But the same applies to renters.
What would happen if the worst happened to you or your partner? How would the rent be paid? Would your family lose their home?
One survey suggests only a quarter of British renters have a life insurance or critical illness policy in place compared to almost half of homeowners.
They don’t have home insurance
Another area where renters often slip up is insurance. One survey found as many as two fifths of renters – that’s the equivalent of 17 million people – do not have contents insurance, meaning they wouldn’t be covered in the event of a fire, theft, or any other damage such as flooding.
Contents insurance protects your belongings whereas buildings insurance, which you won’t need if you rent, covers the structure of the building and anything fitted.
The survey said most uninsured tenants thought they were covered by their landlord’s contents policy or even their parent’s home insurance policy. But you can’t assume this is the case.
If you rent a fully furnished property, it’s worth checking with your landlord what you’re liable for replacing.
They don’t switch energy supplier
You don’t have to own the property to switch gas and electricity supplier. Under consumer protection law, if you are a renting a property and are directly responsible for paying the gas and/or electricity bills, you have the right to choose your own energy supplier.
However, one study found one in 10 private renters have been told by their landlord or letting agency that they do not have the right to switch provider. This ‘lie’ collectively costs tenants £41m a year.
According to the regulator, Ofgem, the average household can save £300 a year by switching so it’s definitely worth doing. Just check your tenancy agreement because you might need to inform your landlord you’ve switched, or even return to the original supplier at the end of the tenancy.