New research by Scottish Widows has highlighted how the majority (56%) of private renters in the UK have no form of financial protection in place, suggesting many people are precariously close to losing their home should they ever be left unable to work.
In fact, the same study of more than 4,000 people noted one third of respondents do currently need to take extended time off work – with an average absence period due to serious illness or injury being almost five months.
This is despite a separate Scottish Widows poll revealing that nearly one in 10 workers could only last one month financially supporting their households without their jobs.
Would you know what you’d if you found yourself in this situation?
Like any financial challenge, the first step towards insulating yourself against hardship is being aware of the options available to you – and proactively planning for the worst.
Here’s some key steps renters can take to today to better protect themselves:
Know where you stand legally
First and foremost, it’s crucial you’re well acquainted with the terms you signed when you moved in. For example, some tenancy agreements have break clauses that allow tenants to leave early under certain conditions. Knowing these terms can help in planning if you need to move due to financial constraints.
It’s also important to be aware of any ‘rent arrears’ clauses in your contract so you’re well prepared should the worst happen. And if you’re at risk of eviction, don’t hesitate to seek legal advice to understand your rights and any protections you may be entitled to under the law.
Consider insurance (because you never know…)
Serious illness and incapacity are unpredictable and could happen to anyone, any time. But don’t worry: there’s a whole host of insurance and protection types that are designed to help you in exactly these circumstances – so if you’ve never considered them before, now could be the perfect time to reconsider if they’re right for you.
Options include Income Protection – which offers a percentage of your income if you’re unable to work, helping you cover rent and other outgoings – as well as Critical Illness Cover that provides a lump sum payout if you’re diagnosed with a serious condition.
Many providers also offer Rental Guarantee Insurance, which covers your rent payments if you’re out of work. Some landlords already have this cover in place for their tenants, so it’s worth enquiring with them before you look into your own plans. Moreover, some companies offer schemes where a small monthly fee can provide rent payment coverage in the event of unexpected circumstances like illness.
Check what help you’re entitled to
As the name suggests, Statutory Sick Pay (SSP) is a government requirement, so it’s key to understand your entitlement; you may be eligible for SSP for up to 28 weeks if you’re classed as a full employee at your firm and earn more than £123 per week (the ‘lower earnings limit’ (LEL)).
Depending on your condition, you might also be able to seek Personal Independence Payment (PIP) or Employment and Support Allowance (ESA). And if your income does drop significantly, you be entitled to Universal Credit – which includes a housing cost element – so be sure to check your eligibility as soon as your circumstances change.
Get a head start on an emergency fund now
If you can afford to put some of your salary away each month, a useful goal is to aim to build up an emergency fund of at least six months’ worth of rent and essential living expenses Having this money stored away for safekeeping can provide a vital buffer during unexpected periods of illness down the line.
You can start small if you have to, and set goals to gradually build up your savings over time. And consider keeping these funds in a separate, easily accessible account to avoid being tempted using them for non-essential expenses.
Don’t be afraid to ask for support
There are plenty of charities and advice services who can point you in the right direction when disaster strikes. For example, Citizens Advice can offer guidance on your tenants’ rights and help you navigate benefits, whilst Shelter specialise in housing-related issues and can support you if you’re at risk of eviction.
It’s also worth noting that, depending on your area, your local council could help you with assistance like discretionary housing payments (DHP) to cover shortfalls in your rent.
Be open with your landlord
When your normal source of income is affected, it can be tempting to try and obscure the situation to ‘buy time’ until a solution arises – but it’s vital to be transparent with your landlord as soon as you know what’s happening.
Many landlords may be willing to negotiate a temporary reduction in rates, or let you defer your payment for a short while whilst you get your bearings. It’s always a good idea to meet them halfway and include a realistic payment plan in any request or proposal, outlining how you’d intend to catch up on arrears once your situation improves.
Note:
This information is for education purposes only – it does not constitute financial advice and should not be acted upon without taking professional advice.
If yourself or a loved one are looking to improve their financial situation, speaking to the experts can provide valuable clarity and peace of mind.
Get in touch below for a consultation on how we can help you meet your goals: