A top ten of the hot spots where runaway rents have pushed household budgets into the red has been revealed.
Young renters in particular have faced a much bigger squeeze than home buyers, according to a new study.
It has identified 160 constituencies, making up almost a quarter of the UK, where people are struggling with high rents.
As a result, these ‘Generation Rent’ households are likely to be borrowing more, relying on benefits, and defaulting on loans.
Conversely, areas of high home ownership – with older people who own their properties outright – have been protected from recent shocks.
The ten areas with the highest proportion of renters who are struggling financially are spread across the country.
They are led by Bristol West, where 40 percent of households are renters, ahead of Cardiff Central, Hampstead and Kilburn in London, East Ham, and Manchester Central.
The research comes from a Financial Vulnerability Index commissioned by credit management experts, Lowell, which assesses the ability of households to manage daily finances and resist economic shocks.
These include debt defaults, using alternative financial products, claiming work-related social benefits, lacking emergency savings, holding a high-cost loan, and relying heavily on credit.
Cities like Bristol, Cardiff, London, Manchester and Portsmouth have been hit particularly hard.
The average age in these renting hotspots is four years younger that it is in the 207 primarily rural constituencies that have seen their savings rise and borrowing fall.
The Lowell’s UK chief executive, John Pears, said: “We know there is a growing gap between homeowners and renters, but we haven’t seen its direct impact on people’s day-to-day finances.
“The study exposes the true gap that the housing crisis and inflation has created, significantly driving up costs for renters in the UK.
“People in these areas are struggling with costs, turning to credit and relying on benefits reducing their overall financial resilience.
“It is not easy. Worst of all, the burden is really falling on younger renters. We need to address this gap and better understand the growing divide in our society.”
The research also identified areas where high interest rates and mortgage costs are hammering households.
These are led by the parliamentary constituency of Richmond Park where average property prices are put at £870,000, ahead of Hampstead and Kilburn on £825,000 and Wimbledon on £745,000.
The study found a growing divide between rural and urban areas as older outright homeowners have been shielded from the economic headwinds of recent years.
Rural areas like these have benefited from higher numbers of retirees with their more stable incomes.
For example, in East Devon where 45 percent of households own their home outright only 3 percent of adults claim benefits – less than half the national average of 8.5 percent. The use of credit also fell last year.
Other areas with the highest proportion of homes that are owned outright are led by Christchurch, Dorset, at 50 percent and New Forest West at 47 percent.
The full report examines these trends in more detail alongside other trends affecting financial vulnerability in the UK and can be viewed here – https://www.opinium.com/fvi/
