1. Context
2. The study
3. Key findings
4. Points to consider

Context

The private rented sector increasingly offers the only practical housing option for many people living on low incomes and was forecast to account for 20% of all households by 2016, up from 9% in the 1980s. Financial inclusion efforts have tended to target social tenants, although private tenants are more likely to live in unbanked households. They are harder to identify and reach, and so have been left in a “policy vacuum”.

This review was undertaken in 2013.

The study

The project aimed to uncover the number and characteristics of financially excluded private tenants in the UK, explore barriers they face to financial inclusion and identify effective approaches to improving this situation. The study analysed findings from the Family Resources Survey (2009-10) and the Wealth and Assets Survey (2006-08) to identify the level and characteristics of the financially excluded private tenant population before undertaking a cluster analysis to outline three key sub-groups within the population. Five focus groups were held to explore individual attitudes and experiences within these clusters. The study defines financial exclusion as being without a transactional bank account.

Key findings

• • About 650,000 or one in ten private tenants did not have a transactional bank account.
  • The most likely to be unbanked are those with low incomes, high deprivation scores, without formal qualifications, unable to work because of illness or disability, and/or receiving income-replacement benefits (socio-economic characteristics).
  • Risk is also higher among the oldest and youngest tenants, single pensioners, people living in Northern Ireland, those not born in the UK, people from a South Asian background, and people with a long-standing limiting illness (socio-demographic characteristics).
  • The single strongest predictor of being unbanked was holding a Post Office Card Account (POCA); those who did were 9.6 times more likely to be unbanked than those who did not.
  • Overall, socio-economic factors are more predictive than socio-demographic ones.
• • Deprived and economically inactive (35% of the unbanked, and especially those with a lower income, retired, permanently sick or disabled, over 60, lone parents, receiving housing benefits, and very likely to have a POCA).
  • Better-off couples (36%, and notably in their 20s and 30s, working, earning £500 a week or more, having a degree, not materially deprived, and/or having a signed written tenancy agreement)
  • Young, single adults (26%, largely under 30s, non-householders, without children, students, temporarily unable to work through illness or disability, often living in their family home or shared accommodation).
  • The first group was most likely to live in a household where nobody has a transactional bank account (80%) and the third least likely (24%).
• • Subject to poverty premium through paying in cash, limited access to goods and services, constraints on money management options, often facing difficulties securing employment.
  • Constrained in choice of housing, often trapped in low-quality housing needing repair, and unable to meet high moving costs.
  • Often feel that nobody is concerned about their needs and interests, and strongly disengaged from and often distrustful of financial services.
• Often refused bank accounts or offered basic accounts with added conditions, and worried about fees and charges.

The outcomes of the research highlighted policy change needs to address four key problems:

• The on-going vulnerability of many of the people living in private rented housing.
• Continuing barriers to the achievement of meaningful and sustained financial inclusion for all of those who need or want financial products and services.

The difficulties associated with delivering help with financial inclusion to private tenants.

• The invisibility of vulnerable private tenants in policymaking

Points to consider

• • Highly relevant to planning financial inclusion policy and interventions.
• • Representative of the UK population, but based on data from 2009 and before, so some circumstances may have changed.
  • The identified clusters are a useful shorthand but by their nature are not clearly bounded.

Full report

Helping private tenants achieve financial inclusion - full report