Business ala October 8, 2024 0 Comments

The solo penalty, from rent to holidays: ‘Being single is costing me £12,000 extra a year’

In popular culture, narratives about being single generally flip between the joys of unparalleled freedom or lean into cliches that depict those flying solo as lonely or desperate for love.

Stereotypes of the “crazy cat lady” or the socially awkward man who lives with his parents abound. But something often forgotten, many singles would argue, is the significant added costs they face on account of their relationship status.

Living alone or being single can come with a very big price tag. Cath estimates that for her, in total, the “single penalty”, or “singles tax”, costs her upwards of £10,000 a year. Similarly, another reader, Joe, a man in his 30s living in London, says that once his mortgage and various other bills and costs are factored in, it amounts to an “approximately £12,000 cost of being, or choosing to be, single a year”.

Those figures echo data issued earlier this year by the website UK Debt Expert, which said: “Being single could mean you fork out, on average, more than £10,000 a year extra compared to homes with two or more adults.” (Its data was based on people who rent.)

This steeper financial burden applies across a vast range of costs – from housing and insurance to utilities, rail travel and holidays. The sting of this “tax”, or “premium”, comes as people are increasingly going it alone.

The number of one-person households, as statisticians call them, is growing: there were 8.4 million people living alone in the UK in 2023, up from 7.8 million a decade earlier, according to official data issued in May this year.

These single-occupancy households accounted for almost a third (29.6%) of the total, the Office for National Statistics said. Exactly half of all those living alone last year were aged 65 or older.

Trying to come up with a one-size-fits-all figure for the financial hit suffered by people living alone is almost impossible because of their varying circumstances and lifestyles, but most say it totals thousands of pounds a year.

Only this week, the home loans firm Mojo Mortgages issued research showing that solo renters typically spend an extra £498 a month on essentials such as rent, bills and groceries compared with couples.

People living alone often say they feel invisible, but in some countries, policymakers are starting to take notice. In February, the Guardian reported on a Belgian councillor who has persuaded her municipality to consider the impact of its policies on single-adult households.

For many, housing is their biggest monthly expense, and the most blatant example of how single-adult households are penalised.

Housing

Mortgages

Not having someone to share housing costs with is a huge issue for many. Londoner Joe says his mortgage is approximately £1,500 a month. “That’s £750 a month more than a young couple paying a mortgage of the same value together in London – amounting to £9,000 a year.”

Rachel, 36, who lives in London and works in e-commerce, says the string of interest rate increases mean that the mortgage payments for her one-bedroom flat went up by £400 a month, “and without someone to share the burden with, it’s a serious dent”.

About one-third of those getting on the property ladder do it alone, but they come up against more barriers compared with couples buying together. First-time buyers put down an average deposit of £53,414 in 2023, according to data from the Halifax. That is almost £20,000 more than a year’s average pay in the UK, at £34,963. An obvious advantage of buying with a partner is that this deposit cost can be shared.

“One of the most significant benefits of joint ownership is the potential to pool two incomes as one to secure a joint mortgage. This can often lead to a larger loan being offered compared with applying as a solo prospective homeowner, as lenders consider the combined income of both parties,” Danny Belton, the head of lending at broker the Mortgage Advice Bureau, says.

According to Mojo Mortgages, it typically takes a solo buyer 13 years to save for a deposit, while couples need only three years and two months.

Aerial view of residential streets in the English city of Bath, Somerset. — About a third of those getting on the property ladder do it alone. Photograph: georgeclerk/Getty Images

There are schemes that can help people hoping to buy, such as the lifetime Isa, where you can benefit from a government bonus of up to £1,000 a year. This doubles to £2,000 when it is a couple where both are saving into an Isa.

Even if someone has been able to buy a property on their own, they would then bear the costs of running the household with only one income. “Solo buyers will also be responsible for all household expenses on their own, placing greater stress on their finances. In contrast, joint owners can share the burden of these costs,” Belton says.

Single people can, of course, take out a joint mortgage with a friend or relative. This can be a great way to step on to the housing ladder but can throw up its own challenges.

The kinds of properties available to people buying alone will also depend on the deposit they can save and the amount borrowers will lend.

“Once they’ve found a place in their price range, the mortgage rates available to single buyers are the same for those buying with someone else,” a spokesperson at the Halifax says.

Renting

With private rents soaring, more and more people have delayed moving out of home or have turned towards house shares. For many single renters relying on their income alone, the cost of a studio or one-bed flat has become unfeasible.

“The cost of renting has surged in recent years, so it is unsurprising that renters living alone are especially struggling to cover the rent and other costs,” says Ben Twomey, the chief executive of the campaign group Generation Rent.

But it is not only single people who are increasingly finding themselves in houseshares in an attempt to save costs. The number of people looking for rooms as a couple increased by 67% in 2023 compared with 2019, according to the flatshare website SpareRoom.

A to let sign outside a house — The cost of renting a property has soared. Photograph: David Burton/Alamy

The average price to rent a room in Edinburgh is £844 a month. That works out at £422 a person for a couple.

Matt Hutchinson, a director at SpareRoom, notes that the way the rent is divided in house shares can vary quite a bit and is not always divided by the room. “Sometimes the cost is fixed for the room and, whether it’s a couple or not, it’s the same. However, some people charge a bit extra for a couple, especially if bills are included. If the group sharing all know each other well, they might just split the rent equally between them.”

Chances are, it is still cheaper to rent with a partner, and this means more money can be put into savings or spent at the end of each month.

Council tax

If you live on your own, you are entitled to a 25% reduction on your council tax, although you will need to submit an application to receive it. This is a huge bugbear for many people living alone, as it means couples sharing the bill are paying 50% each compared with the 75% of the full amount that a single person pays. There had been suggestions that the government was considering scrapping the single-person discount but last month Downing Street indicated it would not be getting rid of it.

The average monthly cost of council tax for each person in a couple is £90.46, whereas it is £135.69 for a solo renter, even with the discount, according to Mojo Mortgages. That is an extra £45.23 for those living alone each month.

Being single has a lot going for it, but £10k a year seems too high a price for the privilege | Emma John

Bills

Utilities

As one reader put it to us this week: “With bills, obviously I have to heat my house the same amount regardless of how many people are in it.”

Energy suppliers do not tend to offer discounts for people living alone, unless they are on benefits. However, some offer tariffs with no standard charges, meaning you only pay for the energy you use, and customers can shop around suppliers to try to find the best deal.

With water, a lot of people could save money by switching to a meter, where your bill is based on what you use. A typical bill for a single occupier is likely to be about £325 a year, while a family of three might expect to pay more than double that, according to the Consumer Council for Water (CCW).

Water going down a plughole in a sink — Have you considered switching to a water meter? Photograph: John Stillwell/PA

“If you don’t have a water meter, the bill will be the same regardless of how many people live in the property and how much water is being used.” says Andy White, the senior leader for social policy at the CCW.

If a customer requests a water meter but it is not possible to fit one for any reason, they should still be eligible for the single occupier assessed charge. “These charges are designed to better reflect the fact that someone is living alone and can significantly reduce a customer’s bill,” the CCW says.

You can try the meter calculator on the CCW’s website.

Car insurance

If you are the only named driver on your car insurance policy, you are likely to be paying more than if there were another person on the plan. Adding another named driver to the policy is one way you can often cut the cost of your car cover because you are “ultimately sharing the risk”, says Rhydian Jones, a motoring expert at Confused.com.

The extra driver may also have more experience, which – in the eyes of the insurance company – means they may carry a lower risk of making a claim. However, the price you pay for a single or multi-person policy will completely depend on the profile of each driver and their driving history. In some cases, this could increase the price you pay.

A man fills in an online car insurance form — If you are the only named driver on your car insurance policy, you are likely to be paying more.
Photograph: Panther Media GmbH/Alamy

A named driver on a policy does not have to be someone you are living with or in a relationship with either – it could be a friend or relative you will be sharing the car with, Jones says.

“For example, our data found that the average cost of car insurance for a woman who is the only driver on a policy is £971, and £1,176 for a man. But in comparison, a female driver with one additional driver, who is not their spouse, pays £854 on average, and for men it is £1,112 on average.”

Jones adds: “For a spouse, this generally brings the price down even further. Women with their spouse named on their policy pay £657 on average, and men pay £717 on average.”

Admiral says married couples are generally seen as a lower risk. “Overall, we statistically find that someone who is married is generally a lower risk than a single person, but this isn’t always the case based on other factors, and it is possible for a single person to be cheaper than a married person in some circumstances [such as historic claims data].”

Home insurance

Covering your contents if you are single can also cost more than it would for a married couple living together, even if you live with a housemate. Moneysupermarket crunched the data and found that single people typically spend almost twice as much to insure their possessions compared with those who are married and split the cost between them.

A model house — Moneysupermarket says buildings and contents cover for a house comes up on average at £275.40 for a single person a year. Photograph: twomeows/Getty Images

“Insurers look at various factors, including claim frequencies and costs, when deciding on premium prices,” says Alicia Hempsted, an insurance expert at the website.

It says buildings and contents cover for a house comes up on average at £275.40 for a single person a year, whereas it costs £292.91 for a married couple. If the couple split the cost, this is about £146.45 each – meaning someone living alone would be paying £128.95 more each year than one half of a couple.

Pensions and retirement

This is another area where it can be tough to be single. The Pensions and Lifetime Savings Association has developed the “retirement living standards” to show what life in retirement looks like at three levels: minimum, moderate and comfortable. It says a single person needs about £14,400 a year to meet the minimum threshold, whereas for a couple it is £22,400 a year. To meet the moderate threshold, for a single person it is £31,300 and £43,100, respectively.

Entertainment and leisure

Holidays

The dreaded single supplement is the bane of many travellers’ lives. It is a premium often charged when someone books a hotel room, package tour or cabin that they are not sharing with anyone else.

Sharing a room involves two people essentially splitting the room cost 50/50. The holiday company Saga says the single supplement “means a single person can expect to pay between 70% and 90% of the room [cost] rather than 100% of the cost – but it can still be significantly more than the 50% someone travelling as part of a pair would spend”.

UK Debt Expert said its research indicated the single supplement “can cost singles about £462 more on average for a package holiday”.

Palm trees at a beautiful beach resort — The single supplement is the bane of many travellers’ lives. Photograph: PhotoTalk/Getty Images

The consumer group Which? has also found that many solo travellers are paying a hefty surcharge on package holidays, cruises and coach holidays. In one example highlighted last year, it found solo travellers were being quoted 87% more to occupy a single-occupancy cabin, when compared with two people sharing a larger double cabin, on a popular Mediterranean cruise route.

Rory Boland, the Which? travel editor, says it is worth travellers digging around to find the companies that offer discounts or reductions for those who are solo.

“The reductions are not always immediately obvious, and may rely on you entering a code, so do search around tour operator websites.”

He adds: “Many hotels still offer a reduced rate on double rooms for single guests, so be sure to change the field indicating how many people are staying to see if you can get a cheaper price.”

How to cut the cost of travelling on your own