Homeowners on low incomes tend to be better off than low-income tenants, according to research published by the government today.
The study, which was commissioned by the Department of Work and Pensions, found that low-income homeowners - people whose total household earnings fall below 60% of the median income for all UK households - were very different from low-income tenants.
A quarter of low income tenant households were headed by a lone parent with no paid employment, compared with fewer than 5% of low-income homeowner households.
Very few of the homeowners were aged under 30 or had dependent children. Most were aged over 60 and owned their property outright.
This meant their living costs were low and they appeared to be managing on low incomes without experiencing hardship.
The researchers found that low income homeowners tended to earn less than their counterparts in the rental sector, but were less likely to experience hardship.
Their properties and personal profile had more in common with better-off homeowners than low income tenants, although their homes tended to be smaller and older than those of higher-income owners.
Around two-thirds lived in homes below council tax band B, compared with 55% of all homeowners.
Seven out of 10 low-income homeowners own their property outright, nearly half have savings and rates of car ownership are similar to the general population. This group does go without holidays and nights out, but owns more household items than low income tenants do.
However, homeowners with mortgages were experiencing problems. A quarter said their repayments represented more than 39% of their household income and a small minority were facing repayment that outstripped their income.
The researchers found that 97% were up to date with their mortgage repayments, but a quarter said they had difficulty keeping this up.
The research suggests that low-income homeowners have not bought their property while on a low income, but have experienced a change in circumstances which has led to a drop in income.
Many have retired, but other events such as the birth of a baby, divorce or unemployment are also factors in loss of income.
In eight out of 10 cases, the research said, the reason for a fall in income was not insurable so it was vital that households have savings to fall back on.
Fortunately, for many the decrease in earnings was transitory. The researchers found that half of those who become low-income homeowners in one year, have moved out of this group the following year. While some have become tenants, almost nine out of 10 have increased their incomes.
