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3 top tips to help employees manage housing costs
The Bank of England has announced it is holding the base rate at 5.25%. This means the cost of borrowing is likely to stay high, which is bad news for homeowners and house buyers. As it stands, the current average two-year fixed-rate mortgage is over 6%; in early 2021, the average was below 3%.
Those who rent their home are also feeling the strain. Higher mortgage rates mean some landlords are passing on the extra cost to renters. Couple that with a shortage of available properties, and the average annual rent has increased by 5.3% – the highest annual increase on record.
For many, it’s difficult enough to make ends meet during the ongoing cost of living crisis. Inflation may have fallen slightly in the last couple of months, but the cost of everyday essentials like milk, bread and cereals remains high. Having to grapple with high housing costs that are constantly in flux could be the final straw.
Financially and emotionally squeezed
Naturally, this upheaval will affect how people feel about their financial situation. Poor financial wellbeing can have a significant impact on mental health, which can then lead to wider wellbeing issues and problems at work.
In fact, research by the CIPD shows that almost one-third (29%) of employees say cost-of-living-related worries have affected their productivity. At a broader scale, employee absence as a result of financial distress is costing large organisations an average of £323,390 a year.
Money worries can affect employee retention too. More than three-quarters (76%) of employees said they’d be attracted to another company they felt cared more about employee financial wellbeing.
Thankfully, the most employers are ready to step in and support their staff. In Standard Life’s annual employer survey, nine in 10 said their employees’ financial wellbeing is important to them.
As an employer, you may be wondering what you can do to help. Indeed, the uncertainty of housing costs is likely to affect most of your entire workforce. This, as we know, could have a knock-on effect on your business.
Top tips to help employees manage their housing costs
1. Help employees understand their finances
Start with the basics by helping employees get to grips with their day-to-day finances.
A good first step is to signpost people to resources that can help them make sense of their money. Impartial guidance services like Money Helper and the Money and Pensions Service are full of useful information.
Having a better understanding of their monthly incomings and outgoings could help employees spot opportunities for optimising their spending and saving, helping them feel more in control of where their money is going.
2. Demystify homebuying
The homebuying process is complicated. From knowing how much to save for a deposit to choosing the best mortgage deal, getting a foot on the housing ladder is not easy.
Consider running internal workshops to help employees feel prepared for the homebuying process. Focus on each of the key stages such as how to create a savings plan, how to shop around for mortgage deals and how to apply for a mortgage. These could be invaluable for first-time buyers unsure of where to start.
Don’t forget to point employees to external support too, such as government schemes that provide financial help towards buying a home.
3. Help renters save for their future
Renters are often faced with the double whammy of wanting to save for their home while needing to pay their rent.
You can support employees by pointing them towards tools that help them budget effectively. Services like Money Helper provide free calculators and guidance that can help people plan their household spending.
With a plan in place, it could make it easier for renters to see if they have any leftover money that they could earmark for a house deposit. Even putting a little bit extra away each month could help them build up a pot of savings more quickly when the time is right for them.
For more information on financial wellbeing, including resources on how to help support employees, go to Standard Life’s Financial Wellbeing hub.
Supplied by REBA Associate Member, Standard Life
Standard Life are part of Phoenix Group, the UK’s largest long-term savings and retirement business. We both share an aligned ambition to help every customer enjoy a life full of possibilities.
