Singles premium: Why it costs you more to live alone

Almost 8 million people in the UK face an expensive problem.

On the few occasions it is discussed, the debate rapidly becomes patronising and presumptuous, failing all those affected.

But with the numbers involved increasing dramatically and set to only rise, it’s surely time to evolve.

We’re not talking about some obscure tax loophole or the world’s most sophisticated scam.

The latest government figures show people living on their own are facing a “singles premium” that permeates everyday life to the point that consumers are accusing businesses from supermarkets to mortgage lenders of the archaic, punitive treatment of an entire mainstream demographic.

With the number of people living alone up by 16 per cent since 1997 and set to rise to almost 11 million people within the next 20 years, data from the Office for National Statistics (ONS) this week revealed that those people who live on their own are far less likely to be financially secure than co-habiting adults.

Even without any dependent children to skew the numbers, people living alone are more likely to be renting, have less money left over at the end of the week or month and feel less financially secure.

They spend an average of 92 per cent of their disposable income compared with two-adult households who spend only 83 per cent of theirs, according to ONS analysis of 25- to 64-year-olds’ spending habits.

While the number of people aged 25 to 44 living alone has fallen by 16 per cent between 1997 and 2017, the number of 45- to 64-year-olds living on their own has increased by 53 per cent over the same period.

This increase is partly due to the large number of children born in the 1960s reaching this age, but more people in this age group are now divorced, single or never married than 15 years ago.

The variation in life expectancy between the sexes – with women typically living longer than men – naturally creates more one-person households among the older population. Among 25- to 64-year-old working-age adults, most of those who live alone are men but the gap between the sexes narrows with age.

The accumulation game

Only half of those aged 25 to 64 who are living alone own their home compared with three-quarters of couples without children. It gives them less opportunity to accumulate wealth by buying their home or paying off a mortgage.

“We see the disparity at all age groups, and the gap in home ownership between one-person households and couples widens with age,” the report states.

One person households spend a greater proportion of their disposable household income than two-adult households on rent, mortgages and other housing costs, as well as food, drink and furnishing their home.

And that regularly has a knock-on effect across wider demographics, Sarah Coles, personal finance analyst for Hargreaves Lansdown, adds. “The sheer cost of living alone is one reason why fewer younger people do so – instead choosing to move in with partners, rent or buy with friends or siblings, or simply refuse to move out of the family home,” she says.

“Parents may be waiting for their ‘empty nest’ years to free up cash for paying off debts and saving for retirement. So if the nest stays crowded, it can end up pushing potential retirement back for years.”

Monica Woodley, a business consultant from Hampstead in London who lives alone, says the singles premium is endemic across all aspects of life.

“There’s no doubt financial services are still absolutely set up for traditional lifestyles, but I get so irritated by little things that cost money I don’t need to spend like food packaged for more than one person,” she explains. “My choice seems to be that I either do without or half of it goes off.

“I have lived with my ex-husband, with flatmates and I’ve now lived on my own for 10 years. Of course, that means I don’t split bills so things like rent and energy will take up a larger proportion of my income, but others like my water bill are based on the size of my home not on how much I use. I’m paying the same for water as the couple living next door.

“There are some discounts, such as the 25 per cent discount on council tax and I’m lucky that I’ve been in the same place for six years without a rent increase. I have higher than average earnings and my rent only accounts for around 20 per cent of my income but I still come up against challenges, including being in a position to get a mortgage. For those on average or lower incomes, it is really problematic.

“I love living by myself. But I have yet to see really great financial products geared towards those with a more modern, flexible lifestyle.

“The financial services industry is simply failing to keep up with the real world.”