Renter rise ties in with STIP growth - Defaqto

clock

The renting rise will fit "quite nicely" with the emergence of market-newby short-term income protection, Defaqto has said.

Ben Heffer, insight analyst at the financial research company, said the development of short-term income protection (STIP) to fill the payment protection insurance (PPI) gap was not a cosmetic change but a consumer-centric one.

He said: "This is not just a superficial attempt to dupe the buying public, STIP has certain advantages that PPI products do not have. If you do not have a mortgage and are paying rent, and you lost your job, you would still need to pay rent.

"STIP does not have to be attached to a specific mortgage as with PPI and mortgage payment protection insurance (MPPI). With the increasing turn away from house buying to renting it ties in well."

In April, Legal & General launched a short-term income protection product to replace its MPPI product for new business.


The product is not linked to a mortgage or loan, but instead pays an amount based on the consumer's income each month.

According to Defaqto research, there has been a rise in the numbers of STIP products available in the market from 20 to 66 between 2009 and 2012. MPPI products dropped from 98 to 63 in the same period.

Pat Bunton, director of mortgage brokers London & Country, said: "STIP is a vauable addition. It can provide a very good safety net for those that are renting and it potentially makes the market place a little bigger in this way."

Rents have risen by 0.5% on monthly basis as rental demand continues to increase, the April 2012 LSL Property Service buy-to-let index has shown; annual rental inflation stands at 2.4%.

Aviva and Nationwide have also launched STIP products in the last year.

The FSA and Office of Fair Trading published consultation in November about the alternative PPI products. A further FSA paper on STIP is expected in the summer.

Author spotlight

Nicola Culley

More on MPPI

MPPI: The new generation is at your door

Demand for Mortgage Payment Protection Insurance is still dwindling, but a new philosophy on debt waiver products could rejuvenate the market. Fiona Murphy reports.

clock 01 September 2014 • 8 min read

UK's First Mortgage Waiver Product Launches

National Counties Building Society has launched the UK's first ever mortgage waiver product, giving borrowers built-in protection from unemployment.

clock 15 July 2014 •

MPPI: Caught in the crossfire

Mortgage Payment Protection Insurance (MPPI) was ‘caught in the crossfire' of the PPI scandal. With the market contracting to a handful of providers, Fiona Murphy asks, does MPPI still have a place for consumers?

clock 04 September 2013 • 8 min read

Highlights

COVER Survey: Advisers damning of protection insurer service levels

COVER Survey: Advisers damning of protection insurer service levels

"It takes longer than ever to get underwriting terms"

John Brazier
clock 12 October 2023 • 5 min read
Online reviews trump price for young people selecting life and health cover

Online reviews trump price for young people selecting life and health cover

According to latest ReMark report

John Brazier
clock 11 October 2023 • 2 min read
ABI members with staff neurodiversity policy nearly doubles

ABI members with staff neurodiversity policy nearly doubles

Women within executive teams have grown to 32%

Jaskeet Briah
clock 10 October 2023 • 3 min read