A recent report from the Resolution Foundation has found that most of southern England is beyond the reach of lower income working families, due to high rents in the private sector.
However, the housing minister says that the report is “fundamentally flawed” as it fails to take housing benefit into account.
Rents are considered affordable if they are no higher than 35% of a household’s overall income. Whilst there has been a significant rise in first-time buyers recently, thanks in part to the government’s Help to Buy scheme, the report states that home ownership remains unreachable for many families.
Add to this the lack of available social housing and this means that many families have no choice but to turn to the private rental sector. A BBC report used a housing calculator to put rents to the test and found that “renting a modest two-bedroom home for less than £700 a month is almost impossible in London and much of the South East.
The report from the Resolution Foundation looks at the cost of housing for the 5.6m low-to-middle income families of working age in the UK. Using figures from 2010/11, the report found that average incomes, excluding those that receive more than 20% of their income from means-tested benefits, was £21,000.
Whilst the study looked at average incomes, accepting that these vary according to location, it focused on the variations in rents, allowing the authors to identify areas around the country where the same low and median income families would face excessive housing costs.
It was found that rents around the country vary wildly, with a perfect example comparing a two bedroom property in Blaenau, Gwent with a similar sized home in London’s Chelsea and Kensington.
Unsurprisingly, it was found that average rents in Blaenau were £350 a month, compared to £2384 a month in London. This, the report said, showed that if anything the analysis presented is conservative, as it’s based on the least expensive properties in local markets.
“In reality many families will face a more challenging situation than the already difficult situation presented in this report,” it said.
Whilst housing benefits help to make private rents more affordable, the report said that due to the way that benefits are assessed, a high incidence of claimants live in the London area. This is due to the high cost of rents in the capital, it was found.
However, the report also said that those claiming housing benefit tend to live in social housing and for this reason housing benefit was left out of the analysis.
Housing Minister Mark Prisk condemned the report, labelling it “alarmist” and pointing out that the report suggests that rents are “soaring” when in reality they are falling.
"And it fails to recognise that housing benefit provides a safety net which ensures that up to a third of private properties in most areas are affordable to low income families," he said.
The report states that most families that are in social housing are those that are out of work, whilst those in low income working families are forced into private rental, due to the out of reach affordability of a mortgage deposit.
This, it says, is the “inevitable outcome of the year on year failure to build enough homes to keep up with demand.”
In order to properly address the problem, the report recommends that more homes must be built where they are needed and must be affordable, especially with regard to larger homes that are desperately needed by low to middle income families.
Article by Brett MacDougall, Director of Hunters Camberwell branch. Circle Brett on Google+ HERE.