Rent 'unaffordable' for low-income families in third of UK

 
terraced houses

A third of Britain is effectively off-limits to lower-income working families because private rents are unaffordable, a new report claims.

The report comes from the Resolution Foundation, which campaigns on behalf of low to middle-income families.

It says most of southern England is now beyond the reach of less affluent households.

The housing minister said the report was "factually flawed" and failed to take housing benefit into account.

With social housing usually unavailable and home ownership unaffordable for many first-time buyers, renting privately is often the only option for households on lower incomes.

A BBC housing calculator also identifies how renting a modest two-bedroom home for less than £700 a month is almost impossible in London and much of the South East. Modest is defined as having a rent below 75% of similar properties in the area.

BBC housing calculator

Renting example
  • Lets you see where you can afford to live - and if it would it be cheaper to rent or buy
  • Enter how many bedrooms, which end of the market and how much you want to pay each month
  • As you move the payment slider, parts of the UK light up to show you where you can afford
  • Based on pricing and rental data from residential property analysts Hometrack

The Home Truths report identifies local authorities that are "affordable" for a couple with a child requiring a two-bedroom property on a household income of £22,000 a year. Affordable is defined as a rent that is no more than 35% of net household income.

On that basis, 125 of 376 local authorities in Britain (33%) are unaffordable for less-affluent working families.

"The private rented sector is now, in large parts of the country, the most expensive form of housing," says Vidhya Alakeson, of the Resolution Foundation.

"It is also the only option for most low to middle-income households, many of whom are faced with the unenviable choice of forgoing other essentials in order to pay for housing or living in overcrowded conditions to reduce their housing costs."

Housing Minister Mark Prisk described the report as "alarmist" as it "suggests rents are soaring when in fact they have fallen in real terms".

"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 BBC housing calculator also allows users to see where they can afford to buy a house. A deposit of £10,000 is only enough to buy a two-bedroom home in 41% of local authorities, because a deposit of at least 10% is needed to get a mortgage.

With a deposit of £20,000, almost 30% of the country remains unaffordable, including all of Greater London and much of the South East.

Housing Blue = affordable | white = not affordable | grey = no data
Line

Even with a £50,000 deposit, central London and areas to the south and west of the capital remain unaffordable. Analysts suggest recent rises in UK house prices have been driven by increases in London and the South East.

Londoners say they spend half their salaries on rent

"Home ownership is out of reach for the vast majority of low to middle income families because few have the savings needed for a deposit," says Ms Alakeson. "While the crisis in London is well documented, there are affordability black spots in almost all regions of the country."

The government recently announced a Help to Buy scheme, offering loans for people moving into new-build homes worth up to £600,000. Another government scheme to assist those buying new-builds and existing homes is due to come into force next January. And shared ownership schemes provided through housing associations are also available to some first-time buyers.

The housing minister said the government had put a range of measures in place to create "a bigger and better private-rented sector", including the £1bn Build to Rent fund and £10bn in loan guarantees to build new homes specifically for private rent.

"And for those looking to buy, the numbers of towns which are affordable for first-time buyers is at its highest since 2002, thanks to schemes like Help to Buy which enable people to buy newly-built homes with a fraction of the deposit they would normally require," he added.

However, there are concerns that without a significant increase in housing supply, additional demand generated by such schemes will push up house prices, exacerbating the problem of affordability.

Start Quote

Affordable is defined as a rent that is no more than 35% of net household income”

End Quote

The latest figures show that in the year to last March, just over 108,000 new homes were completed in England. But this is less than half the number needed to meet demand.

Homelessness is on the rise with more than 55,000 households in temporary accommodation in England - 10% higher than a year before. More than 1.8m households are currently on the waiting list for social housing - a 60% increase in the last 10 years.

The Mayor of London, Boris Johnson, has described the shortage of affordable housing as "the gravest crisis the city faces".

In his plan for the capital, 2020 Vision, published last month, Mr Johnson writes that high house prices have had "brutal consequences for many Londoners".

"Fewer and fewer take out mortgages in the way that their parents did, because they simply cannot afford the deposit," he says. "Rents are now punishingly high, and pre-empt an ever growing proportion of your disposable income."

There are concerns that London is pricing out the key workers it needs to function.

Responding to the Resolution Foundation report, the chief executive of the housing charity Shelter, Campbell Robb, said families were paying so much for housing that "they're forced to choose between putting food on the table, turning on the heating or paying their rent".

"Shared ownership schemes are one of the best ways to offer low-income families an affordable place to live. We need to see more schemes that are affordable for low-income families and that give them the stability and security that our current rental market sadly doesn't provide."

Private rent map

Cost to income ratio for a low income couple with one child

This map is for a couple with one child at the 35th percentile of the household net income distribution, living in a two-bedroom property at the cheaper end of the local housing market.

Source: Resolution Foundation analysis of Hometrack data 2012/13

Note: An earlier version of this story carried an incorrect map.

 
Mark Easton, Home editor Article written by Mark Easton Mark Easton Home editor

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  • rate this
    0

    Comment number 2143.

    When you think about it,an economy which is based heavily in real estate is not sustainable,if a large number of people have less and less disposable cash after paying rising housing costs,then that means less and less money to spend on goods and services,so BTL landlords may gain,but companies selling goods lose.

  • rate this
    +1

    Comment number 2142.

    1638. Eboracum
    Over a third of London's population born outside the UK. Any connection with the rent levels?

    No.
    Paris, Vienna, Berlin, all have similar % of population born outside the country and they seem to do affordable housing.
    UK is below average for immigration for W. Europe, again, misrep. in UK press.
    Our rich-man's government/press/banker club is the root of the problem.

  • rate this
    +2

    Comment number 2141.

    To make it worse, UK council tax is EU’s highest- 6 x Germany and 11 x France. These countries gain with less tax avoidance from big business.
    They don’t pay such a high % of income for their - better and more spacious- housing.
    I’m not into revolutions but UK’s problem is, with big money controlling our government, media, et al, there are no effective channels of protest left.

  • rate this
    0

    Comment number 2140.

    Sorry BBC but your calculator is woefully inaccurate. I'm paying a mortgage of £250 per month on a detached 3-bedroom house. According to your guide this is impossible.

  • rate this
    0

    Comment number 2139.

    some really patronizing , ill-informed comments here from people claiming that they know the breadth and depth of the situation yet clearly know next to nothing.
    If these statistics are wrong, and they may be then put forward the correct figures and state your source otherwise your words are hyperbole

  • rate this
    0

    Comment number 2138.

    Someone is renting in "unaffordable areas", if they weren't all the houses would be empty. A good proportion of them are probably rented by people without jobs on housing benefit, paid for by the tax payer. So the tax payer is funding the rich lifestyles of landlords. That's sick.

  • rate this
    +1

    Comment number 2137.

    THANKS BBC FOR HIGHLIGHTING OUR PLIGHT.

  • rate this
    +3

    Comment number 2136.

    So we cannot afford to live in much of England and the Tories have won the language battle and made "Welfare" bad. We used to be proud that we were a country that cared about the Welfare of its fellow-citizens.

    So how do you live on a low wage in the South East without Welfare? In penury - and apparently that is OK. "70% approve".

    This is getting nasty.
    http://wp.me/pSvdp-ir

  • rate this
    -2

    Comment number 2135.

    These statistics (fed to BBC by Government?) are just not true.

    Renting is much cheaper in many places and varies massively. I should know as I am a Landlord of a few houses.

    Yet another amazingly poor bit of journalism from the seriously failing BBC.

  • rate this
    -1

    Comment number 2134.

    Do away with housing benefit altogether. Market prices will kick in and the buy to let market will drop, as will the house prices for all.
    People will have to live with their families as they did only 30 or 40 years ago, until they can look after themselves.
    Don't rely upon tax payers for your housing.
    Its disgusting to think that is right or your right.

  • rate this
    0

    Comment number 2133.

    I am a female doctor working in London for the NHS. Lots of out-of-hours shift work (13 1/2 hrs) & used to live at an affordable area meant only 5 hrs sleep on those days (>1 hour travel). Many colleagues struggle w/ childcare and house prices (or rent)- the combination costs the same as our full-time wage. God knows what other public servants do!

  • rate this
    0

    Comment number 2132.

    2129.Derek
    The prices will keep on rising people won't want to lose what they worked for.
    Now you'll sell 50% of a house for what you bought it the rest will be in rent ....tomorrow it'll be 25% etc etc. Those buying now if they get a chance will not want to make a loss either!

  • rate this
    +1

    Comment number 2131.

    One has to admire the BBC obsession with housing costs.

    I guess we will have to suffer endless programmes this winter about smug 'property developers', smug 'property investors' and disenchanted 'relocators' who are upset because, having sold their three bed house in Fulham for £2m, they can only get an eight bed mansion in the Shires.

  • rate this
    +1

    Comment number 2130.

    2121 cannot remember specifically but I think I got 1.5 times my wage and 0.5 times for my wife who was on low pay. Lost track of house prices in Southampton where so not sure how this now squares up. It did mean that when a daughter came along we could afford it on my wage so no need for child care etc!

  • rate this
    +1

    Comment number 2129.

    @2123 Your comments are quite correct although I think you might be a bit out on my age. However it was simple greed, from banks, developers and ourselves that caused this mess. We happily bought large houses with large loans. We only have ourselves to blame. The choice we face is do we continue the trend? Something has to give. What shall it be?

  • rate this
    0

    Comment number 2128.

    The calculator doesn't seem to be accurate at all... I purchased a house just a few months ago as a first time buyer with 10% deposit. According to the BBC calculator, I should have been unable to buy one without moving north...

  • rate this
    0

    Comment number 2127.

    2023 Tim Browning

    Yeah but shares can go up and down i remember Energis one day 17 pounds the next day 5 the next 0 ..didn't catch that one... Oz too far away ..

    ..Spain I am thinking is a option right now might serve as a good place to retire lots of Sun.

  • rate this
    -2

    Comment number 2126.

    Why should private house prices & rents have anything to do with politics?

    The UK private housing market self-adjusts through supply and demand and HMG shouldn't get involved other than to support the low paid, the elderly and the vulnerable - all of which it does incredibly well.

    The UK has the largest 'affordable' housing stock in Europe thanks to planning legislation and property developers.

  • rate this
    +1

    Comment number 2125.

    2114.G Smith "38 years ago I was on a lower than average wage and the interest rate was at it highest 15% I think. With a 10% deposit we could afford a very nice end terraced house in Hampshire. What has gone wrong?"

    Simple - the country is full.

  • rate this
    0

    Comment number 2124.

    2016.Billythefirst
    Didnt realise that bakers had a financial crisis! The other schemes you mention rely on government borrowing, so you anticipate even greater borowwing? Just like New Labour? Not good in my view.

 

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