Monday 15 July 2013

Renting ‘unaffordable’ for many families, think-tank warns


Families on lower incomes cannot afford to privately rent a modest home in a third of Britain’s local authority areas and councils need to act to mitigate the problem, the Resolution Foundation said today.

The think-tank’s Home truths report found that low interest rates and rising demand for privately rented property means rents are more expensive than equivalent monthly mortgage repayments in almost half (45%) of the country. 
Across Britain, around 1.3 million families on low and middle incomes are grappling with unaffordable housing costs, the study says.
Vidhya Alakson, deputy chief executive of the Resolution Foundation, said there was an ‘urgent need’ to provide more affordable housing for families on low and moderate incomes.
‘Only an increase in the stock of housing for rent can improve the situation and the government should make this a strategic priority,’ she said.
The foundation urged local authorities to take a more active role in providing affordable housing for their communities. Earmarking some residential land for private rental development only, rather than for construction of homes to sell, would be helpful.
In 125 of the 376 of local authorities studied, rent on a two-bedroom property would take up more than 35% of the net income of a family earning £22,000 a year. This is in excess of what is generally considered affordable. In 38 of the 376 authorities, rental costs would consume more than half their monthly net income.
Families whose income is £19,000 are priced out of almost half of the areas in Britain, the report said. Assuming the family has a moderate income of £28,000 a year still leaves one in six council areas unaffordable for private rentals.
Affordability problems were not just confined to London and the Southeast, the Resolution Foundation said. Affordability ‘black spots’, where private rents exceed 35% of the net income of a low-earning family, include Aberdeen, Exeter, South Cambridgeshire and Warwick.
Shared ownership and social rent were found to be the most affordable types of housing tenure. However, less than 2% of households live in shared ownership housing and access to social housing is heavily restricted.
At the national level, the Resolution Foundation said the government should continue helping the development of a new build-to-rent housing sector. This could increase private investment in purpose-built rental homes, and would offer secure tenures and better quality management.

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