home truths: the housing challenge facing low to middle income britain
DESCRIPTION
Vidhya Alakeson's slides from Resolution Foundation event on housing affordability Full details at http://www.resolutionfoundation.org/events/home-truths-scale-britains-housing-crisis-and-how-/ #hometruthsTRANSCRIPT
Home Truths: the housing challenge facing low to middle income Britain
Vidhya AlakesonResolution Foundation
www.resolutionfoundation.org@resfoundation
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• On low-to-middle incomes who are largely independent of state support
• Face unique – and often overlooked – challenges because too rich, too poor
Low-to-middle income households……………………………………………………………………………………………………..
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Total after-tax household income
£12.6k
£21.0k
£45.1k
£0k £10k £20k £30k £40k £50k £60k £70k
Benefit-reliant
Low tomiddleincome
Higherincome
……………………………………………………………………………………………………..Household income
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Homeownership is still the predominant tenure……………………………………………………………………………………………………..
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But the picture looks very different for under 35s……………………………………………………………………………………………………..
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What does a typical household spend on housing?
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Low to middle income households
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……………………………………………………………………………………………………..But 1.3 million face unaffordable housing costs
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• 590,000 are private renters• 585,000 are owners with a mortgage• 100,000 are social renters• A disproportionate number, 570,000, are
younger families - where the head of the household is under 35
• Two thirds are outside London and the South East
Who are these households?
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Peter and Sue
Net household income: £25,859
……………………………………………………………………………………………………..A closer look at affordability for a typical family
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……………………………………………………………………………………………………..Islington
Two bed, lower quartile property
Rent: £1630
Capital value: £340,000
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……………………………………………………………………………………………………..Guildford
Two bed, lower quartile property
Rent: £950
Capital value: £209,250
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……………………………………………………………………………………………………..Coventry
Two bed, lower quartile property
Rent: £498
Capital value: £83,000
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……………………………………………………………………………………………………..Doncaster
Two bed, lower quartile property
Rent: £410
Capital value: £65,750
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……………………………………………………………………………………………………..How do things look for a low income family?
Cost to service a mortgage (% net income)
23%
Cost to rent (% net income) 33%
Cost of 25% shared ownership (% net income)
16% Two bed, lower quartile property
Rent: £498
Capital value: £83,000
John and Sarah
Net household income: £18,076
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……………………………………………………………………………………………………..A word on housing benefit
• Low income families with high rents may be eligible for HB to help with costs
• But low to middle income group does not closely match HB recipients:
• 74% of existing HB claimants are out of work (although growing number of working households coming onto HB) – Majority of low to middle income group has one person in
work• 65% of claimants are in social housing– Low to middle income group increasingly not eligible for
social housing
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Private rent is increasingly the least affordable tenure in all areas
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……………………………………………………………………………………………………..But for younger households, it is often the only option
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……………………………………………………………………………………………………..Conclusions
• Low to middle income households are at the sharp end of the housing crisis
• Younger households in the group, in particular, have few options outside the private rented sector
• Private rent is now more expensive on an ongoing basis than any other tenure
• And this is no longer only a London and South East problem. High rents can be found in all parts of the country.
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Home Truths: the scale of Britain’s housing crisis and how to fix it
Vidhya AlakesonRichard DonnellNatalie Elphicke
Keith ExfordCampbell Robb
Jules Birch
@resfoundation
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