Low-income households are becoming increasingly exposed to rent increases according to the Institute For Fiscal Studies (IFS).

The research has found that the proportion of people in Great Britain living in private rented accommodation has more than doubled since the mid-1990s. Over the same period, average private rents have risen by 33% in real terms. In recent years, low-income tenants have also been affected by substantial cuts to housing benefit , which are currently saving the exchequer around £3 billion per year. The net result is that paying rent now uses up an average of 28% of the (non-HB) income of low-income private renters. This is up from 21% in the mid 1990s. Reforms in the pipeline mean that, if rents continue to rise, support for housing costs will fall further and further behind the cost of housing.Key highlights from the report include:

  • Declines in homeownership and in social housing mean many more people are renting privately, especially among the young.
  • The rise of private renting has been spread quite evenly across the income distribution.
  • Renters are paying considerably more for their homes than 20 years ago, though in the private sector this is due to trends before the recession.
  • These higher rents paid do not seem to be explained by changes in the characteristics of rented properties.
  • Londoners spend more of their income on rent than renters elsewhere and the differential between London and the rest of the country has increased recently.
  • Low-income renters spend a higher portion of their income on rent than higher-income renters, even after accounting for the help they get through housing benefit (HB).
  • The proportion of low-income renters who do not have all of their rent covered by housing benefit has risen
  • The system of locally varying housing benefit caps is also set to be gradually rolled out to the social rented sector from April 2019

The full report can be downloaded here.

Leave a Reply