Home Truths: the housing challenge facing low to middle income Britain
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This document discusses the housing challenges facing low to middle income households in Britain. It finds that over 1.3 million such households face unaffordable housing costs, with around 570,000 being younger families. While homeownership remains the most common tenure, private renting has become the least affordable option across the country. Younger households especially have few alternatives to private renting. The document concludes that low to middle income households, particularly younger ones, are severely impacted by the current housing crisis in Britain.
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Home Truths: the housing challenge facing low to middle income Britain
- 1. Home Truths: the housing challenge facing low to middle income Britain Vidhya Alakeson Resolution Foundation www.resolutionfoundation.org @resfoundation …………………………………………………………………………………………………….. #hometruths
- 2. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… • 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 …………………………………………………………………………………………………….. #hometruths
- 3. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… Total after-tax household income £12.6k £21.0k £45.1k £0k £10k £20k £30k £40k £50k £60k £70k Benefit- reliant Low to middle income Higher income …………………………………………………………………………………………………….. Household income #hometruths
- 4. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… Homeownership is still the predominant tenure …………………………………………………………………………………………………….. #hometruths
- 5. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… But the picture looks very different for under 35s …………………………………………………………………………………………………….. #hometruths
- 6. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… What does a typical household spend on housing? #hometruths …………………………………………………………………………………………………….. Low to middle income households
- 7. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………….. But 1.3 million face unaffordable housing costs #hometruths
- 8. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… • 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? #hometruths ……………………………………………………………………………………………………..
- 9. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… Peter and Sue Net household income: £25,859 …………………………………………………………………………………………………….. A closer look at affordability for a typical family #hometruths
- 10. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………….. Islington Two bed, lower quartile property Rent: £1630 Capital value: £340,000 #hometruths
- 11. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………….. Guildford Two bed, lower quartile property Rent: £950 Capital value: £209,250 #hometruths
- 12. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………….. Coventry Two bed, lower quartile property Rent: £498 Capital value: £83,000 #hometruths
- 13. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………….. Doncaster Two bed, lower quartile property Rent: £410 Capital value: £65,750 #hometruths
- 14. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………….. 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 #hometruths
- 15. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………….. 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 #hometruths
- 16. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… Private rent is increasingly the least affordable tenure in all areas …………………………………………………………………………………………………….. #hometruths
- 17. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………….. But for younger households, it is often the only option #hometruths
- 18. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………….. 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. #hometruths
- 19. Home Truths: the scale of Britain’s housing crisis and how to fix it Vidhya Alakeson Richard Donnell Natalie Elphicke Keith Exford Campbell Robb Jules Birch @resfoundation …………………………………………………………………………………………………….. #hometruths