You will hear us talk a lot about our concern that rents are rising. We don’t just care about what rents are doing per se, we particularly care about whether any changes affect the people who have to meet their current rent payments and keep up with rent rises in order to keep a roof over their heads. If rents were at an affordable level and incomes grew too, rent rises could be fine.
So while we know that private rents are rising – by over 2% across England in the last 12 months – the question remains as to whether renters are feeling the effect.
The results of the English Housing Survey were released in full last week. And with it some revealing evidence about the impact that the rising cost of renting is having on households.
The survey shows that in one year alone, the proportion of a renter’s income that is taken up by housing costs went from an already staggering 40% to an even more suffocating 43%. To put this in context, housing costs are typically considered unaffordable if they take up more than a third of income. Private renters now pay far more than those in a social rented home (31% of income) or who have managed to buy (19%).
Shockingly it means that, after tax, England’s private renters now spend, on average, almost half (47%) of their income on rent. This leaves much less money available for essentials like food, fuel and school uniforms; or to save for when times get tougher.
The consequences of this are plain to see. Rents are now so high in comparison to incomes that more and more working people need support to help them meet their housing costs and avoid eviction and homelessness. The number of working private renters claiming housing benefit is now over half a million.
Even renters in skilled jobs need help. Someone living in one of the cheapest one bedroom flats in East London yet earning over £34,000 a year would qualify for housing benefit to afford their rent. This isn’t because the rules are lax – housing benefit has a strict means tests. It is because someone even with an above average income, with no children to look after could struggle to afford the spiralling cost of housing within commuting distance of their work.
And many people are already falling out of the safety net – evictions of private renters are the highest they’ve been for years, as people fall behind on their rent. Homelessness is on the increase and the loss of a private rented home is now its main cause.
This is why we’re so concerned about rent rises. And this is why we’re so concerned about the government’s proposals to freeze the support (called Local housing allowance) that private renters can draw on when their rent zooms out of the view of even good wages. Hundreds of thousands of working families are reliant on this support. Yet under proposals set out in this month’s budget, they will see their support lose value over the next four years, as their rent continues to climb.
Shockingly, Shelter modelling of the impact of the freeze suggests that if it goes ahead, 93% of local authorities will become unaffordable for the growing number of families in need of housing benefit. Sixty local authorities (across London, the South East, East and North West of England) will have no homes that anyone in need of housing benefit will be able to afford.
Until we build many more truly affordable homes, renters have very little choice other than to pay these extortionate prices. Local housing allowance is an essential benefit that keeps private renters from the edge of homelessness. It is vital that this support is maintained. Especially at a time when renters are already under pressure.