People on low incomes bear brunt of housing crisis: it's time to act

The last week has seen evidence from all sides on the causes and solutions to the housing crisis. With the Social Housing Green Paper expected soon, there’s a strong consensus that it is time for decisive action.

We’re used to hearing about the housing crisis. Most often discussion focuses on the difficulties faced by people who expected to be able to buy but can’t afford a deposit. The collapse in rates of home-ownership is certainly concerning, not least because it raises the prospect of future generations having to keep renting through retirement, risking a rise in pensioner poverty. New Conservative think-tank Onward yesterday called for action to redress the balance between the rented sector and home-ownership. That is one part of the picture, but there is a growing consensus that no part of the housing crisis can be seen in isolation.

For poverty today, the more pressing issue is the rise in housing costs for working-age people on low incomes. Most were always unlikely to be able to afford to buy a home but used to be able to access low-cost social rented housing. That helped to prevent them being swept into hardship by the vagaries of the housing market.

The IFS last week revealed how much that protection has been eroded – and the extent to which people on low incomes are locked into difficulties as a result. Since 2002/3, average housing costs for low-income families with children have risen four times faster than costs for middle-income families. Housing costs for families with children in the poorest fifth of population have risen by nearly half (47%) in the last fifteen years. At the same time, the protection given by housing benefit has been weakened. Many low-income families find that their housing costs are no longer covered by housing benefit; housing costs not covered by housing benefit have risen by 80% for those in the poorest fifth.

There are two drivers of this startling rise in housing costs. First, even social housing has been made less affordable in recent years: social housing rents have risen by over a third (35%) and housing costs not covered by housing benefit have doubled. Second, and even more importantly, a lack of social rented homes and falling home-ownership has forced more and more low-income families with children into the private rented sector. The proportion of children in the poorest fifth of the population living in the private rented sector has more than doubled – from 15% to 36%.

Recent JRF research uncovered the serious effects this is having on families’ lives. People spoke about the stress and exhaustion caused by the pressure to meet high housing costs and the problems caused by being trapped in poor quality insecure homes. We know the public agrees that social housing is central to preventing families being forced into this position: the Chartered Institute of Housing released a poll today showing that 68% of people agree that social housing plays an important role in tackling poverty in Britain. More than 6 in 10 people across England support more social housing being built in their area.

Our analysis suggests that we need to provide around 30,000 more affordable homes in England each year, over and above the 47,000 currently being delivered per annum. So far, the Government has announced funding of £2 billion over five years, which will pay for around 5000 further homes per year. That’s a start, but we need much bigger steps to bridge the supply gap. We know that it is not right for so many families to be locked into unaffordable, poor quality homes. The public thinks this, and the Government has acknowledged this – the Social Housing Green Paper due out in the new few weeks is the opportunity to match serious action to warm words.