Renting’s back on the housing agenda – now let’s talk about rents

There’s a welcome focus on renting in the new Housing White Paper, but the offer remains out of reach for families on low incomes, says JRF’s Brian Robson.

The most significant aspect of yesterday’s Housing White Paper was the change in tone. Renting is back on the agenda. We have come a long way from the homeownership-at-all-costs focus of last year’s Housing and Planning Bill.

At JRF, we welcome this significant shift. We’ve long argued that housing costs have a significant impact on poverty. The UK’s housing crisis has led to rising poverty and insecurity. An extra 3.4 million people in the UK are in poverty after housing costs are taken into account.

We need a range of housing options to meet a range of needs and pockets. From her foreword to the White Paper, it’s clear the Prime Minister gets it:

‘High housing costs hurt ordinary people the most. In total more than 2.2 million working households with below-average incomes spend a third or more of their disposable income on housing.’

There are clear steps in the White Paper to increase the supply of rented accommodation. There’s a big focus on attracting institutional investment – for example from pension funds – in new-build private rented homes, building on an existing model labelled ‘Build to Rent’. Councils will have to plan for such developments, and the White Paper also aims to make these homes more financially viable by introducing a new form of affordable housing – ‘Affordable Private Rent’. This could be provided on these sites in place of a planning obligation to provide low-costed rented homes.

The issue is that ‘Affordable Private Rent’ won’t be affordable to those on low incomes. That’s because it’s based on charging up to 80% of the local market rate. We can’t expect to tackle high housing costs for those on low incomes if we keep linking ‘affordable’ rents to the market rate.

What does that mean? Here’s a practical example. A similar initiative to ‘Affordable Private Rent’ in London results in a rent of £1,160 per month for a two-bed flat in Harrow. That’s more than the maximum amount of Housing Benefit the Government will make available in that borough. Someone on a low income in Harrow typically earns £1,394 per month gross. JRF’s income-linked Living Rent – designed to be affordable for those on low incomes – in that borough would be just £436 per month.

That’s not to say Affordable Private Rent doesn’t have a role. We need homes to meet a range of housing needs, and Build to Rent typically offers higher quality and more stability than other parts of the private rented sector. But in reality Affordable Private Rent is not going to be a genuinely affordable option for the low-income households the Prime Minister referred to in her foreword to the White Paper.

If the Government is serious about tackling high housing costs, then the new definition of affordable housing needs to include income-linked options like Living Rents. That could really help fix our broken housing market and support low-income working families.

Read JRF’s housing recommendations in our strategy to solve poverty in the UK.