Home Truths: the housing challenge facing low to middle income Britain

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Vidhya Alakeson's slides from Resolution Foundation event on housing affordability Full details at http://www.resolutionfoundation.org/events/home-truths-scale-britains-housing-crisis-and-how-/ #hometruths
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  • 1. Home Truths: the housing challengefacing low to middle income BritainVidhya AlakesonResolution Foundationwww.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, toopoorLow-to-middle income households……………………………………………………………………………………………………..#hometruths
  • 3. ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………Total after-tax household income£12.6k£21.0k£45.1k£0k £10k £20k £30k £40k £50k £60k £70kBenefit-reliantLow tomiddleincomeHigherincome……………………………………………………………………………………………………..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, areyounger families - where the head of thehousehold is under 35• Two thirds are outside London and the SouthEastWho are these households?#hometruths……………………………………………………………………………………………………..
  • 9. ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………Peter and SueNet household income: £25,859……………………………………………………………………………………………………..A closer look at affordability for a typical family#hometruths
  • 10. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..IslingtonTwo bed, lower quartile propertyRent: £1630Capital value: £340,000#hometruths
  • 11. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..GuildfordTwo bed, lower quartile propertyRent: £950Capital value: £209,250#hometruths
  • 12. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..CoventryTwo bed, lower quartile propertyRent: £498Capital value: £83,000#hometruths
  • 13. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..DoncasterTwo bed, lower quartile propertyRent: £410Capital 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, lowerquartilepropertyRent: £498Capital value:£83,000John and SarahNet householdincome: £18,076#hometruths
  • 15. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..A word on housing benefit• Low income families with high rents may be eligible for HB tohelp with costs• But low to middle income group does not closely match HBrecipients:• 74% of existing HB claimants are out of work (althoughgrowing number of working households coming onto HB)– Majority of low to middle income group has one person inwork• 65% of claimants are in social housing– Low to middle income group increasingly not eligible forsocial housing#hometruths
  • 16. ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………Private rent is increasingly the least affordabletenure 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 sharpend of the housing crisis• Younger households in the group, in particular, havefew options outside the private rented sector• Private rent is now more expensive on an ongoingbasis than any other tenure• And this is no longer only a London and South Eastproblem. High rents can be found in all parts of thecountry.#hometruths
  • 19. Home Truths: the scale of Britain’shousing crisis and how to fix itVidhya AlakesonRichard DonnellNatalie ElphickeKeith ExfordCampbell RobbJules Birch@resfoundation……………………………………………………………………………………………………..#hometruths
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