Soaring housing costs could leave up to 6 million private renters living in poverty by 2040, warns a damning new report.
The report – What will the housing market look like in 2040? – from the Joseph Rowntree Foundation (JRF), found that average rents are rising twice as quickly as incomes and people who rent are twice as likely to be living in poverty than homeowners.
‘Right To Buy’ is having a devastating effect on the availability of social housing and sold social homes are going back on the open market with inflated rents, leaving the poorest households with nowhere to live.
JRF say declining social renting, coupled with a lack in new affordable homes, could lead to a 90% increase in private rental costs over the next two and a half decades.
Average rent in the private sector is forecast to grow from £132 per week in 2014 to £250 per week by 2040 in real terms, rising twice as quickly as incomes.
One in five (10.6 million) people will be living in private rented homes by 2040 – up from 7.2 million today – and half of these (5.7 million) will be in living in poverty, a rise of 2.6 million.
The number of people living in social housing is expected to plummet from 8.2 million to 5.7 million in 2040, nevertheless social rents will increase by 39% to an average of £92.10 per week in real terms.
JRF warn that should rents continue to rise at the current rate the amount spent on Housing Benefit could rocket by a staggering 125%, adding as much as £20 billion to the Housing Benefit bill by 2040.
The report also warns how house prices could increase by 57% to an average of £263,000, slamming the door on home-ownership for all but the richest households. JRF analysis suggests that soaring house prices could lead to a reduction of 820,000 homeowners from 2008.
JRF are calling on the government and housing providers to work together and build an action plan to solve the current housing crisis. Around one in four people in the UK could be living in poverty by 2040, but JRF say this can be ‘contained’ if:
- Housing supply doubles to more than 200,000 units a year;
- Social rents continue to go up by inflation plus 1%, rather than move towards market rents;
- Housing benefit continues to support housing costs at similar levels;
- The fall in the proportion of affordable social housing in the overall market is halted.
Julia Unwin, Chief Executive at JRF, said:
“These stark findings are a wake-up call for political leaders. After decades of failing to build enough, those in power have a responsibility to act now to build more genuinely affordable homes. Without that we are storing up trouble for the future – a price that will be paid by children starting school life this year. These high costs are bad for families, the economy and Government.
“We need a clear strategy that builds the homes we need in the right places and avoids locking low-income households out of affordable homes. This is about more than frustrated aspirations of home ownership from Generation Rent: the reality facing many people is a life below the poverty line because of the extortionate cost of keeping a roof over your head.
“Addressing the rising cost of housing is crucial to tackling the high levels of poverty in the UK.”