Last week, we published our briefing on affordability in the private rented sector (PRS)
We pointed to average rent-to-income ratios being persistently high as one of the key issues renters face.
Today, we'll explain how this is particularly acute for low-income households ⬇️
Shocking statistic ⬇️
The hallmark of a generation increasingly unable to achieve the milestones previous generations took for granted..
Its is an issue we discussed in our latest UK Poverty report, one which clearly intersects with low-incomes and lack of opportunity.
(I'm measuring 'family' incomes of young people separate from 'households incomes' which combine incomes of young adults and their parents, but poverty rates are measured at the 'household income' level).
The poverty rates for young people in concealed households is just 17%, compared 44% for young social renters and 28% for private renters.
But clearly this is a problem of low-incomes and lack of opportunity - we need *way* more homes, and more well paying jobs.
Perhaps counter-intuitively - living in concealed households shields people from poverty, as we measure it..
In that by combining their incomes with that of their parents and living housing cost free, they're less likely to fall below the poverty line..
And is a feature of the housing crisis, in that there aren't enough homes that are sufficiently affordable in the right places for young adults to move in to!
The housing crisis is holding back opportunity, and holding people back from carving out their own path in life.
Clearly for many this is an undesirable outcome as they're unable to achieve independence.
It reflects both lack of opportunities in employment, with insufficient employment opportunities paying salaries that enable independence..
The number number of young adults in 'concealed households' (e.g. living with parents, and not including shared household arrangements) has grown by 1.7 million since 2001/02 to 5.2m in 2023/24.
60% of adults on low incomes (bottom 40% of incomes) are now in concealed households
Shocking statistic ⬇️
The hallmark of a generation increasingly unable to achieve the milestones previous generations took for granted..
Its is an issue we discussed in our latest UK Poverty report, one which clearly intersects with low-incomes and lack of opportunity.
Rents staying flat very much suggests that any worries about a mass exodus of landlords in advance of the Renter's Rights Act coming in next month were unfounded.
🚨 New briefing out today!
Our latest analysis looks at the challenges faced by renters in the Private Rented Sector (PRS)
We've identified a few distinct but connected ways of understanding the affordability pressures that private renters are facing 🔽
Our interim policy report on what Government can do drops in May. Watch this space.
Read more in our @jrf-uk.bsky.social report from Rosie, Ruby and I on private rent affordability 👉
www.jrf.org.uk/housing/unde...
So what needs to change?
Three priorities: ramp up supply of homes, particularly social housing - so fewer people are trapped in expensive PRS; bring rents down relative to incomes; and fix housing support so it actually covers costs - permanently linked to local rents.
The Renters' Rights Act is step forward on security of tenure. But it doesn't touch the core issue:
Rents are simply too high relative to incomes, and have been for decades.
The biggest jumps in housing costs come when people move home.
Landlords are more likely to increase rents between tenancies, and by larger amounts.
Problem 3: rent increases come in sharp, unpredictable spikes.
Rents don't always rise every year. But when they do, increases are often well above inflation.
Housing support (housing benefit / LHA) can't fix this on it's own. Many struggling renters can't access these benefits. And support has fallen behind rent growth.
Government should relink LHA to current rents.
High housing costs drive poverty and increase economic insecurity.
At worst, unavailability of homes and unaffordable rents drive homelessness and destitution.
Problem 2: rent affordability pressures are particularly acute for low-income households, made worse when subsidies are inadequate.
Low income renters spend much higher share of incomes on rents, and 40% of renters in the bottom 40% of incomes struggle to pay rent.
The problem now affects far more people.
The private rented sector doubled in size since 2000, as owner occupation and social renting declined.
More people paying high rents for longer.
The UK stands out internationally.
Almost one in four private renters in the UK spend over 40% of their incomes on rents - the highest in Europe (in OECD data).
Before rent deregulation in the late 1970s, average rents were about 11% of average earnings.
This rose sharply after deregulation, and the high rent-to-income ratios have been the norm since. This is the structural problem.
Problem 1: rents have been persistently high as a share of renters incomes for a few decades.
The problem isn't just about rent growth, it's that rents are consistently high as a share of incomes.
It's a bit of a myth that rents are constantly increasing faster than earnings or overall inflation - on average, they're not.
So what *is* the problem of unaffordability in the private rented sector? And what does this mean for how we go about fixing it?
Our take 🧵⬇️
An improved methodology means the numbers in poverty have been revised down, particularly for social renters and outright owners.
See this video explainer from @jrf-uk.bsky.social on how the methodology has changed ⬇️
bsky.app/profile/jrf-...
Old and revised poverty rate statistics by tenure over time
New poverty statistics have been published.
4.5 million private renters (34%) and 4.1m social renters (36%) are in poverty.
Poverty rate for private renters is fairly static, slightly down for social renters (21-23 to 24/25), and slightly up for those buying with a mortgage.
We focus on three dimensions in particular: high ratios of rents to income, particularly acute pressures on low-income families, and rent increase pinch points.
Look out for a @jrf-uk.bsky.social briefing on housing affordability we're publishing in a few weeks which sets out our prescription of the housing affordability problem for private renters.
Although again in some areas rent have increased by much more since 2016; in Belfast and parts of Manchester rents are up around 80%, and up 70% in Bristol.
Rental growth was also particularly high in some seaside towns.
