Election manifestos need to tackle Britain’s high, unequal housing-costs as well as low home ownership
Higher housing costs have reduced incomes and increased inequality as the poorest families have borne the brunt of Britain’s 40-year housing crisis, the Resolution Foundation warns in new analysis published today (Saturday).
The research – Inequality Street – notes that public concern about housing has grown in recent years, with approaching one-in-five adults now believing it’s one of the most important issues facing Britain, up from one-in-twenty in 2001. Housing is therefore likely to feature prominently in the upcoming manifestos.
The Foundation says however that Britain’s housing crisis is really three crises: low home ownership, high housing costs and a particularly acute disaster for low-income families.
Inequality Street finds that home ownership among young (25-34 year old) families has, despite a recent rise, almost halved since its 1989 peak – from 50 per cent to just 28 per cent. High house prices relative to family incomes mean it will remain harder for young families to save a deposit large enough to get on the housing ladder.
The report notes however that high day-to-day housing costs also matter hugely when it comes to family living standards in the here and now. Back in 1980, the average family spent just 10p of every £1 of income on housing. Today, this has doubled to 20p.
This burden of rising housing costs has fallen more heavily on those families with lower incomes. Back in 1980, the poorest families spent 15p of every £1 of income on housing. Today it has more than doubled to 40p.
The Foundation notes that higher social rents, more private renting and declining support from housing benefit have been a major living standards headwind for Britain’s poorest families over the past 15 years, wiping out 90 per cent of all income gains since the early 2000s.
Low-income families have suffered a £1,200 living standards hit from fast-rising housing costs since 2002. At the same time, thanks to falling interest rates, high-income families are £400 better off as their housing costs have fallen in real terms since 2002. This means that recent trends in housing costs have acted to push up inequality in the UK.
The Foundation says it is vital that the parties’ elections manifestos recognise that tackling our housing crisis requires action to help lower income families who have been at its sharp end in recent years.
Policy action should include ensuring housing benefit is tied to actual rents, recognizing the need for more social housing and recognising that social rents are on track to rise faster than private rents in the years to come, which may well push up further housing cost inequalities.
Daniel Tomlinson, Research and Policy Analyst at the Resolution Foundation, said:
- “In this election, politicians know that housing is an issue close to many people’s hearts. Young people in particular, many locked out of buying their own home, may welcome proposals to build more in high demand areas.
- “But political parties also need to address the legacy left from forty years of higher housing costs. As incomes have not risen at anywhere near the same pace as housing costs, families have dedicated a greater share of their income to housing. This burden has landed most heavily on low-income families, particularly in recent years when housing costs have actually fallen for higher income families.
- “Over the next few weeks, we not only need to see election manifestos promising to address falling home ownership; we also need political parties that are serious about lowering the cost of a roof over your head for lower-income Britain.”