Almost half of 25-34 year-olds are currently renting their home
Closing the Conservative party conference today, David Cameron will promise to build 200,000 starter homes over the course of the parliament, in a bid to ‘turn generation rent into generation buy’. Houses built under the scheme must be 20 per cent under the market rent.
But this alone will not be enough to address the dearth of affordable housing in the UK. Only people who are already relatively well off will be able to afford one of these starter homes, capped at £450,000 inside London and £250,000 outside.
What about the 5 million households who are stuck private renting, paying half of their income to their landlords? The charity Generation Rent, which campaigns for affordable privately rented homes, says that it would be better to prioritise social housing instead:
“With lower demand for private rentals, rents would fall, and private renters could start saving for that home of their own.”
Almost half of 25-34 year-olds are currently renting their home. The number of families with children who are privately renting their home has almost tripled in the past 10 years – that’s more than 1.5 million families.
Rents have been rising faster than inflation – in the year to May, average rental values for new tenancies in the UK were 10.7 per cent higher than the same period last year. Meanwhile average tenant incomes were just 2.4 per cent higher than the same period last year. Who can save for a deposit, even for one of these new capped homes, when so much of their income is going to the landlord each month?
The policy change means that the definition of affordable housing now includes starter homes, as well as homes for rent. It means that developers can use homes for purchase towards fulfilling their obligations on affordable housing
With average house prices now at around 8.8 times the local salary, David Cameron is right to address the issue of home ownership. But as Right to Buy eats up more and more of our social housing stock and private rents continue to soar, today’s announcement will not be enough to make housing in the UK affordable.
Ruby Stockham is a staff writer at Left Foot Forward
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