Half of those who live in private rented homes will be living in poverty by 2040 if current trends continue.
Half of those who live in private rented homes will be living in poverty by 2040 if current trends continue
Rents will rise twice as fast as incomes and half of those who live in private rented homes will be living in poverty by 2040 if current trends continue, according to a new report from the Joseph Rowntree Foundation.
By analysing trends affecting the housing market, the study found that the average rent will be £250 per week by 2040 in real terms – up from £132 per week today.
According to the study, one in five (10.6 million people) will be living in private rented homes by 2040, up from 7.2 million today. Half of these, 5.7 million will be in poverty (a rise of 2.6 million).
Meanwhile one in 10 will be living in social housing, down from the current figure of 8.2 million to 5.7 million by 2040. Social rents will increase 39 per cent to reach £92.10 per week by 2040 in real terms.
And if social rents continue to rise towards market rates, the cost of housing benefit could rise by 125 per cent – adding £20 billion to the current bill.
For home owners, real median house prices will increase to £263,000, a rise of 57 per cent. But fewer people will own a home – 35.3 million people will be home owners by 2040 (a reduction of 820,000 people from 2008).
On the back of the study, JRF is calling on the government and housing providers to come up with an action plan to solve the housing crisis and keep poverty in check. It says that poverty levels 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 per cent, 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.
Chief executive of JRF Julia Unwin said:
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“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.”