Lack of affordable housing leading to ‘rental logjam’, warns LGA

Councils leaders have warned of a “rental logjam” as new data suggests that one in seven private renters were forced to spend half their income on rent.

Analysis carried out by the LGA found that 14% of residents in privately rented accommodation were spending half of their total income on rent – contrasting hugely with homeowners, as only 2% spent the same proportion of their salary on their mortgage.

The findings released today – which echo a similar warning in May from housing charity shelter – also discovered that 43% of private renters spent more than 30% of their income on rent – the same percentage as those renting from a housing association.

And 37% of people renting from local housing authorities also spent the same proportion of their income on just paying for accommodation.

Council leaders also found that the figures demonstrate the difficulties for buyers to not only find an affordable home, but also with first-time buyers in raising funds for a deposit.

The LGA discovered that the situation for those trying to get on to the housing ladder was equally challenging, as on average deposits for first-time buyers cost 71% of their entire income.

This amounts to a bleak picture for young people, as under 25s were now half as likely to be homeowners as they were 20 years ago. In the south east, the LGA found it was most difficult to pay for a deposit, as on average deposits cost 85% of the buyer’s income. This cost soared in London, as deposits cost on average 133% of a household’s average yearly income. In the north west, it was significantly lower at 51%.

For the LGA, part of the issue lies in the lack of affordable homes being built, as last year 30,000 new affordable homes were built – the lowest number in 24 years – and many were still priced at a value far beyond the financial capability of many families.

“When one in seven private renters are spending half their income on rent, it’s no wonder we have a rental logjam – with a shortage of homes with genuinely affordable rent, and young people struggling to have enough income left over to save for a deposit,” said Cllr Judith Blake, LGA housing spokesperson.

“A thriving private rented sector helps create a balanced mix of available housing,” she continued. “A new wave of genuinely affordable homes for rental, that costs 30% of household income or less, would provide tenants with stability, reduce the squeeze on household incomes and help more people get on the housing ladder.”

Cllr Blake also argued that only an increase in all types of housing – including those for affordable or social rent – will solve the housing shortage, as she also said that a: “renaissance in house building” was needed by councils to solve the deepening housing crisis.

“For that to happen, councils must be able to borrow to invest in housing and replace sold homes and reinvest in building more of the genuine affordable homes our communities desperately need,” she concluded.

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