Income-linked rents and more social housing: IPPR’s new report

A new report, released this week by the Institute for Public Policy Research, has revealed the true extent of the nation’s sky-high rents, as well as proposing new ideas to provide truly affordable accommodation for tenants.

Renting Beyond Their Means? The Role of Living Rent in Addressing Housing Affordability, assesses the state of England’s housing system, before diagnosing some of the reasons why such a lack of truly affordable homes exists. Among those reasons, the authors argue, are a decline in social housing, changes to the benefits system and the financialisation of housing – the increasing incidence of people looking upon homes as a financial investment.

The result of this confluence of factors is eye-watering rent levels; not just in London, but in pockets throughout the country. The report cites tenants in London spending an average of 62% of household income on rent and renters in Bath and North East Somerset paying 45%.

Having built an understanding of how the housing system works, IPPR proposes a series of systemic changes that could drastically improve the situation for people struggling with housing costs. These recommendations include:

  • abolishing so called ‘affordable rent’, a government-mandated rental model where homes are leased at 80% of market value
  • adopting the ‘Living Rent’ model, where rents are linked to household income so that no more than a third is spent on housing
  • investing in zero-carbon homes for social rent, so that tenants benefit from both reduced rents and reduced utility bills
  • and recommending that when allocating homes as part of the Living Rent scheme, preference should be given to applications from people designated as ‘key workers’ by the government during Covid-19.

The report was accompanied by polling which shines a light on the attitudes of the British public toward renting and the new Living Rent idea. Polling commissioned by IPPR and carried out by Savanta ComRes found that 21% of respondents were concerned that they would be unable to afford rent or mortgage payments in the future. In contrast, the same polling found that the adoption of Living Rent was supported by 61% of respondents.

Jonathan Lewis, the Nationwide Foundation’s Programme Manager for Nurturing Ideas to Change the Housing System, said: “IPPR has truly engaged with our housing system, to understand its quirks and inequities and the researchers have put forward a raft of ideas which have the power to begin to transform and rebalance renting and home-ownership. As a charitable foundation, we have a decade-long commitment to housing, with a focus on ensuring that everyone has access to a decent home that they can afford. This report adds weight to the arguments of so many across the housing sector, that a new settlement is needed for renters and home-owners across the UK, so that unaffordable housing is eradicated for good.”

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