Institute for Public Policy Research

Developing a new rent model which adjusts rental payments according to income and is therefore genuinely affordable for low-income households.

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Why we funded this project

The overall aim of this project was to contribute to the debate and evidence-base on what affordable housing means, by developing a new rent model which is genuinely affordable for low-income households.

Strategic purpose

To improve understanding of the ideas that have potential to create change.

Project description

The Institute of Public Policy Research (IPPR) explored a living rent model for the social housing sector that looks at household incomes and sets rent accordingly. This means that as a household’s income increases or decreases, so too will the rent. The model ensures that homes are genuinely affordable to tenants on low incomes, as well as offering tenants more stable housing in the longer term, with less risk of unaffordable rent increases.

IPPR published its final report, Renting Beyond their Means? The Role of Living Rent in addressing housing affordability in the summer of 2020 and concluded that a broadly affordable rent would be no more than a third of household income.

The report found that while London is the most expensive place to rent on a low income, other pockets of the country suffer from a lack of affordability too. To compare, low-income households in London spend on average 62% of their income on rent, while similar families in Bath and North East Somerset spend 45% and those in Bristol pay 42%.

Included in the report were calls to:

• abolish the current ‘affordable rent’ model, which, when set at 80% of market rate, is often out of the reach of those on lower and even modest incomes
• adopt the Living Rent approach – a new form of truly affordable housing where rents are linked to local average incomes
• increase the level of investment in affordable and environmentally sustainable homes.

Crucial to this project was an understanding of how to scale the Living Rent model, so that the potential could be maximised – something that is featured in the final report.

In formulating its rent model, IPPR also worked with the Affordable Housing Commission – an independent panel of housing experts brought together to consider our housing system and make recommendations to improve affordability. More on that project can be found here.

IPPR

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