Warning of 'homelessness disaster' in race for private rented housing

Published by Jon Land for 24dash.com in Housing and also in Central Government, Communities

Youngsters locked out of homeownership risk forcing young families out of the private rented sector and into homelessness a major report has warned.

Research by the Joseph Rowntree Foundation (JRF) found that an extra 1.5 million 18-30 year-olds - locked out of homeownership - will be forced into private renting in just eight years’ time.

In addition, an extra half a million young people will be forced to stay with their parents into their 30s taking the total number of young people living with mum and dad to 3.7 million by 2020.

In warns that the influx of youngsters chasing a private rented sector (PRS) home will see young families, poorer and vulnerable people finding it hardest to compete for tenancies with around 310,000 more young families looking for private rented housing in 2020.

The report warns of a ‘three-tier’ system developing in a race to find PRS housing, with those at the top who can afford to pay, a ‘squeezed middle’ group who might struggle to pay and a bottom rung of 400,000 who risk being excluded completely.

Kathleen Kelly, Programme Manager for Place at the JRF, said: “Our badly functioning housing system will see those on the lowest incomes really struggling to compete in the competitive rental market of 2020.

“Renting is likely to be the only game in town and young people are facing fierce competition to secure a home in what is an already diminished supply of housing.

“With 400,000 vulnerable young people, including families, on the bottom rung of a three-tier private renting system we need to avoid turning a housing crisis into a homelessness disaster.”

The JRF wants more homes built, more homes let for longer at affordable rents - with tax breaks for landlords that oblige - and the expansion of local letting agencies to find suitable PRS homes for vulnerable young people.

David Clapham, lead author of the report, added: “With 1.5 million more young people no longer able to become home-owners by 2020, it’s vital we take the opportunity to make renting work better. To do this we need strong political leadership that is willing to work with both landlords and tenants to make it more affordable and stable for ‘generation rent’.

“Young people are at a double disadvantage – it takes longer to raise enough for a deposit and their wages are generally lower. But there are simply not enough homes and those we do have cost too much to rent or buy. While more housing would help address this, it may not come quick enough for young people forced into renting in eight years’ time.”

Shadow housing minister Jack Dromey said the research highlights the need not only to build many more homes but also the growing importance of the private rented sector. He said Labour is "looking at ways to ensure the sector provides families with homes that are affordable, of a decent standard and stability of tenure".

Clive Betts, Chair of Communities and Local Government (CLG) Committee, said the report echoes many points made by the CLG Committee in a report on the Financing of New Housing supply published in May.

He said: “In particular, we highlighted the potential for substantially more investment by large institutions and pension funds, but like JRF we acknowledged that the private rented sector will continue to be dominated by smaller landlords. We therefore called on the government to bring forward proposals to simplify the tax regime in ways that will encourage such landlords to invest far more readily to build new homes.

“We also questioned the Government’s flagship Affordable Rent model, expressing concerns that it could prove unaffordable in parts of London and may well prove unsustainable beyond 2015. We saw untapped potential in the historic grant on housing association balance sheets, and called for clarity on how it could be used to best effect. We also urged Government to ease centrally imposed constraints upon local authorities, such as on borrowing, to enable them to deliver more homes.”

“Taken together these measures, along with others we propose, could boost supply, helping to meet the housing needs of young people in the years ahead.”

Matt Harrison, Interim Chief Executive of Homeless Link, said: “This report highlights the difficulties that many young people will face in the coming years in securing and living in affordable decent housing.

“We are especially concerned about the impact on young homeless people. We know from our members that more and more young people are seeking help with homelessness, and our research has shown that the main cause is a breakdown in their relationships with family and friends.

“This means that living in the family home is often not an option for them. However the report shows that access to social housing will be much reduced in the future for young homeless people.

“They will face increased competition for private rented accommodation, and when combined with changes to housing benefit and increases in rent there is a real risk that if we don’t act now, we face a future of more young people living in transient accommodation with no real place to call home or with no home at all.

“As this report shows, rising youth unemployment and the economic recession mean this situation will only continue to get worse. We are urging the Government to intervene to make the private rented sector more accessible to young people and to look at new ways in which we can ensure decent housing for young homeless people.”