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Nearly 1.6 million UK households struggling with housing costs

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Nearly 1.6 million UK households struggling with housing costs

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Published by Jon Land for 24dash.com in Housing

Nearly 1.6 million UK households struggling with housing costs - research Nearly 1.6 million UK households struggling with housing costs - research

Close to 1.6 million UK households are spending more than half their disposable income on the ongoing costs of housing each month, according to new research published today.

The Resolution Foundation think tank also reveals that of those struggling with their housing costs, nearly one million are working households.

Retired households (7% - 110,000) and working age households in which nobody works (30% - 480,000) make up the remainder.

The new research finds that the vast majority of what the think tank describes as the 'housing pinched' are not well off households choosing to spend a large chunk of their income on expensive homes. Just 40,000 of the working households have incomes in the top fifth of the household income distribution, while 830,000 are in the bottom half, meaning 84% of the housing pinched have incomes below the national median.

In 2011-12 – the latest year for which data is available – the 'housing pinched' in the bottom half of incomes had on average just £60 left over each week to spend on all other essentials (including food and bills) after paying for accommodation.

Such households are more likely to rent privately, be young, live alone, live in one bedroom properties, have recently moved and live in London. The proportion of the population spending more than half of their disposable income on monthly rent or mortgage payments has grown significantly since the early 2000s, despite a slowdown in the growth of this group following the financial crisis.

The analysis takes account of the support for housing costs that lower income households receive through housing benefit (HB).

Those who are defined as 'housing pinched' spend more than half of their disposable income on housing even with the support offered by HB. The analysis also finds that:

  • 11% of working London households are housing pinched (250,000) compared to 3% in the North East and Northern Ireland.
  • 12% of working households renting privately are 'housing pinched', while 6% of households with mortgages and 4% of social rented households are affected.
  • Working households where the head is under 25 have a 12% chance of being 'housing pinched', dropping to 7% for the 25-30 age group.
  • Working households in one-bedroom homes have an 11% chance of being 'housing pinched', compared to 7% for working households in two bedroom homes.
  • Working single households with no children have an 11% chance of being 'housing pinched', dropping to 6% for single households with children and couple families with children.

According to the Resolution Foundation, it is likely that a return to house price growth in the years following 2011-12, expected rises in interest rates that will push up costs for many mortgage payers, and slow income growth across much of the distribution will combine to put even more households in the position of spending a very high share of their income on housing.

Laura Gardiner, report author and analyst at Resolution Foundation, said: “The majority of the housing pinched are in work but on low and middle incomes, leaving little left over after housing costs to spend on other essentials.

"With house prices and rents rising in some parts of the country, interest rates expected to start to go up and income growth remaining weak, we should be concerned about the ability of this group to absorb additional pressure on their household budgets from higher mortgage payments and rents.

“It is vital that more money is invested in the supply of new housing in order to drive down costs, otherwise we can expect to see a steady rise in the number of households that are ‘housing pinched’ over the coming years.”

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