Almost one in seven private renters are spending more than half of their income on rent, compared to only 2% of homeowners on their mortgage, according to new figures from the Local Government Association (LGA).
The LGA said the lack of affordable house prices is leaving a generation stuck in a “rental logjam.”
High rental prices, it said, prolonged the problem, since many renters are unable to save up enough for a deposit to buy a home — with the average deposit now costing 71% of a first-time buyer’s annual income.
In London, this average rises to 133% of a household’s annual income.
“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 Councillor Judith Blake, LGA Housing spokesperson.
The LGA has called on the government to build more affordable rented properties, with rent costing no more than a third of a household’s total income. Last year, only around 30,000 affordable homes were built, the lowest number in 24 years. The average rental price for the UK is currently £852, with “affordable rents” at 80% of the market rate, at an average of £545 per household.
“Only an increase of all types of housing — including those for affordable or social rent — will solve our housing shortage and a renaissance in house building by councils is ultimately needed if we are to boost affordability,” said Blake.
“For that to happen,” she said, “councils must be able to borrow to invest in housing and replace sold homes.”
The LGA also found that 37% of people renting from a local authority, and 43% of people renting from a Housing Association, were spending more than 30% of their income on their home, reflecting widespread low incomes. It called for the creation of better paid jobs to help lift people out of this affordability problem.
Despite these findings, in April rents in London fell fo the first time in nearly a decade due to a combination of fears over Brexit and a sudden supply glut.
Previous research by the LGA found that under 25s are half as likely to own their own home than 20 years ago.