The region’s ‘rent trap’ leaves lowest earners reliant on benefits, says Shelter
In all but one council area in the South East, a working family on a low wage could not afford to privately rent a typical home without turning to housing benefit, Shelter’s new research shows.
The housing charity analysed average private rents for two-bedroom homes in every local council area in the South East to assess whether they would be affordable to working families in lower paid jobs - with one adult working full-time and another part-time. The combined salary (after tax and National Insurance) of a family on low wage in the region was calculated as £25,411 per year.
The findings reveal that – excluding housing benefit – in 66 out of 67 areas local families earning a low wage would be forced to spend more than 30% of their salary to rent a typical home. In 47 of these (70% of the region) this rises to more than 40%.
Further exposing the depths of the region’s ‘rent trap’, Shelter mapped the hotspots where private renting is the least affordable. Guildford topped the list with the average rent in the borough equivalent to 59% of a low earning family’s take-home pay. This is closely followed by Oxford at 57% and Brighton and Hove where rents would swallow 56% of a family’s pay – and that is before paying for any other essential costs like childcare, food or utility bills.
|
Area (Local Authority) - South East Region |
Annual regional net earnings (based on one FT and one PT wage) |
Annual median private rent (2 bedroom) |
% of income spent on private rent |
Annual Social Rent (2 bedroom) |
% of income spent on social rent |
|
Milton Keynes |
£25,411 |
£10,740 |
42.3% |
£4,804 |
18.9% |
Additional analysis of rent costs for families with only one full-time worker on a low wage proved even more shocking. No matter where they move to in the region, a family living off one low wage would be forced to spend more than 39% of their take-home pay on rent. In 23 areas (36% of the region) this rises to at least 60% of their salary after tax and NI.
The charity argues that if the government invested in a new generation of social homes, working families would not need to rely on a faulty housing benefit system to keep a roof over their heads. To demonstrate this, it carried out a comparable analysis of social rents.
In stark contrast to private renting, social rents were found to be 100% affordable for working families on low wages across the South East. The maximum a family with one full and one part-time worker would have to spend on social rent is 26% in Mid Sussex, versus 13% in Hastings.
With the latest government figures showing almost £8 billion was paid out in housing benefit to private landlords in 2017/18 – Shelter is calling on the next Prime Minister to deliver 3.1 million social homes over twenty years as a more sustainable solution to the housing crisis.
Polly Neate, chief executive of Shelter, said: “Families in lower-paid jobs are having their bank balances bled dry by the extortionate cost of private rents in many parts of this region.
“The steep decline in social housing across the England has left growing numbers of families caught in a debilitating ‘rent-trap’. It’s disgraceful that despite working every hour they can, many parents are forced to rely on housing benefit to keep a roof over their children’s heads.
“It makes no sense to continue haemorrhaging billions of pounds in housing benefit to private landlords, when the government could support families in the South East and beyond by investing in a sustainable, long-term solution to the housing emergency instead.
“The next Prime Minister, whoever that may be, needs to realise social housing is the best cure to the affordability crisis we face. The delivery of 3.1 million new social homes over the next twenty years is the only way to lift millions out of housing poverty and into a stable home.”
Case study: Lauren, 48, lives with her teenage daughter near Brighton and works as a dance teacher, therapist and wellbeing coach at a university. The high-cost of private renting left her struggling financially for years until she managed to secure a social home at the end of 2018.
Lauren said: “I have counted my blessings every day since I moved into my council bungalow. Renting privately left me paralysed with fear - I couldn’t see a future without benefits and was constantly worried that my landlord would put my rent up. Now it feels like a weight has been lifted off my shoulders.
“Obviously, I am still conscious about my outgoings especially what I spend on any kind of treats – I’ll very rarely go out for a coffee when I can have a nice cup of tea at home. But at least I have a bit of flex around my finances. Our bungalow has brought so much joy and security to myself and my daughter - everyone deserves a home that makes them feel safe.”
