Rents spiral: up 48% since 2007

Submitted by Matthew on 29 June, 2016 - 12:36 Author: Colin Foster

Even on the mean average income — which is quite a bit higher than the median income, the income of the worker halfway up the income range — a young worker now has to pay out 57% of her or his income to rent an average one-bedroom home in London.

A 13 June report from the property services firm Countrywide found that even relatively well-off workers can’t afford to rent on their own in London. Two young full-time workers splitting the rent of a two-bedroom home might scrape by, spending 35% of their post-tax income on rent in London, and a high proportion elsewhere too: an average of 27% across Britain. The average rent of a one-bedroom home in London is £1,133 per month.

At 57% of the post-tax income of an average full-time worker aged under 30 that is a 16% increase on the 41% of income in 2007. Rents have risen by 48% since 2007, more than four times as fast as the 11% increase in incomes.

The root cause of all these problems is the measures by successive governments since Thatcher in the 1980s to make it impossible for councils to build more than a few new homes, and their pressure on councils to sell off their stock. Private renting is now more common than social renting. The Tories’ Housing Act, which became law in May, will make this worse.

From April 2017 council-tenant households with a total income of over £40,000 a year in London, £31,000 outside — which is not a lot for a household total —will have to pay an extra £150 a year for every £1,000 income above £40,000 or £31,000, and so, for example, £3,000 extra a year if the household income is £60,000 or £51,000. From a date yet to be fixed, councils will be able to offer new tenants only fixed term tenancies, usually for five to ten years; and they will be forced to sell off higher-value homes whenever they fall vacant.

Islington council, in London, for example, estimates that it will lose at least 300 properties each year from the council stock. The answer is powers for councils to take over houses left vacant or convert commercial properties; nationalisation of land; funds for councils to build new homes; and rent controls and tenant rights for tenants in the private sector.

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