Low-income tenants battle soaring rents

Low-income tenants are now spending an average of 28% of their wages on rent, up from 21% in the mid-1990s, new research indicates.

They have been hit by substantial cuts to housing benefit, with government support expected to fall "further and further behind" the cost of housing, says the Institute for Fiscal Studies.

Over the same period of time, the proportion of people renting homes privately has increased from 8% to 19%.

Average private rents have gone up 33%.

"Renters are paying considerably more for their homes than 20 years ago," says the IFS analysis, funded by the Joseph Rowntree Foundation.

"In real terms, the median private rent paid in London was 53% higher in the mid-2010s than in the mid-1990s, while in the rest of the country, it was 29% higher. Those rises mainly occurred in the late 1990s and early 2000s (in London) or the early and mid-2000s (elsewhere).

"Meanwhile, social housing rents have been consistently growing in real terms since the mid-1990s."

The IFS said changes to housing benefit policy had so far cut entitlements for two-thirds of low-income private renters and one-sixth of low-income renters in social housing.

Future reforms were expected to increase the number of people facing a shortfall between the amount of housing benefit they received and the rent they had to pay.

"Wider problems in the housing market are pushing up housing costs and increasing the size of the rented sector," said Agnes Norris Keiller, a research economist at IFS and an author of the report.

"While these remain unaddressed, there is likely to be an ever tougher choice: continue decoupling support for housing costs for those on low incomes from the rising cost of housing, or change policy and accept further rises in the housing benefit bill.

"The current approach effectively places most of the risk of further rises in costs on to low-income tenants, and little on the housing benefit bill.

"While containing the cost to taxpayers, it leaves housing benefit vulnerable to becoming increasingly irrelevant with respect to its purpose - maintaining the affordability of adequate housing for those on low incomes."