The government should introduce a new ‘living rent’ to tackle the issue of housing unaffordability post-COVID-19, a think tank has said in a new report.
The Institute for Public Policy Research (IPPR)’s paper, Renting beyond their means: the role of living rent in addressing housing affordability, said the new form of social housing, which would be linked to average local income rather than market rent, would provide greater security to those struggling to make ends meet during the coronavirus outbreak.
The initiative should initially be aimed towards key workers like nurses, shop workers and cleaners who do not qualify for government housing support and struggle with high housing costs in the private rented sector, it said.
IPPR has warned that the COVID-19 outbreak is set to worsen housing affordability issues, as polling revealed that one fifth of renters in the UK are worried they will soon be unable to afford their rent or mortgage.
The think tank has called on the government to introduce the new ‘living rent’ to tackle the issue, along with greater investment in ‘net-zero’ social housing and an increase in housing benefit rates.
Jonathan Webb, research fellow for IPPR, said: “For too long the cost of housing has been determined by the market and not by people’s ability to pay. The current pandemic has shown how this approach leaves people vulnerable to unexpected and unprecedented changes in their income.
“To build a fairer and more affordable housing system, we need to ensure that ability to pay is the key principle in housing, not profit. Building more social housing whilst also ensuring rents are linked more closely to incomes will help ensure we have enough homes that are genuinely affordable.”
IPPR’s report said that spending £15 billion on new social housing would allow the government to fund 120,000 new social homes a year and generate up to £120 billion in economic activity.
The think tank added that housing support for private tenants should be raised to meet the cost of average market rents, rather than the 30% it currently does.
Councils have already called on the government to help them build more social housing through measures such as allowing them to keep 100% of receipts from the Right to Buy scheme.
Luke Murphy, IPPR’s associate director for energy, climate, housing and infrastructure, added that the think tank’s report revealed the ‘enormity of the struggle’ that low-income households are facing with their housing costs due to COVID-19.
Murphy said: “We need a new approach to ensure homes are affordable linked to what people can afford, big investment to build new environmentally friendly social homes, and an increase in housing support to ensure people can cover the average cost of private rents.
“These reforms are a win-win, creating jobs across the country, bringing down the housing benefit bill and ensuring everyone has a decent and affordable place to call home.”