Theresa May should oversee a huge revival of government-funded housebuilding by constructing 75,000 homes a year for rent by low-paid workers, according to an influential Tory thinktank.
Analysis What is pay to stay and who will be affected?
The government’s policy of rent hikes for working people in social housing will hit thousands of low earners across the country. We crunch the numbers
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Under the proposals from Renewal, after two years of paying a “living rent” – no more than a third of the average low pay in a local authority – occupiers would have the option of buying their home.
The scheme would allow low-paid workers to make substantial savings on private sector rents and let them save for a deposit. The thinktank says lack of housing is the UK’s biggest domestic policy challenge.
David Skelton, director of Renewal, said: “Hard-working people on low incomes across Britain are seeing their wages disappear as private rents increase year on year. A Conservative living rent, which gives people on low incomes a chance to put enough money away to save for a deposit to buy their own home, should be at the heart of the prime minister’s social justice agenda.”
The proposals from Renewal follow a call by the Local Government Association for a “national renaissance” in council housebuilding to solve Britain’s chronic housing shortage.
The number of homes built by local authorities in recent years has fallen steeply, while housing associations have not been able to keep pace with rising demand. The UK needs to build about 250,000 homes a year just to keep pace. However, the last time this pace of construction was recorded was in 1977-78, when councils built 44% of new homes, the LGA said.
Renewal says that private renters pay 47% of their take-home pay to landlords, meaning that many aspiring homeowners on low wage have no chance of saving a deposit.
Someone renting a two-bed flat in Enfield, north London, spends an average of £1,250 a month. Under Renewal’s proposals they would pay no more than £462 a month – a saving of £788 a month, or £9,456 a year.
The Department for Work and Pensions predicts that the amount spent on housing benefit for privately rented housing will rise from £9.5bn for 2014-15 to £10.8bn by 2018-19. The thinktank says this amounts to a state subsidy for private landlords.
Under the “rent to buy” scheme, residents would be offered five to ten-year tenancies to give security and stability not found in the private rented sector. New dwellings would be allocated by councils to local people who work but are on low wages.
Responding to the Renewal proposals, the LGA said: “The shortage of houses in this country is a top concern for people who are finding that buying their first house is increasingly out of reach. If we are to stand any chance of solving our housing crisis, councils must be able to replace sold homes and reinvest in building more of the genuine affordable homes our communities desperately need now more than ever.”
A YouGov poll last year found that 52% of private renters earning the living wage or less wanted to own their own home but did not think they would ever be able to do so.
Four million working people will need access to some type of affordable housing by 2024 even if the country achieves full employment by then, according to research published by the LGA on Saturday.
https://www.theguardian.com/uk-news/2016/sep/03/theresa-may-should-build-75000-homes-a-year-for-low-paid-workers-says-thinktank
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