The government risks never achieving its aim of getting more people off benefits unless rents fall, according to the Chartered Institute of Housing (CIH). Universal credit will give tenants in lower-paid work more disposable income by reducing the "poverty trap" in the current benefit system. And as a result more working tenants will receive universal credit than now receive housing benefit or tax credits.
But at the same time, rising rents in both the social and private sector will mean it is less likely that claimants can ever increase their earnings by enough to come off benefits.
The analysis comes from CIH’s UK Housing Review (UKHR) Briefing, produced in partnership with Orbit – an update to the UKHR 2013, which brings together evidence from a range of sources to assess the health of the UK’s housing system.
The briefing, which is being launched this afternoon (Weds 26 June) at Housing 2013 in Manchester, CIH’s annual conference and exhibition, also includes updates on house prices, affordable rent policy, demographic change, the impact of welfare reform and house building starts and completions.
CIH chief executive Grainia Long said: “Rents are becoming increasingly unaffordable for people living in both sub-market and private rented homes. Despite our serious concerns about how universal credit will be delivered in practice, some of its principles and objectives are sound. Improving the incentive for people to get into work is undoubtedly a good thing, but the fact is that unless rents start to come down it’s going to be very tough for most people to earn enough to move off benefits.
“The reason that rents – and indeed house prices – are so high is that we have failed to build enough new homes for decades now. That’s why CIH is calling on the Chancellor to allow local authorities to borrow more to build new homes and invest £2 billion a year in affordable housing in today’s (Wednesday 26 June) spending round announcement. These two measures would support the construction of 70,000 to 80,000 new affordable homes a year.”
Orbit Homes director Paul High added: “This research reveals the scale of the challenges we face in providing the homes this country needs now and in the future. Housing starts are around 100,000 a year and continuing to decline; welfare changes are making life harder for people in our communities; and rents are rising at a time when home ownership is an increasingly distant dream for many. We need evidence-based debate about innovative solutions and this briefing has a key role to play in that.”