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Rising affordable rents have been “a key driver” in a rise in relative poverty in the UK over recent years, a report from the Institute for Fiscal Studies (IFS) has found.
The IFS, an independent economic research institute, included this finding as part of a report into living standards, poverty and inequality in the UK.
Average housing costs for low-income families with children, it found, have risen four times faster than for middle-income families.
The report added that “a key driver” of this change has been the recent increases in what it called “social rents” but which the researchers clarified to Inside Housing meant “rents paid by households that live in council housing or housing provided by a housing association”.
In 2011, the coalition government introduced ‘affordable rent’ as part of its funding programme. This was calculated at up to 80% of market rent, far higher than traditional social rent.
The IFS report found that real mean housing costs among families with children in the bottom 20% of incomes, and who live in social housing, rose by 35% between 2002/03 and 2016/17 – from £64 to £87 per week.
This included a rise in average housing costs not covered by housing benefit from £21 to £41.
Relative poverty – as opposed to absolute poverty – measures the changes in incomes of low-income households as compared to the average.
The report said this has increased since 2011/12, particularly among households with children and pensioners, meaning that incomes of low-income households have grown more slowly than the average.
Catherine Ryder, head of policy at the National Housing Federation, said: “There has been no funding to build new homes for social rent since 2010. Some housing associations took the difficult decision to increase their rents, to ensure they could continue to build homes for future generations.
“Still, we know that many continue to charge rents below the maximum level the government sets out. Of course, one child living in poverty is one child too many. We want the government to invest in new homes for social rent, allowing housing associations to build more homes for people on the lowest incomes.”
Although there has been an increase in low-income families in the private rented sector, the report found that housing costs had risen by 34% among social renters and by 20% among private renters, falling by 14% among owner-occupiers thanks to low interest rates.