Subsiding Subsidies: The Real Cause of Falling Housing Affordability?

James Browne Head of Work, Income and Inequality Analysis

Christos Tsoukalis Economist

January 18, 2023
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With house prices in England reaching record multiples of average income, it’s no surprise that housing affordability has become the focus of growing political debate. But the rental sector has its own affordability crisis. The share of tenants’ income going towards rent is close to its highest for decades, and the demand for cash housing benefits seems higher than ever, even as the public finances look stretched.

A series of policy measures over the past 40 years have reduced the value of housing subsidies. Non-cash housing subsidies have shrunk markedly over the past 40 years even as spending on housing benefits has increased. There are currently 1.9 million pensioners, lower-income families with children and people with a disability living in the private rented sector for whom more-stable housing tenure is a priority. This suggests significant need for additional social housing.

In a paper published today in association with the Joseph Rowntree Foundation, we quantify the full impact of changes in housing subsidies in England since 1979. Our analysis shows that the housing-affordability crisis for renters is firmly grounded in the waning generosity of the subsidies on offer to lower-income households over the past 40 years.

Read the full report.


Lead Image: Getty Images

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