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  1. ITV Report

Low-income tenants 'increasingly exposed to rent increases'

Credit: PA

Households on low incomes are being left particularly exposed to rental increases as housing costs eat up a growing proportion of their money, according to analysis by the Institute for Fiscal Studies (IFS).

It said "substantial" cuts to housing benefit in recent years have led to low-income tenants spending 28% of their wages on rent which is up from 21% in the mid-1990s.

The IFS said that across Britain, the number of people living in private rented accommodation has more than doubled in recent decades.

The proportion of people privately renting homes has increased from 8% in the mid-1990s to 19% in the mid-2010s.

This figure has trebled among 25-to-34-year-olds from 12% to 37%.

It said that over the same period, average private rents have risen by a third (33%) in real terms.

The research, which was funded by the Joseph Rowntree Foundation, found tenants on lower incomes tend to spend greater fractions of their income on rent, even after accounting for the support they receive through housing benefit.

Lower income tenants were found to spend an average of 35% of their non-housing benefit income to pay the part of rent not covered by housing benefit, compared with 19% for higher earners.

The IFS said housing benefit reforms introduced since 2011 have left around 1.9 million privately renting households an average of £24 per week worse-off.

It said reforms have also cut the entitlements of 600,000 social-renting households containing 1.3 million people by an average of £19 per household per week.

Housing benefit entitlements are forecast to fall further behind rents in the coming years, the IFS said.

Low-income working age renters in the private sector with children were found to be particularly affected with reforms causing around 500,000 people to face a short-fall between their housing benefit and rent.

It said potentially, a further 150,000 people in this group could also be facing a shortfall by 2025.

Agnes Norris Keiller, a research economist at IFS and an author of the report, said: "The current approach effectively places most of the risk of further rises in costs onto low-income tenants, and little on the housing benefit bill.

"While containing the cost to taxpayers, it leaves housing benefit vulnerable to becoming increasingly irrelevant with respect to its purpose - maintaining the affordability of adequate housing for those on low incomes."