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Over half of a Londoner’s income goes on housing

Over half of a Londoner’s income goes on housing

Category: Money

Updated: 07/01/2016
First Published: 07/01/2016

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

How much of your income has to go towards housing every month? The answer probably depends on whether you own or rent your home, but your location could come into it as well, with research from the Resolution Foundation finding that a whopping 430,000 households in London spend more than half their income on housing costs.

Housing pinched

Those living in the capital are far more likely to be "housing pinched" than anywhere else in the country, the report showed, and the gap is growing. Largely thanks to huge rises in house prices, many Londoners spend a worrying proportion of their income on keeping a roof over their heads, despite the fact that mortgage costs have dropped dramatically in the last year or two.

However, it isn't just homeowners who are housing pinched, as the report revealed that it's a particular issue for those in rented accommodation: 54% of London's housing pinched are renters, and overall, 24% of private renters spend more than half their income on housing costs, compared with 12% of mortgagors and 8% of social renters.

The cost of London housing makes it more of a living standards issue than elsewhere in the country, the Foundation argues, and says that with such a high proportion of people renting in London – and with many of them struggling to save enough for a deposit to get on the housing ladder – it will take more than just the encouragement of greater home ownership to deal with the capital's housing crisis.

Instead, they call for political candidates to focus on providing secure, appropriate and affordable rental accommodation, as well as a greater roll-out of shared ownership schemes to bridge the gap between renting and homeownership to provide that vital next step on the housing ladder.

"Typical incomes in London are higher than elsewhere in the UK, but too often [it's] dwarfed by the higher housing costs they face," said Laura Gardiner of the Foundation. "With home ownership a distant dream for many, improving the quality, security and affordability of the capital's private rented market must be a top priority."

What next?

Struggling to build a deposit? Consider saving in a Help to Buy ISA for a valuable Government boost

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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