London's Pinched Households

Over 400,000 households in London spend more than half their income on housing.

One in four private renters across the capital are ‘housing pinched’

Around 430,000 households across London – containing 990,000 people – spend more than half of their income on housing costs, according to new analysis published today (Wednesday) by the Resolution Foundation.

The analysis shows that the proportion of ‘housing pinched’ households in London (those spending more than half of their net income on the ongoing cost of housing) increased sharply in the years running up to the financial crisis – peaking at around one in seven households in 2008.

Falling interest rates then reduced the proportion of pinched households, though it started rising again from 2012, even as typical mortgage rates continued to drop.

The analysis shows that people living in London are significantly more likely to be housing pinched than the rest of the UK, and the gap has grown in recent years.

Almost three quarters of London’s housing pinched population (71 per cent) are in working households – far more than the UK average – and the majority (54 per cent) are renters, rather than homeowners.

The analysis shows that almost one in four (24 per cent) private renters in the capital spend more than half of their income on housing costs, compared to 12 per cent of mortgagors and 8 per cent of social renters.

The Foundation says that the high cost of housing in London makes housing far more of a living standards issue than elsewhere in the UK, and one that should be a top priority for the mayoral candidates in the run-up to May’s election.

It adds that with such a high proportion of people renting in London, and with many renters 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.

The Foundation believes that secure, appropriate and affordable rented accommodation should be a key focus for the Mayor’s office and local councils. It also says that a greater roll-out of shared ownership schemes could provide the bridge towards home ownership that many renters in London want.

Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, said:

“Typical incomes in London are higher than elsewhere in the UK but too often this extra income is dwarfed by the higher housing costs they face.

“The scale of the capital’s housing crisis is such that around a million Londoners live in households where the majority of their income goes on housing costs.

“Dealing with the cost of housing is a particular problem for renters, almost a quarter of whom are ‘housing pinched’.

“With home ownership a distant dream for many Londoners, improving the quality, security and affordability of the capital’s private rented market must be a top priority for the new London Mayor and councils across the city.”