The Home Stretch: coping with high housing costs

We find that in 37 per cent of local authorities in Great Britain, modest income households would have to spend on average one third or more of their disposable income to meet their monthly mortgage payment for one of the cheaper properties on the market, and in 21 per cent of local authorities, they would have to do the same to cover their monthly rent. Within this overall picture, several patterns emerge:

• London is a particular black spot, with no local authorities in which a modest income household would be able to buy or rent without spending one third of more of their income on housing. The South East, East of England and South West also have several hot spot local authorities where affordability is a challenge.
• By contrast, in the East Midlands, the North East and Scotland, almost all local authorities are within reach of modest income households wishing to spend no more than one third of their income on housing.
• One bedroom properties present a particularly significant challenge. Renting a one bedroom requires modest income households to spend one third or more of disposable income in 41 per cent of local authorities, compared to under a fifth of local authorities for households requiring two- or three-bedroom properties.
• Buying with a mortgage is the least affordable tenure overall, but renting prevails as the more expensive option in lower-cost areas. This is the case in just under half of local authorities nationally.
• Importantly, although the results are not directly comparable, this 2013-14 picture seems not to represent a worsening on previous years, reflecting stalling rents and tempered house prices in much of the country. In fact, affordability for modest income households in the private rented sector appears to have improved slightly.