I was so interested to read the Resolution Foundation’s (RF) Housing Outlook 2024, which highlighted that increases in Housing Costs are increasingly pushing poorer families with children below the poverty line. The RF pointed to more children growing up in the private rental sector as a key determinant and calculate that high rental costs in the private rental sector resulted in an extra 670,000 children living in poverty in 2022/23.
This got me thinking about the Pensions Policy Institute’s (PPIs) 2023 report on housing, which also highlighted the increase in private sector renting as a key factor leading to lower pensioner incomes in future.
We all know that childhood poverty begets adult poverty and that experiences during working life shape those we have in retirement (e.g., low income in working life generally means low income in retirement). There now seems to be a another thread running through life, not just income levels, but whether one is in a renting household and crucially, whether that household is in the private or social sector, that has a substantial impact on later life incomes.
The PPI report has already highlighted the connection between adult life tenancy and retirement, but this RF repot suggests these connections begin in early life. We could say, therefore, that living in a private sector rental house as a child means you are more likely to be doing so as a pensioner and therefore more likely to experience low disposable income and housing insecurity.
While some commentators call for better targeted benefits, or increasing people’s capacity to buy housing as ways of tackling the problem, these approaches both seem like sticking plaster to me, that might create more problems through increased Government spending and/or housing market distortion.
The key issue is not renting in and of itself, it’s that people are renting in the private sector with high and insecure rents and little guarantee that homes with be warm, safe and secure.
Let’s go back in time to 1980 and the introduction of “right to buy”, the legislation which allowed council tenants to buy their houses at reduced rates. Hundreds of thousands of council homes have been sold since then, but in almost every year, local authorities have built or bought fewer properties than they sold. Demand for social housing is also growing, due to the increase in one-person households.
The previous Government aimed for the generation of 300,000 new houses per year, though the actual demand may be higher at around 340,000 per year (with 145,000 of this being affordable housing). However, supply is not meeting demand, with fewer houses than even the Government target being built each year (for example, 233,000 in 2021/22).
I do wonder why this lifelong issue of tenancy, which is growing as a result of supply issues and probably starts in childhood, is increasingly being seen as the part of the remit of pensions policy. There is a lot of talk about how we can use pensions to help people buy homes and how we can better target Housing Benefit. It may well be the case that these approaches can help with some of the short term pain (and pensioners will need direct help very soon) but if we don’t fix our supply problems soon, this issue will only get worse and cause more financial distress for pensioners, working-age adults and children.
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