The Blog

Not Even Low Unemployment Can Ward Off The Scourge Of Homelessness As Rents Rise And Wage Growth Slows

Official figures show homelessness is rising. Against a backdrop of low unemployment yet slowing wage growth, there has been a 10% rise in the number of homeless households in England.

Official figures show homelessness is rising. Against a backdrop of low unemployment yet slowing wage growth, there has been a 10% rise in the number of homeless households in England.

That's according to the latest figures from the Department for Communities and Local Government (DCLG) which revealed that local authorities accepted 15,170 households as being homeless during the quarter April-June 2016, compared to 13,840 during the same period last year.

There has also been a sharp rise in families with children, or expecting children, unlawfully living in B&B accommodation for longer than six weeks. The level is now a worrying 29% higher than a year ago.

Why is this happening? In short, slow wage growth plus a lack of affordability in the rental market can and is resulting in homelessness.

The ending of assured shorthold tenancies (AST) with private landlords, leaving households unable to find suitable and affordable replacement accommodation, was the most common reason for homelessness - cited as the reason for 32% of cases in the UK and 41% in London.

We are in the midst of a housing crisis and the official figures show it's getting worse, not better.

For too long now we've ignored the rental sector and the requirements of tenants, who are now incredibly vulnerable. It's tenants who feel the effects of the Tory crackdown on buy to let landlords, and tenants who will one day feel the full sting of rising interest rates when mortgage repayments increase and landlords hike rents in response.

Yet there is little to no protection for renters in the private rental sector. Whatever your views on rents controls or rent caps are matter little because we have neither. Landlords are free to set their own prices and, once an AST comes to an end, to increase prices for existing tenants because, in areas of high demand, if they can't afford the rent, there'll be someone else who can.

It's for this reason we read stories of beds under stairs and in corridors for rent, and why there are flatsharers advertising their bedrooms with strangers to cut costs.

We've had years of a Tory Government that focuses on homeownership (think Help To Buy and shared ownership schemes, even a Help To Buy ISA) while failing fantastically to cater to demand for affordable, and quality rental accommodation for long-term renters - and that includes families.

It's not just England. A 2014 McKinsey & Company report estimates that in the United States, the EU, Japan, and Australia, more than 60 million households are financially stretched by housing costs. It also predicts that by 2025, about 440 million urban households around the world - at least 1.6 billion people - will occupy crowded, inadequate, and unsafe housing or will be financially stretched.

This is a global issue requiring local, yet scalable, solutions.

In London, all eyes are on the new Mayor, Sadiq Khan, who is gearing up this month to release further details of his solutions for making the capital a more affordable city to live in. It's believed the Mayor will overhaul planning processes and redefine "affordability" in the rental market.

His London Living Rent scheme, targeted at low and middle-income households, is a start. This involves building accommodation available to rent at a third of a borough's average household income.

But it relies heavily on scale to make any kind of impact and, meanwhile, private landlords across the capital are still free to set their own rents.

It's for this very reason that there's demand for global accommodation solutions like Chototel, catering to low-earners whose requirements aren't being fulfilled by the existing market.