Poverty and housing costs

The Joseph Rowntree Foundation’s newly published review of the evidence on the links between housing and poverty makes fascinating reading and has some important conclusions for future housing policy.

They conclude that there is a better understanding of the ways in which poverty affects people’s housing circumstances than there is of the ways in which people’s housing affects their poverty.

Over decades, one of the objectives of housing policy has been to break the automatic link between being poor and living in the worst housing. People on the lowest incomes have had a number of buffers to protect them from the extremes of the housing market – access to social housing at relatively low rents, a statutory safety net if becoming homeless, and access to a housing benefits system to help meet the costs of renting. These buffers are currently being removed one by one.

JRF observe that ‘social housing is highly targeted on people with low incomes and has been shown to be the most ‘pro-poor’ and redistributive major aspect of the entire welfare state.’  Even with the lower rents that have prevailed in the sector, the proportion of social renters living in poverty rises from 29% to 43% when housing costs are taken into account.

One weakness in the housing support system has been a lack of awareness that housing benefit is also available to people in work (made worse by some politicians who like to make out that benefits are only claimed by the workless). JRF say that only half of eligible working tenants receive the benefit.

Current changes in the housing system – for example, the ending of new social homes at lower rents in favour of ‘affordable rent’ homes at up to 80% of market rents, caps to housing benefits and the overall benefit cap, discharge of the homelessness duty in the private rather than the social sector, and bedroom tax – are increasing the gap for all renters between the rent they have to pay and the housing benefit they will receive. JRF say these measures ‘are likely to increase poverty, however it is measured’.

JRF make the point strongly that poverty is not only found in the rented housing sectors. For the last 20 years, home owners have made up more than half of people poverty (before housing costs are taken into account). The figure falls to 37% of those in poverty after housing costs, because many are in a position where they have low incomes but have paid off their mortgages and therefore have low or no housing costs.

The impacts that bad housing has on poverty are many and various. Poor conditions affect health, of children and adults, which in turn tends to push people into poverty. Educational attainment is affected. The move away from low cost housing makes it harder for people to ‘make work pay’. The housing benefit system, JRF argue, is caught between the two stools of preventing poverty on the one hand and avoiding a ‘poverty trap’ (benefit withdrawal as income rises) on the other.

As a result of their review, JRF draw a number of conclusions for policy. More attention should be given to measures of poverty after housing costs are taken into account and to understanding how some groups of people are in poverty because of their housing costs. Reducing housing costs is vital to reducing poverty. In terms of encouraging people into work, lower housing costs are of vital importance to those who can only command low wages.

This is an excellent review that raises many issues. It should be well read by people with progressive views looking to develop housing policies for the next General Election. As JRF say in their understated way, ‘Efforts to reduce poverty need to consider limiting rent costs, maintaining good housing conditions in all tenures and monitoring the impact of welfare reform cuts.’ Quite.

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3 Responses to Poverty and housing costs

  1. What JRF says is, to me, pure and simple common sense. However, common sense does not come into the equation when you are intent on reducing the size of the state in order to make
    your rich supporters and cabinet members richer. The health of the nation is secondary to healthy
    profits.Greed before need is paramount to need before greed.

  2. Pingback: Tackling squalor in a strategic way

  3. Pingback: Tackling squalor in a strategic way | Red Brick

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