70,000 new households a year can't afford to buy or rent says agency

Over the next five years at least 70,000 new households a year in England alone will be unable to afford to rent or buy market housing unless assisted, according to Savills.  

This means that 350,000 households will need some form of sub-market housing by 2020 according to a report from the agency. 

Owner occupation remains the tenure of choice for the majority and recent policy It says the government has recently adopted a target of delivering 200,000 new homes a year over the course of this parliament, with the ambition of reversing the decline in home ownership. 

However, Savills warns that a consequence of this priority could be a reduction in affordable housing numbers for the lowest income households.

The agency has analysed the ongoing cost of buying or renting a home in the current market, assuming 30 per cent of gross household income is spent on housing. On this basis at least 70,000 new low-to-middle income households a year will be unable to afford to live in market housing, whether rented or owned. 

These numbers exclude any backlog of unmet need and the effect of falling stock levels due to Right to Buy and proposed sale of high value council homes.

It says the nature of households unable to access market housing varies enormously across the country and the problem is most acute in London and the South East.  

In London, the median income of excluded households is £20,000, but even with a household income of £60,000 per annum some will not be able to afford market housing. 

“There can be no question that we need to boost housebuilding volumes, but these new homes need to be built across a variety of tenures to put homes within reach of those in greatest need” says Chris Buckle of Savills’ research team.

“Our concern is that new policy will result in a greater shift from sub-market rental products towards more expensive shared ownership and Starter Homes accessible only to those on middle incomes.”