Skip navigation
The Progressive Policy Think Tank

Covid housing affordability crisis: three quarters back call for dedicated, affordable housing for key workers

  • Housing crisis warning as one in five reveal affordability fears for the future
  • New analysis reveals pockets of unaffordability across the country
  • Think tank proposes innovative ‘living rent’ solution, linking rent to income

An IPPR report today, together with new polling commissioned by the think tank, warns that housing affordability issues are set to intensify due to Covid-19, with those on low incomes and privately renting most affected.

To meet this challenge and tackle affordability issues, IPPR calls for the Chancellor to announce major reforms to housing policy in his forthcoming financial statement.

It says these should include the introduction of an innovative living rent based on income levels; investing billions in net zero social housing; and lifting the housing benefit rate to cover average rents so that families, key workers and others on low incomes can stay afloat. All proposals are backed by a majority of the public.

Polling conducted for IPPR by Savanta ComRes revealed that since the Covid-19 outbreak:

·    One in five (21 per cent) are worried that they will not be able to afford their rent or mortgage in the future

·    One in five (19 per cent) say that they have been unable to save during most weeks since the UK entered lockdown. This rises to a quarter of those living in rented accommodation (25 per cent)

·    A worrying 13 per cent said they have had to cut back spending on essentials in order to pay their rent or mortgage, and 10 per cent said they had run out of money a week or more before the end of the month.

Even before Covid-19, 5 million people faced housing affordability problems - the result of interlinked problems including undersupply, loss of social housing, cuts to housing subsidies, low wages and housing benefit cuts, according to IPPR.

IPPR argues that the pandemic has further exposed the fragility of the housing social safety net.

A new approach to affordable housing

The report proposes an innovative type of social housing known as ‘living rent’, with rent levels linked to average local incomes, rather than to rents charged in the market. IPPR argues this would be fairer and provide greater security. Polling showed this idea is supported by 66 per cent of people.

IPPR calls for these living rent homes to be aimed initially at key workers like nurses, shop workers and cleaners, who don’t necessarily qualify for social housing, but struggle with high housing costs in the private rented sector and have no immediate prospect of buying their own home. This initiative to provide key workers with dedicated affordable housing is backed by an overwhelming majority (78 per cent).

IPPR created a video to help explain this innovative approach – available here

Wider reforms to the housing market

In addition to the living rent approach, IPPR also calls for major reforms to housing policy, including major investment to radically increase the supply of green affordable homes. Polling revealed strong public support for the proposals, including seven in 10 (69 per cent) supporting the government investing £15 billion in building environmentally-friendly social homes. This investment would fund the construction of 90,000 social rent and 30,000 living rent homes a year and generate up to £120 billion in additional economic activity, according to the think tank.

IPPR also calls for housing support to private tenants be increased so that it covers the cost of average market rents (higher than the current 30 per cent) – an idea backed by three in five of the public (60 per cent). In addition, the paper proposes suspending damaging policies such as ‘right to buy’, which IPPR found had led to loss of 1 million social homes since 1980.

Not just a London problem

The report also recommends expanding local government's powers to drive house building. This follows IPPR analysis that shows housing affordability is not just an issue affecting London and the South East, as is often suggested, but one that impacts many across the country living in pockets of unaffordability. The regional analysis found that even before the coronavirus pandemic:

·    The average private rent in London is equivalent to 61 per cent of the income of the average household in London. In the South East region, the average is also high at 36 per cent.

·    Within other English regions pockets of private rent unaffordability exist for average households, such as Bath and North East Somerset where private rents are equivalent to 45 per cent of households’ average income. In Warwick and Solihull it is 40 per cent and in York it is 39 per cent.

·    This analysis suggests that many households are paying far more than they are either able or willing to afford. The average UK adult believes that the maximum that is reasonable to spend on housing costs is 32 per cent, while what they think they could afford is 35 per cent.

Overall, 1.2 million people in England now spend more than a third of their income on renting from private landlords. The IPPR report concludes that a fairer housing system is urgently needed and that the living rent approach is key to achieving that end.

Jonathan Webb, IPPR Research Fellow, said:

“For too long the cost of housing has been determined by the market and not by people’s ability to pay. The current pandemic has shown how this approach leaves people vulnerable to unexpected and unprecedented changes in their income.

“To build a fairer and more affordable housing system, we need to ensure that ability to pay is the key principle in housing, not profit. Building more social housing whilst also ensuring rents are linked more closely to incomes will help ensure we have enough homes that are genuinely affordable.”

Luke Murphy, IPPR Associate Director for Energy, Climate, Housing and Infrastructure said:

“Today’s report reveals the enormity of the struggle which many families and low-income households are facing with their housing costs. A struggle which the coronavirus pandemic has only made worse.

“This crisis cannot be solved by tweaks but instead by bold reform. We need a new approach to ensure homes are affordable linked to what people can afford, big investment to build new environmentally friendly social homes, and an increase in housing support to ensure people can cover the average cost of private rents.

“These reforms are a win win creating jobs across the country, bringing down the housing benefit bill and ensuring everyone has a decent and affordable place to call home. What is more, our research shows that the public overwhelmingly agree - it’s time for the government to act.”


Jonathan Webb and Luke Murphy, the report’s authors, are available for interview


David Wastell, Head of News and Communications:  [email protected]

Robin Harvey, Digital and Media Officer: [email protected]


1.  The IPPR paper, Renting Beyond their Means: The Role of Living Rent in addressing housing affordability by Jonathan Webb and Luke Murphy, will be published at 0001 on Tuesday 30 June. It will be available for download at:

2.  Advance copies of the report are available under embargo on request.

3.  Breakdowns of affordability data available on request.

4.  The living rent video is available to view here – contact IPPR for a digital copy for re-publishing.

5.  Savanta ComRes interviewed 2,120 UK adults between 19th and 22nd June 2020. Data were weighted to be representative of UK adults. Savanta ComRes is a member of the British Polling Council and abides by its rules. Full polling details available on request.

6.  Fewer than 10 per cent of private rented homes are affordable for Local Housing Assistance claimants. Without housing benefit, private renting would be unaffordable for 67 per cent of families. A lack of truly affordable housing has contributed to a spiralling housing benefit bill, which totalled £23.4 billion in 2018/19.

7.  Recommendations for reforming the housing market:

o   Redefine affordability – no rent over 33 per cent of income can be considered genuinely affordable. Social rent homes should also be reviewed to ensure they are affordable.

o   Abolish so-called ’affordable rent’ – this housing product is not genuinely affordable and should be converted to social rent or living rent homes with government support for the transition.

o   Increase the supply of green affordable homes – Over the next ten years the government will need to invest £15 billion to support the delivery of zero carbon sub-market housing. This will be vital to meeting the UK’s net zero ambitions and boost the economic recovery by generating up to £120bn a year through increased industry activity and job creation. This will deliver:

o   90,000 net zero social rent homes a year to boost supply and help those on the lowest incomes.

o   30,000 net zero living rent homes a year linked to local incomes. Where possible, these should be prioritised for key workers.

o   Suspend ‘right to buy’ – to urgently prevent the loss of more social homes.

o   Expand the housing safety net – the rate of local housing allowance should be lifted so that it covers the average cost (up to 50 per cent) of properties in a local area.

o   Devolve – local government should be granted more powers to set rents, create new housing products and fund building. Local authorities, housing associations and their membership organisations should explore the viability of a living rent product in different local housing markets across England.

8.  Affordability for local authority areas was calculated using data from the Valuation Office Agency private rental market statistics (April 2018 to March 2019 average across all home sizes) and comparing this to regional median incomes from the Department for Work and Pensions Family Resources Survey and households below average income data (2017/2018).  Affordability calculations for English regions used these data sources and also data on social and affordable rents from the UK Housing Review (2019)

9.  IPPR is the UK’s pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain’s only national think tank with a truly national presence.