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Housing costs to cause ‘pincer movement for foreseeable future’


Housing costs rising inexorably will likely depress living standards for millions in 2024 and beyond. Rents and mortgages in combination with permanently dearer essentials (despite falling inflation) will cause a ‘pincer movement for the foreseeable future’.
2023 Campaign Reflection 1) Housing

That was the gloomy assessment of Citizens Advice policy head Morgan Wild at a Resolution Foundation event in December.

Whether they pay rent or a mortgage, those on low or modest incomes are likely to find 2024 difficult. The Bank of England estimates low fixed-rate mortgage deals will end for around over a million households. Competition between lenders is bringing rates down, but new monthly payments are certain to be a lot higher.

Renters face a tough time before new support measures announced in the Autumn Statement take effect in April. A significant (9.8%) rise in the minimum wage and higher housing benefit (local housing allowance) are on the way. It’s also true (and a relief) that many people’s wages are now rising faster than prices.

But demand for rental property still looks set to outpace supply by some distance; so more ‘queues to view’, more bidding wars, more bad behaviour by (some) landlords. Meanwhile the final instalment of special support will be paid people on low incomes in February and there are no plans to continue the Household Support Fund* after March.

Massive cut back

What is happening according to Morgan Wild is “a massive cut back in consumption”. If you’re in (or close to) a negative budget (essential costs exceed income) something has to give. Housing costs aren’t an option: missing rent or mortgage payments means taking a risk with the roof over your head or your credit record. This is the first arm of the pincer movement.

Of necessity now you look at being even more careful with everyday essentials: food, groceries, energy and transport. Here is the second arm of the pincer. The problem is this is where you’ve already been cutting back for over a year to cope with big price rises; and that inflation is now built-in so this pincer comes with new risks: of food and fuel poverty and damaged health.

Warnings past

Throughout 2023 we drew attention to housing issues as part of (and part cause of) the cost of living crisis. In Epsom & Ewell problems with rental property and its dependence on housing benefit have been a constant theme (chart below). We warned of a growing debt crisis and the effects of the chronic desperate shortage of rental property – effects that extended to the finances of our borough council. Alongside national CA and others we have consistently called for reform including enactment of the long-promised and now long-delayed Renters Reform Bill.

Housing Issues 2023
The two most numerous housing issues facing clients were directly connected: inadequate housing benefit was the main cause of private rental sector problems.
Warnings future

Calls for action to relieve the obvious crisis in housing have become more strident. Understandably so, as its links with the cost of living and so many other social problems are harder and harder to ignore. Reform is essential and urgent. Without it 2024 will be more and more difficult for families and individuals without a secure good-quality home.

We are happy content to go with the essential changes set out by Morgan Wild:

  1. accept that the only solution is to expand supply of affordable housing; and to that end also accept that:
  2. the solution must include more social housing to stop what he memorably calls the ‘dehunanising rationing’ in current policy
  3. move the basis of the landlord role towards provision of decent homes and away from speculative business that too often means failure even to meet legal responsibilities.
    2023 Campaign Reflection 1) Housing

* The cost-of-living crisis isn’t ending, so why might the Household Support Fund be? Citizens Advice, 03/01/24

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