Even before looking at the difference in housing costs for Londoners, though, it is worth reflecting on the reduced expectations of those living in the capital.
Because the MIS asks the public what the minimum should be for someone to have an acceptable standard of living and then bases costs off of that, what is included in that minimum differs inside and outside of the capital.
The MIS for London, then, accepts that families should expect to live in flats, whereas the minimum housing offer in the rest of the country for families should be a house.
This expectation is surely revealing about the way the housing market has come to change what is seen as natural – why, after all, should a family who happen to be born, live, and work in the capital just accept a flat, while the rest of the country’s families need, as a minimum, houses?
But even given this difference, minimum housing costs are still much greater than elsewhere in the country, and the difference between rents is increasing. Lower quartile rents increased four times faster in London (up 16%) from 2014-2016 compared to the rest of the UK (up 4%).
The MIS also assumes that families in London have access to social housing while single people and childless couples are privately renting. Doing this gives a figure of between £100-160 more per week needed by a family in London to meet the MIS, amounting to 18% higher budget in Inner London and 21% more in Outer London for a couple with two children.
However, if we consider the same family privately renting, the income needed to meet the MIS in London against the rest of the country is up by between a third in outer London and 60% in inner London.
Of course, higher average incomes in London will support much of the city’s population, but those on low incomes will be well cut off from the MIS, and that separation is very much dependant on their housing tenure.
The report shows that a single person on the national minimum wage, which has increased significantly from 2014-2016 (by 14%) will have seen that entire increase wiped out by rising private rents, whereas families also on the minimum wage, but assumed to be in social housing, will see gains.
Every household has different circumstances, and the complexity of the benefits system and the makeup of different families means that comparisons can be difficult.
But it remains obvious that, while a larger proportion of London’s social tenants fail to meet the MIS than private renters (because of overall lower incomes), if you are on a low-income and privately renting, you are being hit hardest by London’s high cost of living.
Against a background where in half of London’s boroughs, 30% of private renters are claiming housing benefit, the freeze on local housing allowance (LHA) for the next three years, while rents continue to rise, is a disaster that will simply hurt people trying to get by.
The LHA freeze has to go, but we also have to consider how else the city deals with affordability in the PRS, where incomes are set to stagnate or fall while rents only go up.
Disappointing as it was to see no additional housing powers given to the Mayor as part of the budget’s devolution package, we also know that nothing on controlling rents is currently part of discussions around devolved powers.
The £3.15 billion package achieved by the Mayor for building 90,000 affordable homes by 2021 is impressive when judged against recent efforts in the capital, but with close to 1 million of London’s private renters now living in poverty, it is nowhere near enough to help them as costs continue to rise, nor will it stabilise or reduce rents as London’s population grows.
In this context, will politicians at local authorities, City Hall, and in parliament, be persuaded to look again at rent control? A cap is surely sustainable where less than half of landlords in London have buy-to-let mortgages, and the vast majority retain their property income alongside another job.
The evidence suggests London’s landlords are mostly individuals who have sought to maximise their rents because they can where demand is so high, but can also be made to charge less without (for the most part) blinking an eye.
The question is how we balance a landlord’s right to make money by raising rents each year against increasingly large numbers who cannot afford a minimum standard of living in London, as a direct result of those rents. Surely the answer is obvious.
