Alarm at soaring rents in capital

One working person every five minutes is being forced into claiming Housing Benefit because of soaring rents in London and other areas experiencing economic growth, a report has warned.

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The NHF called on the Government to do more to build affordable homes in the capital

One working person every five minutes is being forced into claiming Housing Benefit because of soaring rents in London and other areas experiencing economic growth, a report has warned.

The number of employed people claiming Housing Benefit in England has risen by 104% since 2009, with a further 310 added every day, at a total cost to the taxpayer of more than £12 billion over the period - or £1.7 million a day - said the National Housing Federation.

In a report entitled Home Truths, the NHF called on the Government to do more to build affordable homes in the capital and other growth areas where the housing market is "overheating", warning that the failure to provide homes in sought-after areas has pushed rents beyond what ordinary working families can afford.

The report warned that by 2020, house prices in London will have risen to the point that an entire generation will be locked out of home ownership and forced to rent for life.

But it said that rented property too is becoming unaffordable, with prices expected to rise by 39% by the end of the decade. While rents currently take up half of people's disposable income, this is expected to reach 57% within the next 10 years, said the NHF.

David Orr, chief executive of the National Housing Federation, said: "We hear a lot about 'making work pay', but a decent job won't even cover the cost of a home in England. Billions of pounds of taxpayers' money is wasted, lining the pockets of private landlords, when it could be better spent building more homes people can afford. Relying on the private rented sector so heavily is a costly sticking plaster rather than a solution.

"In towns and cities pulling away from the recession the dysfunctional housing market is burning the fingers of many people. Hard-working families are spending more and more of their income on a home and many could be forced to move - away from jobs, schools and relatives. We need to address the problems of the housing market now, before another generation is left locked out and reliant on taxpayers to keep the roof over their head.'

The report found that England needs 240,000 homes a year just to meet demand. But it said that house-building numbers have fallen, with just 107,000 new homes built in 2012/13 - 11% fewer than in 2009.

Government spending on housing benefit has risen to £24 billion, but most of this money is going to private landlords rather than building the new homes which would stem rising housing costs, said the NHF.

Housing minister Kris Hopkins said: "The housing market we inherited in 2010 had house-building at its lowest peacetime levels since the 1920s.

"Three years later rents are falling in real terms, we've built 360,000 homes and housebuilding is growing at its fastest rate for 10 years. None of this would have been possible without our action to cut the deficit left by the last administration, and keep interest rates low.

"But there's still more to do. That means getting builders back on site, adding to the 170,000 affordable homes we've already delivered in the past three years, and fixing the welfare system so we end the something-for-nothing culture that got us into this mess in the first place."

Labour housing spokeswoman Emma Reynolds said: "The growing housing shortage is central to the cost-of-living crisis, but this Government has refused to take the action needed and is presiding over the lowest levels of house-building in peacetime since the 1920s.

"The failure of the Government to build the homes the country needs and to tackle the cost-of-living crisis will mean home ownership remains out of reach of low and middle-income earners, rents will continue to rise faster than wages and waiting lists will grow ever longer."