LOWER rates of home ownership are set to cost the government an extra £8bn a year in housing benefit, a think-tank said this morning.
Once today’s generation of renters retire, there will be 3.45m pensioners claiming housing benefit by 2060, the Strategic Society Centre (SSC) has calculated.
In today’s prices, these claimants will cost the state £13.45bn a year – around two and a half times the size of the current £5.32bn bill for housing benefit.
“In the debate on ‘generation rent’, what everyone forgets is that most pensioners who rent rely on state support,” said SSC director James Lloyd. “So, in future, when there will be far more pensioners than today, if more pensioners are renting, the cost of housing benefit to the state is going to explode.”
Elevated house prices have forced prospective buyers to remain in the rental market, driving up leasing costs, particularly in London.
“People who want to buy, can’t – and this pushes up rent, which raises the housing benefit bill,” added Jonathan Portes of the National Institute for Economic and Social Research (NIESR), a separate think-tank based in Westminster.
“We are in a very weak recovery with low interest rates and many unemployed people – now is the ideal time for a house building boom, like the kind which dragged us out of the 1930s recession,” Portes argued.
Matt Griffiths of the campaign group Priced Out complained that the government “seems happy to let a generation of young people become renters, as house-building numbers stagnate and private landlords buy up greater levels of the existing housing stock.”