Huge rise in numbers of working people receiving housing benefit

Rising rentals and house prices could see millions more relying on Government support as rents hit new high

Private rents are increasing at a faster rate than house prices with a knock-on cost to the taxpayer as a result, according to the National Housing Federation's new Home Truths report.

Its forecast of England’s housing market is bleak, with both private rental and house prices forecast to rise sharply from 2015.

The report shows that 417,830 more working people, an 86 per cent increase since 2009, are now reliant on housing benefit to help them pay the rising rents on their home.

‘We now have millions of families struggling to keep on top of their rents, priced out of the housing market and nearly 10,000 more working families every month are now reliant on housing benefit to help pay their private rent," said David Orr, chief executive of the National Housing Federation.

"These people are the ‘strivers’ the Government wants to help, yet their future is looking bleak. This cannot continue. We need action now to address the causes of rising housing costs, not just the symptoms. Only by addressing the chronic undersupply of new homes can we stem the financial pressure on families and Government."

The federation's report also shows that:

* The cost of privately renting a home has risen by 37 per cent in the past five years and is set to increase by a further 35 per cent over the next six years

* Private rents are likely to be fairly stable through 2013 but could see steep increases from 2015 to 2018 of around 6 per cent a year as interest rates rise and house prices increase.

* The weakness of the economy will see modest falls in house prices into 2013, but demand conditions will support renewed house price growth of 5-6 per cent a year across England from 2015 to 20175.

* In 2011 390,000 new families were formed, but only 111,250 new homes were built

* House building starts will recover only gradually, from 100,000 homes this year to 140,000 in 2014, but increases will flatten out from around 2016/20177.

The National Housing Federation is calling on the Government to release publicly owned brownfield land to housing associations so they can build more houses.

A separate report from LSL Property Services shows that rents hit a new high of £741 per month in September.

In England and Wales the average rent rose by 1.1% in September, beating the previous record high of £734 in August. London and the South East saw the strongest increases, with rents rising by 1.7 per cent and 1.9 per cent respectively. With rents reaching a record £1,092 a month, London’s rents rose at their fastest monthly rate since November 2010. Three regions saw rents fall in September, the East of England, Yorkshire & the Humber, and the West Midlands.