The report argues that the current way housing affordability is measured is mistaken, as it defines affordable housing as 80 per cent of market rents, regardless of a household’s income.
Instead, the commission wants a new measurement which is based on an affordability threshold at the point when rents or purchase cost account for more than a third of household income for those in work.
It also wants to include issues such as housing quality, overcrowding, adequacy of housing benefit, the size of a household, and regional variations.
Under its new definition, it believes that 4.8m households have affordability problems, with struggling renters accounting for 2.9m of that figure.
A second category of strugglers are low income older households under the commission’s definitions. It suggests that around 600,000 of these are owner occupiers in “non-decent housing”.
There are then a further 900,000 homeowners who are having difficulty with their mortgage repayments, which it warns could “increase sharply” if interest rates rise.
The report states: “These home buyers are in quite a precarious position: they face the possibility of higher interest rates and of employment and personal hazards that would lead to loss of the home. And many in this group also have the burden of being unable to upsize – to become second-steppers – if, for example, they want to start a family.”
Affordability is most stretched in London, where almost nine in ten lower income homeowners are paying a higher proportion of their income towards their housing costs.
The commission notes that the majority of those facing affordability problems are in work, usually on a full-time basis, though points out that a “significant proportion” of the total is made up by those who are self-employed.
Frustrated first-time buyers
Included within the overall figure are also “frustrated first-time buyers” – those who are able to buy but cannot at present, generally because of the time needed in order to save a sufficient deposit.
According to the commission, there are currently 1.6m people in this position, a jump of 600,000 since 2010. The report suggests that three quarters of renters have “very little chance” of buying a home at present.