Photographer: Jason Alden/Bloomberg

The Cost of Renting a Home in London Eats Up 40% of Salaries

  • Poorest left worse off by cuts to housing benefit, IFS says
  • Housing a hot issue as parties offer rival solutions to crisis

Britain’s housing crisis was laid bare in a report that showed how soaring rents, particularly in London, can swallow salaries.

The average private renter in the U.K. capital spent 40 percent of their income on housing between 2013 and 2015, compared with 28 percent in the rest of Britain, according to the Institute for Fiscal Studies.

The poorest tenants, its findings on Friday show, are paying a third more of their income than they were in the 1990s as a result of cuts to housing-welfare payments. Here are four charts showing the scale of the problem in the city of almost 9 million people.

Austerity, more than Brexit, is at the forefront of voters’ minds and helps explain how Prime Minister Theresa May and opposition Labour Party leader Jeremy Corbyn are competing for who offers better policies on how to make housing more affordable.

Corbyn, who has drawn strong support from young people forced to rent because they cannot afford to buy a home, has pledged to introduce rent controls and promised “a radical program of action” for tenants. According to the IFS, the proportion of 25-34-year-olds renting privately has tripled to 37 percent from 12 percent since the mid-1990s.

May said she would make it easier for local authorities to build more rental homes, known as council houses. The announcement marked a major shift for the party of Margaret Thatcher, whose signature policy was to force local councils to sell off properties and massively expand the number of people who own their own homes.

The great unknown is how an exodus of foreigners post-Brexit will affect demand -- and prices.

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