Local authorities are also failing to build enough homes generally to meet their overall housing need.
A report by the think tank notes government projections that 67 per cent of local authorities did not meet housing demand in 2015/16.
According to the research, the range of housing products available has increased but rental models, ownership schemes and intermediate housing schemes have become increasingly “divorced” from earnings.
This has left affordable housing out of reach for most, “posing significant problems” for those on low incomes.
Priced Out: Affordable Housing in England considers the affordable housing markets in the Greater Manchester, West Midlands, Tees Valley and West of England combined authority areas.
Tees Valley is the only area that is meeting housebuilding needs.
The West of England needs to build an additional 1,060 homes a year and the West Midlands needs to build 2,812 further units. Greater Manchester is the worst-performing area, missing its target by 42 per cent and requiring an additional 4,518 homes a year.
House prices are out of reach for many on average incomes, says IPPR. Median monthly rents do not become affordable (using the 35 per cent of net monthly income measure) until after tax earnings of £33,167 in the West of England, £19,131 in the West Midlands and £18,959 in Greater Manchester.
Single people are the worst affected, with the most housing products unavailable to them.
IPPR has made a number of recommendations for the government in advance of the Budget on 22 November, including:
- Removing the arbitrary cap placed on borrowing through the Housing Revenue Account (HRA) to allow local authorities to borrow to invest in the building of a new generation of council homes.
- Adopting a threshold of 35 per cent for affordable housing to be applied to all private developments nationally, with a higher threshold of 50 per cent on all public land.
- On a local level, city-region mayors should establish combined authority-wide mayoral housing companies, using them to bring land to market for social and affordable rent. They should also use mechanisms to capture public value from the land and that local authorities and local authority pension funds should work together to combine their land and investment to build affordable housing.
- Devolve great powers to mayors to deliver the housing their regions need, including greater flexibility in the pooling and coordination of housing funding streams.
- Reallocate funding for the Starter Homes programme to a programme for investing in genuinely affordable homes for rent and devolve the appropriate proportion to the combined authorities.
Darren Baxter, researcher at IPPR, said: “This analysis shows that not only are local authorities failing to build enough affordable homes, those which are being built are often out of reach of those who they are intended to support.
“The newly elected mayors should use their powers to take on the housing crisis and get their local councils building, including working to bring land to market for social and affordable rent.
“If it is serious about tackling the housing crisis, the government will work with mayors to ensure they are equipped with the powers they need to drive local house building programmes their regions need.”
Luke Murphy, senior research fellow at IPPR, added: “The chancellor should use the Autumn Budget to provide city-region mayors and local authorities with the powers and resources they require to build the affordable homes their communities need.”
Priced Out: Affordable Housing in England can be found on the IPPR website.
Written by Laura Edger, Planning