Rising Housing Costs Equal To 10p Increase In Basic Rate Of Tax

The rising share of income spent on housing over the last two decades is equivalent to a 10p increase in the basic rate of tax for a typical family, according to new Resolution Foundation analysis. The analysis finds that the share of income spent on housing costs was stable for most of the 1990s and early 2000s at around 17 per cent. However, a wedge opened up in the mid-2000s as rising housing costs outstripped income growth. By the eve of the financial crash, the average working age household spent around a fifth of their income on housing. This housing affordability wedge then shrank in the wake of the crash as interest rates were cut to record lows and house prices fell. For many households this fall helped soften the post-crash living standards squeeze by reducing mortgage costs. However with rising housing costs once again outstripping income growth, the Foundation warns that housing risks being a major brake on the UK’s living standards recovery. Read more on the Resolution Foundation website.