Thriving Investments report shows increasingly unaffordable UK towns

Thriving Investments report found affordability constraints appear to be forcing key workers to live further from their workplaces.

Cath Webster, CEO of Thriving Investments | PriceHubble | BTR News
Cath Webster, CEO of Thriving Investments.

Fund and asset management firm Thriving Investments has commissioned a new report which found that whilst London continues to suffer from a severe renter affordability crisis, hotspots of acute housing need can be found across the UK.

In addition to London, which accounts for ten of the top 15 most unaffordable locations in the UK, key workers in the commuter belt and metropolitan locations of Manchester, Birmingham, South Wales, Bristol and Bath are most exposed to the challenges of high rents and a shortage of homes, with nearly half of renters spending over 30% of their income on rent in the UK’s most unaffordable locations.

This is according to the first-of-its kind research from Thriving Investments and PriceHubble, which assessed 283 Local Authorities (LAs) across multiple indicators of housing stress. The research worked to identify where the undersupply and unaffordability of homes for key workers is most acute and consequently, to reveal the locations in which investors in housing can create the biggest social impact through the delivery of new high-quality affordable housing.

“The affordability crisis in the UK has reached an all-time high, and this research, which looks beyond purely conventional indicators, shows the scale and severity of the problem while highlighting the specific areas of acute housing distress not only in London but also across the wider UK.

“Through identifying the locations most impacted by rental pressures, we can continue to inform our strategies – open market, key worker and affordable – targeting locations where private capital can make the biggest social impact through the delivery of high-quality, affordable homes across multiple tenures.

“In some of these areas, rental pressure is caused by a failure to align net addition to stock with population growth and rental growth, so strategically targeting the regions most in need of new housing delivery can help to alleviate pressures on the ‘squeezed middle’ who can’t afford ever- increasing open market rents but who may never get to the top of the housing list in their local authority due to supply-demand imbalances.

“In particular, the research provides further evidence of the urgent need for regional strategies in England & Wales that will deliver key worker housing at pace and scale, like our Scottish key worker fund, which we are currently engaged with investors around.

“We will continue to prioritise real estate investment that delivers long-term, stable returns while also generating positive, place-based impact, as we target the delivery of 20,000 homes over the next decade.”

Cath Webster, CEO, Thriving Investments
Affordability rankings: the map highlights the overall rankings from 1 (dark blue) to 283 (yellow) for each of the local authority areas assessed, where rank 1 is the most unaffordable location/ facing the highest demand pressure. These overall rankings are equally weighted across eight different components of the affordability research, and highlight that hotspots of acute housing need are scattered throughout the UK | Thriving Investments | PriceHubble | BTR News
Affordability rankings: the map highlights the overall rankings from one (dark blue) to 283 (yellow) for each of the local authority areas assessed, where rank one is the most unaffordable location/facing the highest demand pressure. These overall rankings are equally weighted across eight different components of the affordability research, and highlight that hotspots of acute housing need are scattered throughout the UK.

Due to numerous affordability constraints, key workers are being pushed into living further away from their workplaces, with York, Reading and Hastings ranking particularly poorly on this metric. On average across the UK, only 22% of key workers currently live within two miles of their workplace, versus 25% in 2018, the report found.

Additionally, renters are remaining in the PRS sector for longer than they have done previously and are renting through several different life stages. An average of 30% of renters in the UK are families, a trend that is particularly apparent in the geographic arc from Reading to the East Coast via Northampton.

Across the most unaffordable top quartile of locations, 44% of key worker renters are paying over 30% of their take home income on rent, with the average figure sitting at 33% across all UK local authorities. In the most unaffordable areas of London, this figure rises as high as 80% in Westminster, 74% in Camden and 70% in Hammersmith and Fulham, whilst outside of London, the top locations are Arun and Elmbridge – both 52% and Slough – 50%.

When focusing on average earnings versus average rents, affordable rents were up to 26% below the median rents in the worst areas of the UK, with it being hardest to afford a rental property and enter the PRS market as a low-income earner in London and the Southeast.

“Thriving Investments was keen to identify places with the most acute housing pressures. Relying on affordability metrics alone inevitably focusses attention on London at the expense of other places which we know are suffering too. The need for affordable housing in London is undoubtedly acute but it is also well-known and widely discussed. This research layers up multiple stress indicators to identify housing need in places that are too often overlooked.”

Sandra Jones, Managing Director, PriceHubble

Earlier this year, Thriving Investments secured a £100m equity for its PRS strategy, Picture Living. It will accelerate the company’s targeted delivery of 20,000 predominantly single-family homes in the next ten years. The company also announced the appointment of former Greystar executive Adam Tutka as its Director of Capital Markets.