A new report lays bare how England’s broken housing system is failing low‑income families
A severe lack of social and genuinely affordable homes is locking families into poverty and damaging their health and wellbeing, a new report by leading housing academics has warned.
Professor Christine Whitehead of the London School of Economics and Kelvin MacDonald of the University of Cambridge argue that private rents are now so high for lower-income households that homelessness is rising, with the pressures most acute in London and the South East.
The study, sponsored by Family Building Society, finds that house prices and rents are continuing to grow faster than earnings, creating an affordability squeeze across much of the country. At the same time, government policy remains heavily focused on boosting new-build delivery, shaping local authorities’ planning and development priorities – but the authors question whether this will be enough to hit the target of 1.5 million homes.
They highlight the increasingly lengthy timescales from planning application to decision, alongside stalled sites where viability is in doubt and where agreements with registered providers for affordable units are not in place. Structural issues in the housebuilding sector – including capacity, business models, skills shortages in both construction and public-sector planning, and the financial position of housing associations – are also acting as a drag on supply.
The report stresses that affordability is now one of the most pressing issues facing households, particularly those on lower incomes or with previous housing difficulties. But it also notes that affordability is complex: no two homes are identical, with differences in size, type, age, outdoor space and location all affecting value and how price rises are felt by different groups.
An earlier report by the same authors, published in July 2025 and also backed by Family Building Society, put forward three “quick wins” – scrapping stamp duty for older movers, taxing short lets and second homes, and treating private landlords like other profit-making businesses for tax purposes – but none of those recommendations have been adopted.
Meanwhile, local authorities are facing mounting costs in meeting their statutory duties to house homeless households, leaving less room to fund non-statutory services. At the sharpest end, the authors say, the challenge has moved beyond affordability alone to the basic question of ensuring people have a roof over their heads.
Market adapting – but risks in stretching lending
Against this backdrop, Thomas Boughton, founder of specialist broker Artillium Finance, says lenders are already shifting their approach in response to the cost-of-living squeeze – but warns that some of the changes carry longer-term risks.
“Banks are adapting quickly to ongoing cost-of-living pressures,” he told Mortgage Introducer. “We’ve already seen major lenders such as NatWest follow Nationwide Building Society in offering up to 6x loan-to-income for eligible borrowers. While Nationwide has historically been known for more flexible and creative criteria, NatWest adopting a similar stance is a strong indicator of where the market currently sits and how some of the older banks need to adapt.”
Boughton notes that many high street names have also brought back 95% LTV mortgages, with a handful venturing up to 98% LTV for certain customers – moves he sees as clear attempts to support borrowers whose income is increasingly swallowed up by everyday living costs.
However, he cautions that relying on ever-higher income multiples and loan-to-value ratios is not a sustainable solution.
“Continually stretching LTI multiples and LTV doesn’t feel like a long-term fix to me,” he said. “Endlessly increasing loan to income is dangerous and could spiral.”
Instead, Boughton believes lenders should focus on areas where underwriting remains “overly conservative” despite strong borrower profiles – particularly the self-employed and foreign nationals.
“I think an area that could do with a shake-up is self employed,” he continued. “A more constructive approach would be a more pragmatic view of those who are often strong earners with larger deposits, yet restricted by conservative income assessments from most lenders. If underwriting better reflected retained profits and true affordability, it could unlock movement across the lower and middle tiers of the market and allow them to move upwards, creating more supply and better access for those struggling currently.”
He argues that criteria for foreign nationals could also evolve. Many have substantial deposits and strong incomes, but face tighter lending caps than their earnings warrant.
“If lenders explored more creative risk mitigation, potentially in collaboration with employers, it could broaden access responsibly,” he added. “Strengthening these areas would help stimulate activity from the bottom up, easing rental pressure and encouraging healthier market turnover.”
For mortgage intermediaries, the twin messages from the report and the market are clear: structural supply failures are driving affordability problems, while lenders’ attempts to respond via higher LTIs and LTVs need to be balanced with more nuanced, evidence-based underwriting for underserved but creditworthy borrowers.
