According to Home Truths, the latest report from the Resolution Foundation looking into the state of the nation’s housing sector, even a very modest rented home is out of reach for low-income families in 33% of all local authority areas.

The report highlighted that private renting is fast becoming the only solution left for millions of families who are not wealthy enough to afford a deposit to buy a home or vulnerable enough to qualify for social housing.

It found that a couple with one child aged five and an annual net income of £22,000 would be priced out of 125 of the 376 local authorities in the UK, with rent eating up around 35% of their net income.

In 38 of the 376 local authorities rent would eat up more than half of their annual net income. Rent in the London Borough of Kensington and Chelsea would eat up 130% of the family’s net income.

The report said that the gap between supply and demand for housing is creating ‘affordability black spots’ across the country for ordinary families. The problem is particularly acute in the overheated housing markets of London and the South East.

There are 1.3 million low income households spending around 35% of their annual net income on housing meaning they are having to cut back on other essentials. The report said this problem is now also extending to middle income families who are struggling with the high costs of housing.

The analysis showed that the on-going costs of owning a home with a mortgage are currently lower than renting in nearly half of the country, particularly in the north of England.

However, it warned that this is a temporary situation and it is critical that people are not drawn into home ownership through Help to Buy on the basis of these historically low interest rates as they will subsequently struggle to meet their ongoing costs.

It also said that large numbers of low to middle income households are unlikely to qualify for Help to Buy given that they would struggle to raise even a 5% deposit and meet the on-going costs of a 95% mortgage in expensive areas.

Housing Minister Mark Prisk has attacked the report as ‘flawed’ and ‘suggests that rents are soaring when in fact they have fallen in real terms’.

This follows a recent government report that claimed that the Help to Buy equity loan ‘is an instant hit, with almost 7,000 reservations in the first 3 months’.

Under the scheme buyers receive a 20% equity loan, interest free for 5 years, which helps them buy a new build property from a participating housebuilder with a value of up to a £600,000.