NEARLY 1.6 million households in the UK are "housing pinched" - meaning that they see more than half of their disposable income swallowed up by rent or mortgage payments, according to thinktank the Resolution Foundation.

Households in which people are retired or not in work account for around one third of the housing pinched, leaving around one million households where people are in work but are still spending over half their cash on housing costs.

Laura Gardiner, an analyst at the Resolution Foundation who carried out the research, said: "The majority of the housing pinched are in work but on low and middle incomes, leaving little left over after housing costs to spend on other essentials, let alone occasional high cost items.

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"With house prices and rents rising in some parts of the country, interest rates expected to start to go up and income growth remaining weak, we should be concerned about the ability of this group to absorb additional pressure on their household budgets from higher mortgage payments or rents.

"It is vital that more money is invested in the supply of new housing in order to drive down costs, otherwise we can expect to see a steady rise in the number of households that are 'housing pinched' over the coming years."

The Foundation said it made its findings from analysis of the Government-sponsored Family Resources Survey.