Latest housing survey reveals 'huge changes' of last decade
As the government publishes its English Housing Survey, CIH head of policy Melanie Rees takes a look at four notable things it reveals about the way the housing market has changed over the last decade.
1. Far fewer young people are buying their own home and more are renting in the private sector
This is not exactly the biggest surprise, but the number of young people who own their home has declined significantly in the last decade.
From 2006-07 to 2016-17 the percentage of all households which were owner occupiers went down from 70% to 62.6%.
But this drop was much more pronounced for younger age brackets.
Over the same period the number of 25-34-year-olds in owner occupation fell from 57% to 37% and the number of 35-44-year-olds in owner occupation fell from 72% to just 52%.
Meanwhile the proportion of young people in the private sector has rocketed; in the 25-34 age bracket from 27% to 46% and in the 35-44 age bracket from 11% to 29%.
While we know rising house prices are putting home ownership out of reach for many people, the figures reveal just how disproportionately younger people are being hit, and how they are being forced into an increasingly expensive private rented sector as a result.
The stark numbers show the scale of the housing challenge facing future generations and paints a worrying picture of the future if we don’t get our response right quickly.
2. The private rental sector is larger than the social rented sector
This was the same as in last year’s survey, but it’s still worth mentioning.
In the same way that house prices continue to rise in many areas, we know that private rents have also continued to rise at a time when wages have stagnated. We know too, from other research, that in the worst affected areas, private renters are regularly spending around half of their income on their rent.
There’s no doubt that the private rented sector plays an important role in offering choice and meeting housing need but it is also often a more expensive, less secure and poorer quality option.
We know that for many people the only really affordable option is social housing, in particular at the lowest ‘social’ rents, so this tenure balance is a cause for real concern.
Furthermore, this growth of the private rented sector once again highlights the importance of finding a way to ensure the growing numbers of private tenants are protected.
We know that there are significant issues with standards in the private sector and we’ve consistently argued for a set of minimum standards, backed up by an accreditation scheme, with landlords meeting the criteria receiving more generous tax allowances. It has been good to see the government outline proposals to regulate letting agents and landlords and as well as arguing for a better mix of tenures, we will be continuing to make the case for the millions of private renters in England.
3. London is unique
The contrast between London and the rest of England continues to grow.
Outside of London 35.7% of households own their home outright, 29.5% have a mortgage, 18.6% are private renters and 16.2% are social renters.
In the capital the tenure mix is completely different. Outright owners make up 25.1% of all households, mortgage holders make up 22.4%, the exact same proportion are social renters and private renters are now by far the biggest tenure group making up 30% of all households.
Though some of the difference in tenure mix can be explained by demographic differences and other factors specific to London, there’s no doubt that this continued shift also highlights the fact that the capital is subject to our most severe housing challenges.
It’s a familiar story - astronomic house prices are putting home ownership out of reach for the majority of people who are left with no option but to rent in an increasingly expensive private rented sector.
But looking at the trend graph in the English Housing Survey things have changed so starkly, even in the last five to ten years, you have to wonder where that trend is going. What is the end game?
Unless we provide a significant number of new housing options that are truly affordable for people in our capital, and quickly, we are rapidly heading to breaking point. Some would say we are already there.
4. We need to invest in more social housing – including homes at social rents
The tenure trends in the English Housing Survey may not on their own tell us we need more social housing. But taken together with everything else that we know they certainly do.
We know that house prices are out of reach for so many people, particularly younger people. We know that in many areas private rents are increasing at a time when livings costs are and wages are not. We know that even affordable housing is anything but affordable in some areas.
It’s clear that social housing has a huge role to play in offering a solution and that housing associations and local authorities, with their track record of building, should be major players in the delivery of the government’s ambitious new housing target.
But there are questions to answer about how we do this? Fundamental questions about the nature of the role social housing can play in solving our housing crisis. What actually is social housing? Who should it be for? What is its role and purpose today?
We set up our Rethinking social housing project to examine exactly these questions. Because if we can answer them; if we can get to the bottom of who we are here for and how we are going to help them access a home – then we can begin to establish what sort of homes we should be building, where we should be building them and, crucially, what mix of tenure those homes should be.
One thing is already clear though – and the English Housing Survey stats back that up - the mix of homes will have to include a significant amount of the cheapest rented homes if we’re going to really make progress.
Melanie Rees is head of policy at the Chartered Institute of Housing.