Government releases English Housing Survey statistics
The Government has released its annual statistics as part of the English housing survey, and, for the sixth year in a row, owner occupation rates have stayed the same – which is still around 7-8% lower than at its peak in 2003.
The proportion of households in the private rented sector (PRS) has also not changed in the last six years, with the social rented sector (SRS) not seeing changes for more than a decade.
Similar to last year, the Government was promoting the increase of ownership within the younger demographic, this time the 25-34 age group. However, there were 60,000 less first-time buyers in 2018-2019 than in the previous year.
The increase in the amount of young home owners is welcome but any attempts to look at the housing market must be across tenure. With unchanged rates within sectors, it means that attempts to ease the housing crisis is just moving people around tenures. With the Private Rented Sector (PRS) continuing to be the second highest tenure but lagging in quality and standard, the need for standards and regulation and not just tinkering must be a primary focus for the Government.
Tenure and demographics
As a tenure owner occupation is still the largest, representing 64% of English households and remains unchanged since 2013-2014. The 1980s saw similar levels of owner occupation after which they steadily increased until the peak of 71% ownership in 2003. The largest increase in tenure has been in the PRS, which has doubled in size since 2002 and now accounts for 19% of English households in 2018-19. Social housing accounts for 17% of English households.
The proportion of 25-34-year-olds in owner occupation and the PRS combined now equate to 41%. This represents an increase in ownership and a decline within the PRS since 2013-14, with a raise in ownership of 5% and a decrease in the PRS of 7%. However, ownership within this age group is still lower than 10 years ago, with the number in the PRS still higher.
While the next age group 35-44 remains statistically unchanged from last year, there are 12% less owner occupiers within this age group from a decade ago and 13% more within the PRS over the same time period. Both age demographics having lower ownership than a decade ago reflects the current issue of young people having less ability to get onto the housing ladder. The average age of a first-time buyer is currently 37 within London, and 33 outside of London.
There has also been a change within the 55-64 age group, with an increase of 3% of this age group within the PRS and a decrease of 6% in the owner-occupier tenure over the last decade. This change in the age group may be a reflection of socio-economic changes such as marriage break down rather than housing policy. But it emphasises that housing cannot be treated as a one problem subject and must be tackled holistically, incorporating not just all tenures but what is happening within society as a whole.
Mirroring the unchanged owner-occupier rates, is the split between outright owners and those who own with a mortgage (mortgagors), with outright owners being the largest group within this tenure since 2013-14. In the year 2018-19, 34% of English households were outright owners, with mortgagors representing 29% of households.
While the fact that outright owners were the largest group has not changed the difference between mortgagors and outright owners has, with the gap between them increasing. In London the number of mortgagors has decreased by 4% in the last 10 years to 27%, with a 7% decrease over the last decade of mortgagors outside of London to 30%. This reflects that the owner-occupier tenure is increasingly dominated by those who bought many years ago and not newer entries to the tenure.
Of those who own their home outright, 63% are over 65, which isn’t surprising. However, it is worth noting that the same age group is also the most prevalent group within the social rented sector, highlighting the need for aged care and that housing for the elderly must continue to be a priority housing and social policy focus. Of those with a mortgage. 60% are aged between 35-54 and 67% of households in the PRS are aged under 45.
Affordability seems to be the issue to why owner-occupation has remained unchanged since 2013-14 and numbers are still below a decade ago. Within the economic profile of tenures 68% of mortgagors were in the top two highest income quintiles, with 40% within the top quintile. This is further evidenced by the average (mean) deposit for buying a home being £42,361. Of first-time buyers, 72% were couples, with 44% couples without children, only 23% of first-time buyers in 2018-19 were one person households.
Between 2013-14 and 2018-19, there was a decrease of 5% of private renters who expected to buy. On average those within the PRS spend 33% of their household income on rent compared to 16% for mortgagors. Affordability will therefore continue to be an issue that may impact on those within the PRS wanting to buy.
PRS and Standards
While the number of households within the PRS staying consistent, more must be done to address the conditions and standards within this tenure.
Overcrowding has increased over the last 20 years within both the PRS and the social rented sector and remains the highest it has been. In 2018-19, 6% of those within the PRS are living within overcrowded accommodation. Given that PRS is a private enterprise and tenants are not forced to stay until a more suitable property becomes available unlike social tenants, it must be questioned what factors are keeping those within the PRS in overcrowded accommodation.
Government has continuously ensured and improved standards within the social rented sector. This is evident by the fact that social rented accommodation has the lowest proportion (12%) of non-decent homes. This is around half of non-decent homes within the PRS, which have 25% of properties not meeting the decent home standard.
The PRS is also the tenure with the most homes with a Category 1 hazard (though over all tenures the number has almost halved in the last decade). The tenure has the oldest stock and the highest proportion of converted flats, with almost 4 times as many as the social rented sector and almost 6 times as many as owner occupiers.
To be considered a decent home they must:
- meet the statutory minimum standard for housing (the Housing Health and Safety System (HHSRS) since April 2006), homes which contain a Category 1 hazard under the HHSRS are considered non-decent.
- provide a reasonable degree of thermal comfort.
- be in a reasonable state of repair.
- have reasonably modern facilities and services.
Tenants within the PRS deserve to have better standards, especially given the increasing affordability issues creeping into the tenure with the average rent at £341 a week in London, £30 higher than the previous year.
In a progression on standards, more deposits are registered with a Government-backed tenancy deposit than last year and there is a smaller percent of tenants not knowing if their deposit is protected. Though progressions are always welcome, improvements are still needed.
Government has attempted to tinker with the PRS to try bringing in improvements. Before the December election they consulted on the removal of Section 21, reinforcing this direction in their manifesto for the general election. We would reiterate our long-held belief that the best solution for the issues attempting to be fixed by tinkering with the eviction process, is for standards and regulation to be introduced across the industry. To encourage an efficient and balanced private rented sector, better standards and regulation need to be embedded into the industry, giving the security and conditions needed by tenants and to provide the clarity of good performance for landlords and agents.
As a regulatory and standards body RICS supports any attempts to improve the industry for consumers. However, we don’t believe the Government’s proposals around tenancy lengths and evictions will help bring about the changes within the PRS that the Government hopes for.
Kindly shared by Royal Institution of Chartered Surveyors (RICS)