In real terms, housing costs have risen significantly for social and private renters since 1994/95, while remaining at similar (and low) levels for those who own outright, and falling for those buying with a mortgage despite substantial increases in house prices.
Across the UK, rent-setting policies in the social rented sector have seen long-term above-inflation increases in rents. Although the 1% a year rent reduction from 2016/17 to 2019/20 for social housing in England curbed this increase.
Although private rents on average did not rise in real terms between 2008/09 and 2019/20, the high cost of housing for private renters remains a key driver of poverty. This is partly because the number of households in this tenure has grown.
Low-income private renting households paid the highest housing costs and highest proportion of income towards housing costs of all low-income households. Their housing costs averaged £130 a week or 38% of incomes. Compare this with £98 a week or 32% of incomes for social renters. These rates are before housing support is considered which helps with the affordability of housing for those who get support.
Households buying with a mortgage have benefited from falling mortgage interest costs since the financial crash. The median housing costs for a low-income household buying with a mortgage in 2019/20 was £49, down from a peak of £88 in 2006/07 (in 2019/20 prices). Lower mortgage interest costs mean we have seen a fall in the proportion of households buying with a mortgage who are pulled into poverty by their housing costs. This measure of housing costs excludes mortgage capital repayments.
Low-income households buying with a mortgage had on average lower weekly housing-related outgoings (including mortgage capital payments) compared with low-income private renters - on average £122 and £130 respectively.
Those buying with a mortgage benefit from the accrual of wealth that comes with homeownership, with on average £73 of outgoings invested as capital into their mortgage and the remaining £49 as costs. By contrast, all the £130 in outgoings paid by low-income private renters is cost, from which they do not see any additional return benefit.
The data presented here is from our 2022 UK Poverty report, setting out the trends and impacts of poverty across the UK. Read the full report at UK Poverty 2022.