Housing commentary - analysis of the trends

In this chapter we consider the links between housing and poverty. To put this into context it is useful to understand how overall tenure patterns have changed in recent years.

Introduction

One of the biggest changes in housing in the last decade has been the rise in the number of people living in the private rented sector from 6.3 million in 2003/04 to 12 million in 2013/14. Meanwhile the number of people in owner-occupied homes has fallen by 1.4 million to 40.4 million and the number in social rented homes has remained at 10.5 million. Despite these changes owner-occupation remains by far the dominant tenure containing 64 per cent of the population.

But this tenure distribution and how it has changed varies considerably by age (see table). The age group with the highest proportion in owner-occupied housing is 65–74-year-olds with more than 80 per cent in this tenure. In fact among those aged 45 and over at least three-quarters live in owner-occupied housing. People aged 16 to 34 have the lowest levels of owner-occupation, with less than half living in that tenure, and the highest levels living in the private rented sector at over a third. Across all ages from 25 around 15 per cent of people live in social rented housing with the proportion slightly higher among children.

Tenure shares and shifts by age
  Owner-occupied Private rent Social rent Main shift in last decade (tenure and percentage points)
Children 57% 22% 22% Owned > private rent (11pts)
16-24 47% 34% 19% Owned > private rent (9pts)
25-34 45% 39% 15% Owned > private rent (19pts)
35-44 65% 20% 15% Owned > private rent (10pts)
45-54 75% 11% 14% Owned > private rent (5pts)
55-64 79% 8% 14% Owned > private rent (4pts)
64-75 81% 5% 14% Social rent > owned (3pts)
75+ 77% 5% 18% Social rent > owned (9pts)

Source: Households Below Average Income, DWP; the data is for the UK in 2013/14; the change is between 2003/04 and 2013/14

In the last ten years the main tenure shift has been from owner-occupation to private rented. This increase has been greatest among 25–34-year-olds with a shift from one to the other of 19 percentage points, almost double the shift seen in any other age group. But sizeable shifts occurred among children, 16–24 and 35–44-year-olds; the shift towards private renting from owner-occupation is not isolated to one cohort or generation, it can be seen in all age groups under 45.Source: Households Below Average Income, DWP; the data is for the UK in 2013/14; the change is between 2003/04 and 2013/14

Among those aged 45–54 and 55–64 shifts from owner-occupation to private renting have been much smaller. Among those over state pension age levels of private renting have remained low and the main shift has been a decrease in the proportion in social rented housing for an increase in owner-occupation.

Choice of indicators

The first indicator in this chapter looks at how these shifts are reflected by looking at poverty by tenure and work-status. The next indicator looks at Housing Benefit claimants to see how many people, and who, is in need of help from the state to pay their rent. It then looks specifically at the in work claimants who make up a growing share of the Housing Benefit claimants.

The next indicator looks at housing quality, how standards have changed over time and how this progress has varied by tenure and income. The following four indicators look at trends in repossessions, evictions and homelessness – all examples of acute housing distress.

Lastly we return to the shift in tenure by age, looking at what this means for families with children and their housing costs, and how it varies across Britain.

Commentary

The term ‘generation rent’ typically refers to the growing number of younger adults living in private rented housing as they are unable to get on the property ladder. This issue has gained much media attention over recent years and policy recognition has come through the help-to-buy schemes. But what has received much less attention is the growing number of children living in the private rented sector which reached 2.9 million in 2013/14.

This poses a serious poverty challenge. Firstly, because 1.3 million of these children are already in poverty, but also because housing costs are much higher among families with children – they need more bedrooms and often are less able to work full-time due to childcare. Nonetheless they have to compete for the same rented properties as fully working, adult-only households. While this might be manageable there is little chance of building up savings and qualifying for a mortgage. So housing costs are likely to remain high for the long term and the prospect of improvement for those children already in poverty is limited.

There are other problems with the private rented sector too. Tenancies are often short term so it is difficult for parents to anticipate where they will be living and how much it will cost more than 12 months ahead, and disruptive school moves are likely in the private rented sector. Their homes are also more likely to pose a health and safety risk than in other tenures. Increasingly, private renting is a gateway tenure to homelessness either through actual evictions or tenancies not being renewed.

In recent years the economy has improved and unemployment has fallen which is undoubtedly good news for poverty. But what remains are serious structural issues that cannot be solved through more economic growth. This is evidenced by the growing number of long-term in-work Housing Benefit claimants.

Though great, these problems are not insurmountable – the substantial improvements in housing standards in recent years are testament to what has been and can be achieved when a problem is recognised and something is done to address it.

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