English Housing Survey data reveals that “Generation Rent” keeps growing

David Kingman reports on new data from the recently-released 2014 edition of the English Housing Survey, which reveals that the growth of “Generation Rent” shows no signs of slowing downLandlord

Private renting has officially become the second most common form of housing tenure in England, after owner-occupation, according to new figures from the 2014 edition of the English Housing Survey.

Seismic shift in renting

This finding demonstrates the seismic shift that has occurred in patterns of housing tenure during the last four decades. As recently as 1980, fewer than 12% of English households rented privately, while the social rented sector was responsible for housing almost a third of all households (31%).

However, a number of factors have been responsible for the changes that have occurred since then. In particular, the sell-off of over 1 million council houses under successive governments, the liberalisation of the private rented sector and the innovation of buy-to-let mortgages, as well as rising house prices and the current problems that many first-time buyers are experiencing with borrowing, have all contributed to the long-term decline of social renting and the growth of the private rented sector.

According to the latest data, 18% of English households now rent privately, a figure which is narrowly ahead of the proportion of social renters (16.8%) for the first time.

The report also highlighted a number of costs which have unfortunately accompanied the expansion of private renting. In particular, it has been a near-disaster for the public finances, as a quarter of all private renters now receive Housing Benefit. The amount the government spends on Housing Benefit has more than doubled in 12 years, rising from £9.7 billion in 2001 to £21.1 billion in 2013.

The 2014 English Housing Survey also raises a number of concerns about the quality of the housing stock within the private rented sector. The report found that exactly a third of housing in the private rented sector was rated “poor quality”, compared with 15.2% in the social rented sector and 20.3% among owner-occupiers.

Given that sub-quality housing has been linked to poor health – especially respiratory problems such as asthma, which are often exacerbated by dampness and draughts – there is a strong argument that the government should intervene on behalf of tenants to try improve standards.

Young people falling off the housing ladder

The 2014 English Housing Survey also confirmed that levels of owner-occupation remain in steep decline. The proportion of English households who own their own home is thought to have peaked at around 70% back in 2003, and has now dropped to about 65%.

This is mainly due to the affordability crisis which is facing young would-be first-time buyers. As a result, the demographic profile of England’s owner-occupiers is ageing: the report showed that over a third of owner-occupiers are now aged 65 and over, while half of all renters are under the age of 34. Contrary to the view presented in some quarters that more young people have turned to renting out of choice, the report also found that 61% of all private renters dream of owning their own home day.

Commenting on the report, shadow housing minister Emma Reynolds expressed her concern to the Daily Telegraph that so many young people are now renting because of the problems they are experiencing with housing affordability:

“This report shows that private renting is becoming the norm for many young people as home ownership drifts further out of reach…the number of homes built has fallen to their lowest levels in peacetime since the 1920s. We need to build many more homes to keep up with demand. Owning a home is out of reach of many low and middle-income earners, and rents are rising faster than wages.”

The 2014 English Housing Survey provides another stern reminder that Britain needs to build more housing if we want young people to be able to accomplish their dreams of home-ownership. However, this is unlikely to completely solve Britain’s housing crisis by itself; as IF argued in its submission to the recent Lyons Review of Housing Policy, there is a serious danger that increasing the supply of housing on its own will simply create more opportunities for property investors, who often out-compete would-be first-time buyers because of their greater financial resources.

In its research papers on housing, IF has called for a number of policy measures, including:

  • encouraging downsizing;
  • addressing under-occupation in owner-occupied homes;
  • equalizing the tax treatment of buy-to-let and owner-occupied property;
  • reforming the planning system so that young people have more of a chance to influence local democratic institutions such as town and parish councils (whose membership tends to be monopolised by local elites who are often much older than the general population)

All such measures will be necessary alongside simply building more housing if we want Britain’s current housing crisis to come to an end.