The rise and rise of private renting
New figures show that the number of English households in private rented accommodation has risen by almost 50% in five years. There are now almost as many households in private rented as social rented accommodation, a huge change compared to even a decade ago.
The English Housing Survey Bulletin (here ) contains a range of up to date statistics on housing tenure, quality and costs. One of the most interesting statistics in the publication is the long term trend in tenures. The graph below shows the number of households, for England only, in the three main tenure groups – owner occupiers, social renters and private renters. The data allows us to go back to the early 1980s, giving us a long historical view.
Graph 1 - Changing tenures in England since 1981
In 1980, there were 5.4m households in social rented accommodation, compared to 2m in the private rental sector. The last 30 years has seen a convergence of the two numbers. The decline in the numbers of social renters has been pretty steady since 1980. While they were rising anyway, there has been a notable upturn in the private rental figures from around 2000 onwards, including a 40% rise in the last five years. There are now 3.8m social renters and 3.6m private renters. The gap between the two has never been lower and the trends suggest private rental will overtake social rental in the next year or so.
The majority of households in England have been owner occupied for as long as there has been data available. In 1980, there were 9.7m owner occupiers. Today there are 14.4m. Put that with the decline in social renters and you have a clear story - council tenants bought their own properties under Right to Buy, and housing stock that was social rented became owner occupied.
Clearly this is true, but only up to a point. Look at what happens in the early 2000s, at the peak of the housing boom. The number of households who own and live in their own properties stops rising and is now lower than a decade ago. But the number of households in private rental goes up as the number of social rentals goes down.
The growth in private rental then comes from two directions. Firstly the house price boom priced many young potential buyers out of the market. The credit crunch that followed, with lenders unwilling to offer the kind of mortgages that were common during the boom meant the “flow” of new owner occupiers dried up. These potential owner occupiers are now in private rented accommodation.
At the same time, the slowdown in construction in the social sector meant that families looking for council housing either faced a long time on the waiting list or moved into private rented accommodation.
We looked at the effects this has on the distribution of people in poverty in the last Monitoring Poverty and Social Exclusion Report (page 117 – 122 here). Over the last decade the number of households in poverty living in the private rented sector grew by 600,000 and fell by 900,000 in the social rented sector.
There are implications for policymakers, the most topical of which is also covered in the EHS bulletin. The number of private renters receiving housing benefit has risen by 300,000 since 2008/09, a 50% rise. There has been a smaller rise among social renters (130,000, a 5% increase). Private sector rents are, on average, much higher than social rents, so these payments were covering increasingly high amounts.
One of the justifications for the cap on benefits, particularly the cap on Local Housing Allowance, was the rising housing benefit bill (see DWP’s impact assessment). But one of the reasons the total cost was rising was the long term shift of households from more affordable social rented accommodation to more expensive private rented accommodation.