Five things you need to know about the state of English housing

Housing has been centre-stage in recent years, whether during the ‘stay at home’ orders of the pandemic, high energy prices that put pressure on the ability of many to heat their homes, or high rental asking prices and rising interest rates now feeding through into mortgage costs. Yesterday, new data releases from the Department for Levelling Up, Housing & Communities’ 2021-22 English Housing Survey (following on from the headline report published back in December) turned the spotlight on some of the key housing trends that have fed into these difficult 2020s – including five highlighted below:

1) An expensive private rental sector

For the year to March 2022, the English Housing Survey finds that, on average, private renters spent a third of their income on rent. This was higher among those receiving housing support, who spent an average of 39 per cent of their income on rent (gross of housing support), or private renters in the capital (40 per cent of their income). Overall, this means that private renters have much less affordable housing than either social renters (who spent an average of 27 per cent of their incomes on housing costs) or mortgagors (22 per cent) – although many mortgagors will see significant increases in their costs over the next year.  Our previous analysis has found that on top of high costs, private renters are receiving much less for their money, with average floor space per private renter declining by almost a fifth over 20 years.

2) …with some serious quality issues

The private rental sector also fares badly in terms of housing quality, with 23 per cent of private rental homes failing to meet the Decent Homes Standard (compared to just 10 and 13 per cent of social rental and owner-occupied homes). Around 11 per cent of private rental homes were reported to have issues with damp, amounting to nearly half a million homes (465,000). The English Housing Survey also reported lower life satisfaction among those living in non-decent homes. This echoes findings in our previous work, that illustrated a link between low housing quality and lower physical and mental health, even after controlling for various demographic factors.

3) A higher quality, but overcrowded social rental sector

Housing quality remains much higher in the social rented sector (albeit with 380,000 homes still categorised as non-decent). However, in terms of overcrowding the sector remains the lowest performing across all regions of England. Overall, 8 per cent (or 325,000 homes) in the social rental sector were overcrowded – compared to just 5 per cent of privately rented homes, and 1 per cent of owner-occupied properties. This echoes findings in our work during the pandemic, which highlighted the dramatic rise in overcrowding in the social rented sector over time. Unsurprisingly, London remains the most over-crowded area of England, with a staggering one-in-six social rental homes experiencing overcrowding, as well as over one in nine privately rented homes.

4) A less risky mortgage market…

Moving to homeowners, the latest English Housing Survey data on mortgagors illustrates the scale of the change we’ve seen in the mortgage market over the last two decades. The aftermath of the financial crisis saw lenders become much more cautious, and require more stringent checks for those looking to take out interest-only mortgages. These are now held by just 6 per cent of mortgagors in England, down from a massive 67 per cent of mortgagors back in 1993-94. Given rising interest rates and the impact they are having on mortgagors, the fact that we have a less risky mortgage market should limit repossessions over the next couple of years – although we may yet see a an increased number of interest-only mortgages at least temporarily, with lenders asked to provide struggling mortgagors with options to lower their monthly repayments (even if this defers the eventual pain of higher interest rates).

5) …and second homes are on the rise

Finally, new data from the English Housing Survey on second homes illustrates the extent of the inequalities in our housing market, with 3 per cent of households in England saying that they collectively own 809,000 additional homes in the year 2021-22. As a proportion of total households, this has remained fairly constant over time (roughly the same as back in 2010-11). However, interestingly, these homes are now more concentrated within the UK’s housing stock. In 2010-11, just under half of these homes (48 per cent) were within the UK, compared to 60 per cent in the latest data – with the number of reported UK-based second homes rising by 175,000 over the period. This suggests that while overall scale of second home ownership has remained constant, its effect in constraining housing supply within the UK may have become more acute.

This year may see significant changes across all housing sectors, with the Renters’ (Reform) Bill making its way through Parliament, mortgage rates rising, and the housing market cooling in response to higher interest rates. However, many of the challenges of quality and affordability we’ve seen illustrated in this 2021-22 data are likely to remain pertinent for this Government, and many more to come.