The Proportion of Homes in the PRS has Doubled in 20 Years, English Housing Survey Reveals

The proportion of homes in the private rental sector has doubled in the past 20 years, according to new updates published in the Government’s English Housing Survey.

The report assesses different circumstances and conditions of housing across various tenures in England. The latest release covers the period of 2016/17.

Variations in housing circumstances

During this timeframe, households living in houses were more likely to be owner-occupiers, while those in purpose-built and converted flats were more likely to be social tenants and private tenants respectively.

Households with five or more people were more likely to rent their homes, while smaller households were more likely to own their own homes.

The report also found that the higher the household’s income, the more likely the household was to be an owner-occupier.

Of the factors examined, tenure had the strongest link to the likelihood of living in a non-decent or damp home: private tenants were more likely than owner-occupiers to live in a non-decent home, while those in social rental accommodation were less likely to do so; private tenants were also more likely than owner-occupiers to live in a home with damp.

The age of the household reference person (HRP) and tenure were particularly strongly related to both overcrowding and under-occupation.

Households where the HRP was aged 30-44-years-old were most likely to live in an overcrowded home and least likely to live in an under-occupied home. Private and social renters were more likely to live in an overcrowded home and less likely to live in an under-occupied home. Overcrowding became less likely as household income increased.

Households in different tenure groups tended to have different characteristics.

Outright owners were more likely to be couples with no children or single person households. They also tended to be older (61% of the HRPs who owned their homes outright were aged 65+).

Households who were buying their homes with a mortgage were more likely than outright owners or tenants to contain couples with dependent children. Mortgagors were also more likely than owner-occupiers or renters to be in the middle-aged ranges, with 61% of HRPs aged 35-54.

Households in the private rental sector tended to contain the younger age groups: the HRP of 11% of private tenants were aged under 25; a third (33%) were aged between 25-34. HRPs in the private rental sector were also less likely to be white than owner-occupiers or mortgagors.

Stock condition

The majority of homes in England are owner-occupied, with a sizeable private rental sector and a smaller social rental sector.

The Proportion of Homes in the PRS has Doubled in 20 Years, English Housing Survey Reveals

The Proportion of Homes in the PRS has Doubled in 20 Years, English Housing Survey Reveals

In 2016, there were an estimated 23.7m dwellings in England, including both occupied and empty homes. Of these, 14.8m (62%) were owner-occupied, 4.9m (20%) were in the private rental sector and 4.1m (17%) were in the social rental sector.

The type and condition of this stock varies by tenure, but houses and bungalows make up over three-quarters of the stock.

In 2016, 56% of English housing stock was built before 1965. The age of dwellings varied by tenure; for example, homes in the private rental sector tended to be older, with a third (35%) built before 1919, compared with 21% of owner-occupied and 7% of social rental homes.

Meanwhile, the majority (92%) of owner-occupied homes were houses or bungalows (compared with 63% of private rental and 54% of social rental properties). There were very few detached houses in the social (less than 1%) or private (6%) rental sectors, but a quarter (25%) of owner-occupied homes were detached.

Between 1996-2016, the proportion of homes in the private rental sector rose from 10% of all stock to 20% (or from 2m to 4.9m dwellings).

While the proportion of owner-occupied homes decreased (from 68% in 1996 to 62% in 2016), the number increased (from 13.9m to 14.8m homes).

Across all tenures, the proportion of non-decent homes declined steadily between 2006-16, with year-on-year improvements until 2014, after which the proportion has remained stable.

In 2016, a fifth of homes (4.7m) failed to meet the Decent Homes Standard, down from 35% (7.7m) in 2006.

The private rental sector had the highest proportion of non-decent homes (27%), while the social rental sector had the lowest (13%). 20% of owner-occupied homes failed to meet the standard in 2016.

In 2016-17, 38% of private renters lived in poor housing (which is defined as a home that has serious damp or mould, a Category 1 housing healthy and safety rating system (HHSRS) hazard, is non-decent, or has substantial disrepair). A quarter of owner-occupiers (24%) and 22% of social tenants lived in poor housing.

Almost half (46%) of social renters lived in deprived areas, compared with 11% of owner-occupiers and 21% of private tenants.

On the topic of electrical safety, the report found that 41% of owner-occupiers and 39% of private tenants lived in homes that did not have all five electrical safety features, compared with 25% of social renters.

Private rental sector 

The private rental sector remains the second largest tenure in England, having doubled in the past 20 years.

The sector grew a little between 1996-97 and 2006-07, but growth accelerated after this period, with over two million additional households added to the sector. However, growth appears to have slowed in more recent years.

The increasing size of the private rental sector means that, across most age groups (with the exception of those aged 75+), the number of private tenants has risen in the last 20 years, even where the proportion of private tenants in that age group has not. For example, the number of those aged 16-24 has grown from 365,000 to 513,000, despite the proportion falling from 18% to 11%.

Where the proportion of private renters has increased, the rise in numbers has been particularly pronounced. There were more than three times as many 35-44-year-olds renting privately in 2016-17 than 20 years ago – an increase from 331,000 households in 1996-97 to 1.1m in 2016-17.

While the majority of private tenants are satisfied with their accommodation and their status as renters, the majority also expected to buy their own home at some point in the future.

Most (84%) private tenants were satisfied with their current accommodation. Two-thirds (68%) were either very or fairly satisfied with their current tenure. This makes them more likely to be satisfied with their current accommodation than social renters (81%), but less likely to be satisfied with their current tenure than social tenants (83%).

In 2016-17, 60% of private renters stated that they expected to buy a property at some point in the future, which is unchanged from 2006-07. By comparison, just 30% of social tenants expected to buy.

On average, households in the private rental sector spent 34% of their income (including housing benefit) on rent. Social renters spent, on average, 28%.

Some 9% of private tenants were either currently in arrears or had been in the previous 12 months, compared with 25% of social renters.

Churn (defined as moves within the sector) in the private rental sector is higher than any other sector and has risen in the last 20 years.

In total, 860,000 households moved within the tenure and 149,000 new households were created. There were 179,000 moves into the sector, of which 80% were from owner-occupation. There were 266,000 moves out of the sector, with 68% of those moving into owner-occupied homes.

Churn within the private rental sector has grown in the last 20 years, from 465,000 households in 1996-97 to 860,000 in 2016-17, with churn accounting for a larger proportion of private rental sector moves than 20 years ago (72%, compared with 57%) in 1996-97). However, churn is lower than it has been in previous years; in 2014-15, for example, there were 1m moves.

Homeownership 

In 2016-17, there were 14.4m households that either owned their homes outright or were buying with a mortgage. This represents 63% of all households. Outright owners made up 34% of households, while 28% were mortgagors. Outright owners have made up a greater proportion of households than mortgagors since 2013-14.

In 2016-17, the proportion of homeowners under 35-years-old was 9%. Two decades ago, this figure was 18%. This difference is largely explained by fewer mortgagors being under 35. In 1996-97, 28% of mortgagors had an HRP under 35. In 2016-17, this figure was 18%.

Mortgagors and outright owners have different age profiles: outright owners tend to be older, with 61% having an HRP over 65, while just 5% of mortgagors are aged 65+.

Fire and fire safety

The report found that 1% of households in England had a fire at home in the last two years, the majority of which were put out without the fire and rescue services.

The English Housing Survey has been Updated

The English Housing Survey has been Updated

In 2016-17, 95% of households reported having a smoke alarm. A slightly smaller proportion (90%) reported having at least one working smoke alarm, which is up from 84% in 2008-09.

The proportion of households with working smoke alarms varied depending on tenure. Housing association tenants were most likely to have at least one working smoke alarm (95%), compared with 89% of owner-occupiers, 88% of private tenants and 93% of households renting from a local authority.

Between 2008-09 and 2016-17, the proportion of households with a working smoke alarm increased from 84% to 90%. This rise was observed across all tenures. Since 2015-16, the proportion of private tenants with a working smoke alarm grew from 83% to 88%.

Landlords must be aware that it is a legal requirement for them to install at least one working smoke alarm on each storey of their rental property that is used as living accommodation at the beginning of the tenancy. We have created a useful guide to help you understand your legal responsibilities: https://landlordnews.co.uk/guides/a-landlords-guide-to-smoke-and-carbon-monoxide-alarms/

4% of homes in England have a significantly higher than average risk of fire, of which 0.4% had a Category 1 fire hazard.

Private rental homes (6%) were more likely to have a significantly higher than average risk of fire than owner-occupied (4%), local authority (2%) and housing association (1%) properties.

Energy efficiency 

The energy efficiency of English housing stock has increased over the last two decades. This was evident across all tenures.

In 2016, the average Standard Assessment Procedure (SAP) rating for all homes was 62, which is up from 45 in 1996. Private rental homes had a similar average rating (60) to owner-occupied homes (61), but a lower average rating than social rental homes (67).

In 1996, private rental homes had the lowest rating (40), with owner-occupied homes following (44), while social rental dwellings had the highest (49).

Over the same period and across all tenures, the proportion of homes in the lowest Energy Performance Certificate (EPC) bands (F or G) fell from 29% to 5%.

The proportion of private rental homes in the F or G bands dropped rom 39% to 7%. However, private rental stock is over-represented among the one in 20 homes that have the worst energy efficiency ratings, accounting for 28% of such dwellings.

Around one in 15 private rental homes have the poorest energy efficiency ratings, most of which failed the Decent Homes Standard. These dwellings were more likely to be: built before 1919, converted flats, or rural homes. A lower proportion had central heating or one of the more energy efficient types of boiler.

Landlords must also be aware of the Government’s new Minimum Energy Efficiency Standards (MEES), which mean that properties must have an EPC rating of E or above in order to be leased to new or existing tenants.

The most common type of energy efficiency improvement work done by households in the last 12 months was maintenance or replacement of parts of the central heating system. The three most common improvements were: servicing the central heating boiler (36%); replacing the central heating boiler (11%); and replacing the central heating thermostat (6%).

Comments

Kate Davies, the Executive Director of the Intermediary Mortgage Lenders Association (IMLA), comments on the results of the latest English Housing Survey: “This Survey is a stark illustration of the state of the English housing market. In just ten years, we have witnessed a step-change in the market as the shifting demographics of homeownership and the housing supply shortage redefine what has previously been considered the norm.

“While the housing market and the availability of mortgage finance has improved significantly over the last decade, stricter affordability rules are limiting activity by those who would otherwise be highly leveraged. Coupled with a dearth in housing supply, it means more younger Britons are stuck in the rental sector. Concurrently, rising under-occupation rates show that ageing homeowners are moving less often – whether by choice or constraint.

“This Survey points to a chronic housing supply shortage, contributing to an increasingly illiquid market. Home movers, or steppers, in particular, face a number of hurdles, including high house prices relative to earnings, stricter mortgage affordability criteria and a lack of suitable homes – holding back housing turnover and transaction volumes.

“The market needs to work for everyone: we look forward to working with the new Housing Minister as he faces the challenge of delivering on the Government’s promises and aspirations for change.”

The Policy Director of the Residential Landlords Association (RLA), David Smith, gives his thoughts on the state of the housing market: “Whilst we should never be complacent, these results confound the myths that some have peddled about the private rented sector.

“It shows, once again, that the vast majority of private sector landlords do a good job, and look after their properties and tenants properly.

“The Government should recognise this and ensure policy supports the vast majority of landlords who are individuals to continue providing the good quality homes to rent we need, whilst improving enforcement to root out the criminals who have no place in the market.”

Dan Wilson Craw, the Director of tenant lobby group Generation Rent, also responds: “Most private renters expect to buy a home, but because only a minority currently have the savings needed for a deposit, millions are stuck in an inadequate tenure for years to come.

“Too many renters have had to move because of poor quality, high rents or their landlord’s whim. This failure of the housing market is unacceptable, especially when children are having their lives uprooted unnecessarily. The Government must start protecting tenants and give them confidence to complain about disrepair by restricting rent rises and abolishing Section 21, the law that allows landlords to evict with no reason.”

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