Thoughts of home sweet home

Attitudes to housing tenure are changing, with a sharp fall in the number of households buying their home with a mortgage, says Adrian Coles,
director-general, the Building Societies Association

Adrian Coles
Adrian Coles

The survey of housing in England published by the Department for Communities and Local Government in February shows a distinct change in home ownership and renting habits compared with the second half of the 20th century.

In the intervening period we have witnessed what seemed at the time to be an inexorable rise in the proportion of owner occupiers, a similarly unstoppable decline in the importance of the private rental sector and an early growth in social housing followed by a decline as the Right to Buy policy of the 1980s took effect.

Since 1980 the number of social renting households has fallen from 5.4 million to 3.8 million.

In the past 10 years the trends have been somewhat different from those seen in the years after World War II. In 2008/09, of the 21.5 million households in England 67.9% were owner occupied, this figure having declined from a peak of 70.9% in 2003.

Social renting is the second largest tenure in the most recent survey, representing 17.8% of all households. This proportion has remained broadly stable in recent years. But the smallest tenure, private renting, is the one growing most rapidly, accounting for 14.2% of households in 2008/09 compared with only 10% in 2001.

The number of privately rented households rose from around two million in 2001 to around three million in 2008/09. Despite the decline in the proportion of owner occupiers their number has increased slightly from 14.4 million to 14.6 million because the overall number of households has risen. This peaked at 14.8 million in 2005.

Within the owner occupied sector there has been an increase in the proportion of outright owners from 28.8% in 2001 to 31.4% in 2008/09, equivalent to an increase from 5.9 million households to 6.8 million.

Owner occupation is still most popular but the smallest tenure – private renting – is the one growing most rapidly, accounting for 14.2% of households in 2008/09 compared with only 10% in 2001

In contrast, there has been a relatively sharp fall in the proportion of households buying their homes with a mortgage – down from 41.5% to 36.5%. This is equivalent to a fall from 8.5 million to 7.9 million households.

Perhaps unsurprisingly, outright ownership is concentrated among elderly households, with 83% of all households owning outright including what the DCLG calls a household reference person over the age of 55. Indeed, 60% of outright owners are retired. In contrast, 70% of private renters are under the age of 45.

Perhaps consistent with this, 59% of private renters think they will eventually buy or share a home compared with just over a quarter of social renters. But of this number 42% think it will take them more than five years to realise this ambition.

This proportion has risen from 35% in 2006/07, suggesting that private renters now expect to rent for longer before buying – a trend probably related to the economic downturn. Interestingly, there is relatively little unemployment among owner occupiers of working age, that problem affecting just 1% of the group. In contrast, 12% of social renters are unemployed and 5% of private renters.

There is also a much higher proportion of what are classified as ’other inactive’ among working age social renters than those in other tenures – 37% compared with 19% of private renters, 10% of outright owners and 4% of those with mortgages.

This means that around half of all social renters of working age are not, in fact, working. Just a quarter of all social renters are in full-time work.
Owner occupiers remain the most satisfied with their accommodation. Some 73% of outright owners are very satisfied with their accommodation, with a further 23% fairly satisfied. Only 2% were slightly or very dissatisfied.

Among those buying with a mortgage 59% are very satisfied and a further 35% fairly satisfied. Just 4% exhibited any degree of dissatisfaction.

In contrast, 16% of those renting from a local authority or housing association are dissatisfied compared with 11% of private renters.

Private renters seem pretty content with their lot, with 42% very satisfied and 41% fairly satisfied with their accommodation.

Overall, 90% of households are very or fairly satisfied with their accommodation – a not inconsiderable figure. Similarly, 87% feel the same about their local area.

Turning to housing stock rather than the households inhabiting that stock, England’s housing is relatively old.

Of the 22.2 million homes in the country 8.4 million were built before 1945, of which 4.8 million were built before 1919. A fifth of all homes – 4.7 million – have been built since 1980. Around a million houses and flats are not occupied.

The English Housing Survey: Headline Report 2008/09 contains a wealth of fascinating detail on tenure, households’ attitudes and the nature of the housing stock in the country. It makes a good read for anyone wishing to know more about the state of housing in this election year.