Shifting tenures

Levels of homeownership began its decline in the early 21st century, before the credit crunch began, pushing more people into the private rented sector. Meanwhile, the social rented sector continued its relative decline with the number of those renting privately overtaking social tenants in 2011.

There were 4.3 million households in the private rented sector in the UK in 2011. Savills expects the number to grow by one million over the next five years.

Although renting privately continues to be regarded as a short-term measure, more people are renting for longer. The biggest group of private tenants is aged between 25 and 34. However, the fastest growing group of private tenants are aged between 35 and 44, a quarter of which are young families. They are what we call ‘Generation Rent’, and we expect many will never own their own home.

The mismatch between supply and demand is driving up rents and forcing tenants into sometimes poor quality rental housing with little security of tenure.

Our exclusive survey of 2,300 tenants conducted by YouGov revealed that there was a greater desire for longer term tenancies among those over 35, while younger tenants prefer flexibility.

The survey also showed that the search for better quality housing was the main reason renters move. We interpret this as a search for better standard of accommodation, better design and higher specification. These findings provide an opportunity for housing associations offering market rent homes to distinguish themselves from the average buy-to-let landlord.

Housing need

Households excluded from the property market are unlikely to qualify for state help today as social housing provision is focussed on the most vulnerable. However, a generation ago, support for housing was available for a wider range of families. According to a new report by the National Housing Federation, The Politics of Housing, in 1979, 20% of households in the top decile of the income distribution lived in social housing, compared with close to zero by 2004-05.

The shift towards the private sector as the main provider of housing for those who can afford it, coincided with the rise in homeownership in the latter part of the twentieth century.

Change in social attitudes towards housing and welfare, as well as cut backs in affordable housing grants, means that the social sector is unlikely to become the main provider of housing.

Now is the time for housing associations to tackle a different kind of housing need. With homeownership now in decline, housing associations could broaden their tenant base and provide a proportion of their housing at market rather than social rent.

As this would be in addition to their current operations, the additional rental income could be used to cross subsidise other tenures.

Taken from
Spotlight: Bridging the Gap in Housing