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Home ownership falls for the first time in past century

Private renting has increased in each of the past two decades

Between 2001 and 2011 there was a 1.7 million rise in the number of households in England and Wales to stand at 23.4 million households. Nearly all of this increase has happened within the rental sector which increased by 1.6 million households over the same period. There was an 110,000 rise in the number of householders owning their home.  This has meant that over the decade the percentage of people owning their home fell for the first time in almost a century across England and Wales. The fall in ownership from a peak of 69% in 2001 to 64% in 2011 happened against an economic backdrop of tighter lending requirements since the financial crash in 2008 and increasing difficulty to raise deposits with house prices increasing at a much faster rate than wages.

All of the increase in renting over the decade occurred within the private rental sector, continuing a trend that happened between 1991 and 2001. This followed the passing of a Housing Act in 1988 that aimed to reverse rent controls introduced in 1915, by allowing landlords and tenants to negotiate rent levels, which made it more attractive to become a private landlord. Before 1991 the private rental sector was in long term decline – in 1918, 76% of households were privately renting.

Social housing rose throughout the century until the right-to-buy scheme

In 1918 just 1% of homes were socially rented, but the need to rebuild following the First World War, saw the Government of the day introduce a social housing policy in 1919, in which they subsidised and passed a law forcing local authorities to provide social housing. The numbers of people in social housing continued to rise throughout the century, peaking at 31% in 1981, just after the introduction of the right-to-buy scheme. This scheme saw people buying their social homes and coupled with new relaxed requirements on the building of new social housing, over the past 30 years, social renting has fallen back to 18% in 2011.

Renting increases across all regions of England and in Wales

The percentage of households renting increased in all English regions and in Wales, in the decade to 2011. London had the highest percentage of renters, where over half of householders rented, at 50.4%. This was about 15 percentage points higher than the average for England and Wales which was 35.7%. The second highest region was the North East with 37.8%, while Yorkshire and The Humber with 35.5% had the third highest rate. The region with the lowest percentage of households that were renting was in the South East at 31.3%.

More local area analysis of housing is available in the full story looking at A Century of Home Ownership and Renting in England and Wales.

This is a video looking at a century of home ownership and renting in England and Wales

We will firstly look at the percentage of households that are owner occupied, shown by the red bars, and rented, shown by the blue bars back to 1918. In that year just 23% of households were owner occupied, while the remaining 77% were rented.

The percentage of households that were owner occupied rose in the early part of the 20th century and in 1971 an equal percentage of households were owner occupied and rented.

The share of households that were owner occupied continued to rise up until 2001 where 69% of households owned their homes and just 31% rented. Between 2001 and 2011 we have seen the first fall in ownership since records began, down to 64% while the remaining 36% of households were rented.

Within the rental sector the split between private and social renting has changed over the past century and looking at this chart we can see that in 1918, 76% of households were renting from private landlords while only 1% of households were socially renting.

Moving along the chart we can see throughout the mid part of the 20th century the percentage of households privately renting fell sharply and the percentage of households socially renting grew, following the Housing Act of 1919.

In recent decades we have seen a reversal of this, the percentage of households socially renting has fallen from a peak of 31% in 1981 to 18% in 2011 following the introduction of the “Right to Buy” scheme, and the percentage of households privately renting has been on the rise, from 11% in 1981 to also stand at 18% in 2011.

Looking in more detail at what has happened between 2001 and 2011, we can see that the number of households in England and Wales has risen by 1.7 million over this period, from 21.7 million in 2001 to 23.4 million in 2011.

The majority of this rise is attributable to an increase in the number of households that are renting their accommodation, this number rose from 6.7 million in 2001 to 8.3 million in 2011. In comparison there has only been a marginal increase of 110 thousand in the number of households that are owner occupied.

Looking more closely at this increase in renting we can see there was an increase of 1.7 million in the number of households being rented from private landlords and a small decrease of 100 thousand in the number of socially rented homes.

Moving across to focus on the change in ownership, there was an 826 thousand rise in the number of households that own their home outright and a fall of 749 thousand in the number of households buying their home through a mortgage.

Some of the factors that may explain this increase in renting include house prices which have risen at a faster rate of over the last decade than in previous years. This makes housing more expensive and therefore more difficult to buy.  Secondly, looking to the right, since the end of 2009 the growth in prices shown here by inflation, the light green line has been faster than the growth in pay shown by the dark green line. This means that pay has not been stretching as far as it used to, which can impact on savings and therefore the ability to buy a house.

Thirdly, because the increase in house prices has been greater than the increase in wages, the house price to wage ratio, which is obtained by dividing average house prices by average annual wages, has risen over the last decade. This means that houses are less affordable now than they were previously. Finally, following the 2008 recession banks have tightened lending requirements which means that the deposit required to buy a home is now higher than it was previously.

That was a century of home ownership and renting in England and Wales.

 

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Categories: Population, People and Places, Housing and Households, Households
Content from the Office for National Statistics.
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