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Renters paying more than mortgage holders for housing

Renters paying more than mortgage holders for housing

UK Government research reveals that renters in London on average pay two fifths of their income towards housing costs, a situation that Shelter is warning could lead to a tsunami of Covid-19 related evictions.

The English Housing Survey produced by the Ministry of Housing, Communities and Local Government, which covers England alone, has revealed that private renters bear the highest housing costs, followed by mortgagors, then social renters. Unsurprisingly, housing costs were highest in London for all tenures.

  • The mean weekly housing costs for private renters was £200. For mortgagors it was £172 per week, £96 per week for local authority tenants and £106 for housing association tenants.
  • The average private rent in London was £341 per week (71% higher than the national average). Weekly mortgage payments were also highest in London, at an average of £242. Average London weekly social rents were £124 per week for local authority tenants and £139 for housing association tenants.

Private renters spent a larger percentage of their gross income on housing costs than either mortgagors or social renters. This proportion was higher across all tenures for those in London.

  • Private renters spent 33% of household income (including Housing Benefit) on rent. Those buying with a mortgage spent an average of 18% of their household income on their mortgage, and those in local authority and housing association spent 26% and 27% respectively.
  • Private renters in London spent 40% of their income on average on their rent. For mortgagors this was 22% of their income. Social renters in London spent 31% and 30% for local authority and housing association tenants respectively.

The research also revealed that more than one million (28%) of private renters find it difficult to pay rent, while 61% reported having no savings at all. The proportion of social renters without any savings is 82%.

The housing campaign group Shelter noted that private renting households England wide spent 33% of their household income on rent on average and this increased to 47% for people aged between 16 and 24.

The government’s eviction ban, which started in March and was extended in June, is to be lifted on 23 August.

Polly Neate, chief executive of Shelter, said These figures highlight again the bleak situation that many renters are in as they struggle to navigate the financial chaos of the pandemic. And they echo what our services hear on a daily basis – that many families don’t have savings to fall back on and that young renters have been particularly badly hit.

“Our own research shows that almost 230,000 have fallen behind with rent since March, meaning thousands could face homelessness when the evictions ban lifts – despite Robert Jenrick promising that nobody would lose their home due to coronavirus.

“Government can protect these renters, but with only a few sitting days left before Parliament breaks for summer, it must act now. Some small changes to the law would give judges the power they need to keep thousands safe in their homes and prevent a wave of Covid-evictions.”

Owning a home is increasingly only for the rich

The research shows that house owners were most likely to be in the top 40% of earners, whilst social renters were most likely to be in the bottom 40%. Private renters were more evenly distributed across quintiles.

About 70% of social renters were in the bottom two income quintiles, with 40% in the lowest quintile. Almost half (49%) of homeowners were in the highest and second highest household income quintiles. Private renters’ incomes were more evenly distributed.

In 2018-19, nearly half of households in England report not having any savings. This varies across tenures and with age.

  • 47% of households in England had no savings. Social renters were least likely to report having savings (82%), followed by private renters (61%) and owner occupiers (33%).
  • Households with an older HRP1 (55-64 and 65 and over) were more likely to have higher levels of savings (20% had more than £50,000 in savings) than other age groups. For younger age groups, 10% or fewer report having higher levels of savings. Still, there are nearly 3.8 million households with a HRP over 55 who report having no savings at all. In 2018-19, nearly two in five renters had someone in the household who received Housing Benefit. Of those who received Housing Benefit, more than half report it covered part of their rent.

English Housing Survey, 2018 to 2019: housing costs and affordability can be downloaded here (opens as a PDF).