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Owners "spend even less income on housing than social tenants"


Published: 11 July 2012 | Author: Bernard Clarke

The latest findings from the English Housing Survey confirm the persistent popularity of home-ownership, despite current problems in housing and mortgage markets. Although the survey found high levels of satisfaction by people living in all tenures, owner-occupiers were more likely to be "very satisfied." The findings confirmed the results of our own surveys showing a strong aspiration to home-ownership.

The cost of paying a deposit was seen as one of the main barriers to owner-occupation, with only a quarter of those who had considered applying for a mortgage in the last year actually doing so. The rest did not make an application because they did not believe they had a big enough deposit.

Once the barrier of a deposit is surmounted, however, owner-occupiers have lower housing costs, in absolute terms, than those renting privately. And, when their higher average earnings are taken into account, owner-occupiers pay a significantly smaller proportion of their income on housing costs.

The survey, published earlier this month by the Department for Communities and Local Government (DCLG), contains useful information for lenders and others on a wide range of topics, including:

  • the relationship between aspirations to home-ownership and the balance of tenures;
  • perceptions of property values and negative equity;
  • the rate at which people in different tenures move home;
  • levels of satisfaction in different tenures; and
  • overcrowding and under-occupation of property.

Housing costs and incomes

Despite the commonly held view that home-ownership is expensive, owner-occupiers have lower average housing costs than those renting privately, the survey found. Those repaying a mortgage made average weekly payments of £143, compared to average payments of rent by tenants in the private sector of £160 a week. Social tenants paid an average of £79 a week in rent.

Home-owning households also have higher incomes than those in the rental sector, so housing costs consume a significantly smaller proportion of their income. Findings for 2010-11 showed that the average gross annual household income for owner-occupiers was £40,900, compared with £29,000 for those renting privately and £17,400 for those living in social housing.

Within the owner-occupied sector, there was also a significant difference between the average annual income of those owning outright (£30,800) and those buying with a mortgage (£50,300). The survey concluded that the most likely explanation of this was that a higher proportion of those who owned their home outright were retired and living on a pension. 

Among those buying with a mortgage, a large proportion (91%) were in full or part-time work. The proportion dropped to 69% for those renting privately and 32% for those living in the social sector.

Chart One shows that the combination of lower housing costs and higher incomes meant that owner-occupiers paid a considerably lower proportion of their earnings on their accommodation (19%, compared to 43% for those renting privately). Home-owners also paid a smaller proportion of their income on housing costs than those in the social sector (29%).

Chart One: Mortgage/rent payments as a percentage of weekly household income, 2010-11


Source: DCLG English Housing Survey

With the owner-occupied and private rented sectors driven by conditions in the open market, the survey found a wide range of housing costs across the country. The survey also found what the DCLG described as a "more surprising" regional variation in costs for social housing. The DCLG attributed this partly to a policy of rent re-structuring based on local property values and earnings. 
The survey also showed significant changes in the types of mortgages held by owner-occupiers over time. In 1996-97, one-third of mortgages were repayment loans, a proportion that had risen to 73% by 2010-11. Over the same period, the proportion of borrowers with an endowment mortgage had declined sharply, from 61% to 8%.

Housing aspirations and perceptions

Aspirations to home-ownership were stronger among those tenants renting privately, with 59% expecting to buy a home at some point, than in the social sector (23%). Among those currently renting but aspiring to home-ownership, 16% had considered applying for a mortgage in the last year. Only a quarter of these, however, had actually done so. The main reason given for not applying for a mortgage was the belief among potential borrowers that they did not have a large enough deposit.

The desire to be a home-owner is affected not only by long-term aspirations and affordability, but by perceptions of what is happening to property values. In almost every English region except London, a larger proportion of households believed that the value of their property had fallen, rather than increased, in the preceding year. Those in the north, the north west, the north east and Yorkshire and Humberside were the most likely to believe that their home had fallen in value. 

However, home-owners appeared to have a positive outlook on future property values, with a larger proportion of households thinking that the value of their home would increase, rather than fall. Those in the south east, followed by Londoners, were the most likely to believe that property prices would rise.  Only 1% of owners believed their home to be in negative equity.

Trends in tenure

The survey found there were 21.89 million households in England, with the majority of them (14.45 million, or 66%) living in owner-occupation. But owner-occupation has been in decline in recent years, the survey said (in 2005, there were 14.79 million home-owning households in England). 

The decline in home-ownership during this period has coincided with a particularly strong growth in the number of households in privately rented accommodation – from 2.45 million to 3.62 million over the same period. Growth in private renting has been concentrated in younger households, the survey found. Over a 20-year period to 2010-11, the proportion of households aged 16 to 34 renting privately rose from 18% to 46%.

Among those aged 65 or older, more than three-quarters (76%) were owner-occupiers (71% owned their home outright and 5% were buying with a mortgage). The contrast in tenure between the generations was even more pronounced when comparing these findings with those for the youngest adults. Among those aged 16 to 24, two-thirds were renting privately.

The average size of an English household was 2.3 people, although again there were variations between those owning outright and borrowers. Households buying with a mortgage contained, on average, 2.8 people, compared with 1.9 people living in a home owned outright. Once again, the difference is explained by the high proportion of older people who own their property outright and no longer have children living at home.

There were also some marked regional differences in tenure. London had the lowest proportion of owner-occupiers (51%) and the highest proportion of households renting privately (25%). The proportion renting in the social sector was also highest in London, a position it shared with the north east (both had 24% of the population in social housing).

Housing needs and mobility

Housing mobility has improved a little since the last survey, with two million households having recently moved, compared with 1.8 million in 2009-10. But those renting privately were much more likely than social tenants or owner-occupiers to have moved recently. More than one-third (35%) of those renting privately had moved within the last year, compared with just 8% of those renting in the social sector and only 3% of owner-occupiers.

The overall rate of overcrowding in all English homes was 3%, with 655,000 households living in overcrowded conditions. In the last 10 years, the rate of overcrowding has increased slightly, from 2.4% in 2001-02, but this small rise has been concentrated in the social and private rented sectors. Overcrowding in the owner-occupied sector has remained unchanged over this period.

By contrast, the overall rate of under-occupation of property was 37%. The owner-occupied sector had a much higher rate of under-occupation (49%) than the social and private rented sectors (10% and 17% respectively). Owner-occupied homes tended to be larger with almost half (48%) having more than 90 square metres of floor space, compared with 14% in the rented sector. 

Housing satisfaction and attitudes

Most households are broadly satisfied with the area in which they live, although owner-occupiers (90%) and those renting privately (86%) felt a little better about their location than tenants in the social sector. Just over a quarter (26%) of social tenants thought their area had changed for the worse over the last two years, compared with 24% of owner-occupiers and 17% of those renting privately.

Around 90% of all household were satisfied with their accommodation, but levels of satisfaction were highest among owner-occupiers. Almost 70% of this group described themselves as "very satisfied" with their accommodation, compared with between 40% and 50% of tenants.


The latest findings from the Survey of English Housing are aligned with our own surveys showing the overwhelming popularity of home-ownership.

Although housing costs vary sharply across England depending on market conditions in both the owner-occupied and rental sectors, the average monthly cost for home-owners is lower than for those renting privately. Taking into account the higher incomes of home-owners, housing consumes a smaller proportion of income for owner-occupiers than for those renting either privately or in the rented sector.

Finding a big enough deposit is one clear barrier to fulfilling the aspiration to home-ownership. A significant proportion of those renting but wanting to buy considered applying for a mortgage in the last year, but did not do so because they did not believe they had a large enough deposit.