PRIVATE RENTERS’ AVERAGE FLOOR SPACE per person in England has fallen by 16 per cent over the past 20 years – floorspace collectively equivalent to the size of Nottingham – while rents as a share of income have remained stubbornly high, according to new Resolution Foundation research.
The Foundation’s latest Housing Outlook examines the state of the private rental sector amid the cost-of-living crisis, as well as the longer trends that have resulted in too many private rented properties today being high on cost, but low on space.
The Foundation notes while the Government has set out significant – and welcome – support for families to cope with rising energy bills, though many households still face a tough winter with other costs, from food to rent, also increasing at a pace.
While rising interest rates have put the spotlight on mortgage cost pressures, the research shows that England’s 4.4 million private renting households are already feeling the pinch – with rent levels for new tenancies rising by more than 10 per cent over the past year. Annual rents overall increased by 3.4 per cent in August 2022 – more than double the average rate of 1.3 per cent seen between 2018 and 2021.
These price rises are particularly challenging for low-income households, who typically have rents equivalent to half of their income, compared to a third for the private renter population as a whole.
These higher rental costs might be less resented if they reflected higher quality housing, says the Foundation. But while there has been some progress in this area – the share of non-decent homes halving from 47 to 23 per cent between 2006 and 2019 – in terms of space, things have actually got worse.
For example, the proportion of overcrowded households in the private rental sector has more than doubled since 1996-97 – from 3.1 per cent to 6.7 per cent by 2019-20.
This rise in over-crowding has been driven by a 16 per cent fall in average floor space over the past 20 years (from 43m² per person in 1997-2001 to 36m² in 2017-19). Collectively this reduction in floor space amounts to 75km² – equivalent to the size of Nottingham. In contrast, average floor space for homeowners has increased by 10 per cent over the same period (from 39m² to 43m²).
Low-income private renters have experienced the greatest decrease in space, losing three times more than high-income renters (21 per cent compared to seven per cent), while 25-34-year-olds have the smallest average space per person at just 30m². The report authors note that this is largely driven by more people sharing a similar amount of space over time, such as the rise of families with children living in rented accommodation.
Additionally, while there have been significant improvements in rental properties’ energy efficiency recently – the proportion of private renters in homes with EPC rating D or below has fallen from 98 per cent in 1996-2001 to 67 per cent in 2017-19 – over 70 per cent of low-income and older private renters (over 55-year-olds) will live in expensive-to-heat homes this winter.
The Foundation notes that the Government has recently proposed a set of promising reforms to the private rented sector, which includes committing to applying the Decent Homes Standard to the sector for the first time, improving security of tenure, and requiring landlords to speed up the pace of energy efficiency improvements.
However, the progress on housing quality is not matched by a focus on cost. Addressing this issue will require expanding housing supply, more social housing, and a focus on increasing the earnings and benefit levels of younger and poorer families struggling with high rents.
Felicia Odamtten, Economist at the Resolution Foundation, said: “The deal that 21st Century Britain offers private renters is a bad one. Rents have risen and floor space has fallen, with renters losing space equivalent to the size of Nottingham over the past 20 years.
“With rental prices growing at twice the pace they were two years ago – and hitting double digits for new tenancies – renters are facing considerable financial pressure, even despite the Government’s welcome support with energy bills. This is in part because much of our private housing stock is so poorly insulated. As well as ensuring that landlords hit the target of making all properties energy efficient by 2028, policymakers also need to massively increase the number of new homes being built.
* Housing Outlook for Q3 2022 i s available here
* Source: Resolution Foundation