Double shift

Figures published today underline yet again the historic change in the way we are housed in England.

Headline results from the English Housing Survey for 2012-13 confirm not just one but two remarkable trends. I’ve highlighted them in a graph below:

The first is the one happening within renting that I first highlighted on this blog in 2011. There are now more private tenants than social tenants for the first time since the early 1960s and the heyday of Rachmanism. Contrary to some reports, this historic shift actually happened in 2011/12 but 2012/13 saw the gap between the two grow as even more of us rented from a private landlord and social housing continued to decline.

The second less noticed one is happening within owner-occupation. As is widely reported today, the overall rate of home ownership fell to 65.2% in 2012/13, its lowest share since 1987. However, that conceals a deeper underlying shift: the number of outright owners almost overtook the number of households buying with a mortgage in 2012/13. On current trends this will happen next year.

The graph below shows the number of households in each form of tenure going back to 1981, the first year for which the split between owning outright and buying with a mortgage is available. Click on the tabs at the top to see what has happened to each of them:

The number of outright owners has seen a steady increase over the last 32 years as more and more of us pay off the mortgage or can afford to do without one in the first place.

The number of people buying with a mortgage is in stark contrast to this. The 1980s and Margaret Thatcher’s property-owning democracy saw mortgaged ownership rise by about half thanks to policies such as the right to buy and the liberalisation of mortgage lending.

Growth continued more slowly into the 1990s and early 2000s but went into reverse after 2003. The general decline of home ownership is usually seen as the result of the credit crunch and global financial crisis but this shows it began much earlier as young first-time buyers were priced out of the market. Mortgaged ownership is now back at levels last seen before 1988.

That same year was both the post-war low point for the private rented sector (just 1.7 million of us were private tenants) and in retrospect the turning point in its fortunes as the government moved to dismantle security of tenure and deregulate rents. Growth was sluggish at first but really took off after the creation of Buy to Let in the late 1990s. The number of private tenants has doubled in the years since then, with many of those outright owners becoming owner-landlords as well.

Finally, we have social renting. In 1981 it was already declining thanks to the right to buy and cuts in investment. A million homes were lost in the 1980s and the sector has continued to decline ever since under governments of both parties as homes are sold off or demolished faster than new ones are built.

These trends are of course all connected. The explanations are for other blogs but include long-term trends in the labour market, the lending market and the taxation of investments as well as the rising inequality noted in Danny Dorling’s new book. The effects are already being felt but a country that had grown used to home ownership as a right and social housing as a safety net is still making the adjustment.

Housing minister Kris Hopkins has responded to the new figures with the usual bluster about Help to Buy and affordable homes and by pointing out quite correctly that they are a year old.

He might also want to note that the number of households buying with a mortgage fell by 513,000 in the first three years of the coalition. The number who are private tenants rose 601,000. The historic shift in housing tenure continues.