Insights into EU Countries: the UK

Christine M E WhiteheadLSE and CCHPR University of Cambridge

No Space for Families: Inclusion and Housing

Expert Meeting Berlin, Friday 30th August 2013

The Position of Families and Children in the UK

• Highest number of births in 2011-12 since 1972 –number of children roughly constant over the last forty years

• Nearly 25% of children are defined as living in relative poverty (60% of median income after housing costs) - this is around 50% up on 40 years ago

• But housing is a major source of assistance to poorer family households in the rented sector

• Highly centralised political system with local authorities acting as agents rather than decision makers. Welfare UK based; housing policy country based

Housing and Families: Five Big Current Issues

• Changing access to owner-occupation• Government commitment to family housing • Social housing priorities• The growing role of private renting - especially in London• Welfare support

Table 1: Dwelling stock and tenure, England (1961 – 2011)

Owner-occupied Private rented Rented from housing association

Rented from local authority Total

000s % 000s % 000s % 000s % millions

1961 6,068 44 4,377 32 3,382 24 13.8

1971 8,334 52 3,201 20 4,530 28 16.1

1981 10,653 59 2,051 11 410 2 4,798 27 17.9

1991 13,397 68 1,767 9 608 3 3,899 20 19.7

2001 14,838 70 2,133 10 1,424 7 2,812 13 21.2

2007 15,070 68 3,182 14 1,951 9 1,987 9 22.2

2011 14,693 64 4,140 18 2,255 10 1,726 8 22.8

Source: Table 104 Dwelling stock by tenure: DCLG Live Tables

Table 2: Household characteristics by housing tenure (2010/11) %

Owner-occupation Social renting Private renting All

Couples with children 23 16 19 21Couples without children 43 16 25 35

Lone parents 3 17 12 7One-person households under age of 60

10 20 23 14

One person households 60 + 15 24 6 15

Economically active 54 33 69 59Retired 32 31 8 28Median income £31,500 £14,800 £23,200 £25,400

Source: English Housing Survey

Families and Owner-occupation

• Owner-occupation is the aspiration of most households and particularly family households

• But largest proportions are couples without children – mainly because people live a long while after children leave home

• Particularly in 2000s problems of affordability (prices/incomes; first year payments; required deposit) began to dominate and first time buyers found it increasingly difficult to enter owner-occupation

• The financial crisis reduced interest rates and made it difficult to obtain a mortgage: the first helped existing owners and the second excluded many households from buying – 1.5 million ‘lost’ purchasers

Trend estimate: England; all households

Trend estimate: England; households with dependent child(ren)

Government Policy with respect to Families

• Anyone who can find a rented home is eligible for Housing Benefit which, at the limit, pays 100% of the rent

• Concealed and sharing family households will normally have high priority in allocations and choice based lettings in social housing

• Homelessness legislation from 1977 requires local authorities to provide suitable accommodation for any family household accepted as homeless (including inadequately housed). In most parts of the country that means social housing, although growing use of ‘Housing Options’ . In London likely to mean private renting and sometimes temporary accommodation increasingly outside the local authority area (although normally still within London).

The Role of Social Housing• Social housing has always provided lifetime security at sub market rent (less than 50%

in much of London to 80% plus in lower demand areas) • It has always concentrated on accommodating family households in need and

increasingly on single parent households (although proportion of such households accommodated remains roughly constant)

• Local authority housing was mainly in estates: larger and better quality than private but poor locations and post war high rise at edge of urban areas especially problematic

• Right to Buy generated mix and helped that generation of families – but left large gap – replacements , shared ownership and shared equity, very small

• Housing associations have built a wider range of properties in smaller and now mixed tenure estates often reasonably accessible. About 40% ‘over-allocated’ outside pressure areas.

• London a very different story – higher proportion of family households in the sector but major problem of overcrowding – with 100,000 plus households overcrowded in the social sector. Around 5% of those on waiting list need 4+ bed homes and a further 16% need 3 bed

Projection: England; households with dependent child(ren)

Scenario assumes weak economic recovery; social rented stock: constant; excess SR demand: all to PR

Table 3: Rents before and after housing benefit by type of landlord (2010/11) £ per week

% of tenants receiving housing benefit

Rent before deduction of housing benefit

Rent after deduction of housing benefit

Weekly housing benefit

Mean Median Mean Median Mean Median

Local authority 65 74 69 7 0 67 67

Housing association 60 84 78 8 0 75 73

Private landlord 25 160 137 41 16 107 94

Source: DCLG English Housing Survey: Table No. FA3242 & FA3245

Trend estimate: London; households with dependent child(ren)

Biggest Current Issues for Families• Continued problems of access to mortgage finance – although

government Help to Buy schemes beginning to help and funding is easing.

• Still major issues of affordability, especially in London and South East• Changing conditions in social rented sector – rents on new properties

and some new lettings up to 80% of market; security may be only 5 years; restrictions on HB for ‘spare rooms’

• If unable to access either major tenure then ‘forced’ into private renting where further constraints on HB and range of properties/quality of management less suitable

• Welfare reform hits some large families particularly hard• Particular issues in high demand arras particularly London – but

movement out of London hit by crisis.

Increasing importance of private renting

• Traditionally seen as suitable mainly for younger, more mobile households

• Increasing role as ‘social housing’ with HB but also latterly for ‘squeezed middle’

• Tenure form: Assured Shorthold Tenancy (AST) 6 – 12 months at market rent - then renegotiation (average length of tenancy – 2 – 3 years but many very short)

• Changes in HB and Universal Credit forcing households out of higher rent areas

• Use of private renting by local authorities to accommodate homeless households in high pressure areas

• Issues I rural areas and other locations where limited private rented supply

Projection: London; households with dependent child(ren)

Scenario assumes weak economic recovery; social rented stock: constant; excess SR demand: all to PR

Welfare changes (UK)

• Increasing constraints on HB for younger non family households• Maximum rent covered by Local Housing Allowance (HB in prs) is

local reference rent, now reduced from 50% of market to 30% with absolute maxima which rule out highest priced areas

• The Welfare Cap, at roughly median family earned income of £25,000pa. Affects between 45 – 65,000 households and maybe 180,000 children. Way out: 16 hours work per week (24 if 2 adults)

• Heavily concentrated among large workless families in London - and among particular ethnic and religious groups (but meets discrimination laws)

• Changes being rolled out slowly - towards Universal Credit in 2015 – politically popular.

• Remember that 25% of children live in poverty after benefits and housing costs – poverty of our general welfare system rather than our housing

Looking to the Future

• More family households than in much of the rest of Europe – partly as a result of migration patterns and age of migrants (they don’t have more children, just come at the right time to have children)

• The fundamentals are the worsening distribution of income and increasingly fragmented family structures

• Family households in owner-occupation and social housing generally have good housing conditions and reasonable affordability - but cannot access all areas

• In social housing some problems of exclusion and access - poor estates in poor areas; more generally concentrations of poverty

• Those in private rented sector facing increasing difficulties in high pressure areas, notably London and are being forced out of high rent areas

• Tougher welfare regime – will work incentives work?

Conclusions

• Housing policy has favoured families and has been seen as important in offsetting low levels of social security

• But political consensus that expenditure must be contained and this is hurting family households especially in the private rented sector - which is likely to house many more such households into the next decade

• The vast majority of families are well housed but a proportion heavily excluded by both the market and social provision – new entrants at a major disadvantage

• But THE fundamental is simply low incomes and a worsening distribution of income and wealth.