Thinking about Housing Tenure

by Ken Gibb

One of the first things you learn in housing studies is not to make a fetishism of housing tenure. Tenure is not the same as class, race, gender, wealth or income as a measure or signifier (there are, for instance, poor home owners living in falling down houses and there are high income private tenants but vanishingly few in social housing). Tenure probably has important different subjective meanings within specific households and locations. You can sometimes conflate house type and neighbourhood quality with tenure but in reality housing and neighbourhoods are both joint goods that you consume and invest in simultaneously. Tenure is just one albeit important attribute.

As a policy goal, tenure, it seems to me, has always been an arbitrary simplistic and divisive (even exclusionary) basis for favouring specific legal forms of housing occupation over others, and does so for more or less spurious social engineering reasons. So, analysis of process should not dwell on tenure even if policy making short hand and agenda-setting happily do so. Such are the paradoxes.

But housing tenure remains a valuable summary indicator among a cluster of measures and we use it all the time. It is in this context that I wanted to reflect a little on the latest tenure figures for Scotland presented in the Scottish Household survey comparing figures in 2014 with earlier years showing trends and some fairly dramatic changes.

What do the figures say? The headlines reported in Inside Housing are, first, that social housing declined from 32% of all households in 1999 to 23% in 2007 but remained around that level thereafter and has actually edged upwards to 24% in 2014.

Second, for homeowners, outright owners (no mortgage) increased from 22% in 1999 to 30% in 2007 and remains at the same level in 2014. Home ownership as a whole grew to a peak of 66% in 2005 but has since fallen back to 60% in 2014. My colleague, Duncan Maclennan, would also however point out that home ownership in Scotland grew later than the rest of the UK and reached broadly UK levels of ownership very rapidly (compared to other tenure change episodes elsewhere in Europe) with considerable growth in the 1990s.

Third, housing in the private renting sector doubled from 7% in 2004 to 14% ten years later (compared to 19.5% of households in England in 2013-14, as recorded in the English Housing Survey and reported in Inside Housing). The numbers also suggest that 56% of Scottish households in private renting have been at the same address for more than a year (and 44% less than a year).

Many of these trends are apparent in the rest of the UK and indeed some of them can be found in other developed economies. It is a little too easy to attribute it all to the backwash from the market collapse, credit crunch and long recession after 2008. Earlier in the last decade and on an ongoing basis, home ownership was already under affordability threats limiting access to would-be first time buyers. As is well known mortgage lending has tightened structurally as well as cyclically and the average age of first time purchasers has increased relentlessly. There is no escaping the fact that the 6% fall is a big reverse on policy aims of successive governments and has wider and deeper long term social, cultural and economic implications. Significant parts of entire cohorts or generations remain much longer in rented housing and simply do not expect to own.

Social renting has remained much larger, at around a quarter of all households, than many of us would have predicted ten years ago. This tells us a lot about inertia and allocation systems,, the counter-cyclical nature of the demand for social renting and the resistance to seeking private renting (where it is available) by low income households. This may also represent the fruits of social housing investment programmes to achieve the social housing quality standard, improving management performance, as well as continuing albeit limited new build programmes.

The big winner is of course the diverse and atomistic private rented sector. A lot of that doubling in relative size must be due significantly to the choking off of home ownership but it also reflects easy access housing solutions for those moving to new jobs, because of household dissolution but also for low income and otherwise disadvantaged groups who cannot or will not access social housing. It will also, to an extent, represent the realised preferences of some households who want to rent privately for simple housing reasons. Overall, this is, as elsewhere in the UK, a major change in the housing system with both advantages and risks. One thing we can confidently predict is that private renting will continue to be a regulatory policy focus as governments and councils seek to eliminate rogue landlords, poor performance and safeguard tenant rights. Wider issues will also encroach regarding rent regulation and tenancy length.

In something else I have been working on this week I was struck by the effect that housing costs have on poverty levels. The Scottish Government has reported before housing costs poverty rates stand in Scotland for 2013-14 at 14% but this rises to 18% after housing costs. The gap between before and after housing costs poverty is widening, probably because of rising social and private rents and also because of housing benefit cuts. Digging into the numbers it looks like specific groups, children and working age adults are most adversely affected by housing costs in terms of poverty incidence. The relevance of this is that the PRS had particularly deep reductions in HB and this is obviously important for families with children renting privately.

Without wishing to overstretch the point, these tenure changes generally represent constrained outcomes rather than simple preferences or aspirations. Policy needs to understand these outcomes and think about working with the grain of the reality of the housing system and not just what people aspire to. That might also help one day to give pause to policymakers continuing to chuck money at home ownership rather than prioritise better housing for those who need it most whatever tenure it might be in. We can dream.