It’s a year on from Grenfell, a tragedy that has taught everyone that social housing has to return to its proper place in national debate. There’s been good progress on this front already: there are fora that give a voice to those living in social rented homes; projects which seek to define the purpose of social housing in the 21st century; and a commission asking how the sector can best address the challenges of today and tomorrow. Crucially, the tide also appears to have turned on social housing funding, with government commitments last year to build more homes for social rent, backed up by real money.
This debate is good for the social housing sector, providing the opportunity to turn outward after some years of internal disagreement. It offers the chance to remind everyone of the unique social purpose that underpins this proud movement. But what is the nature of housing need in Britain today? The answer is complex, varying by class, place, age and many other factors. We start with two key pieces of evidence.
The first is that housing costs weigh more heavily of families’ living standards than they have in the past. This is felt most acutely by those on low incomes, but it is spreading to families on middle incomes too. Figure 1 illustrates the point by showing the share of families in each income decile who are ‘housing stressed’ (spending more than a third of their income on housing, even after housing benefit has been taken into account). Today, nearly four in ten families in the lowest income decile spend an unaffordable amount on housing. While some studies suggest incomes are likely to be understated at the bottom of the income distribution, the scale of the increase stands out. Even more striking is the rising level of housing stress in families across the next five income deciles. Weak income growth and housing cost pressures leave one in ten of these families in housing stress.
Second, young people are at the sharpest end of the housing crisis. Figure 2 shows the average share of income spent on housing costs by young and older families in the bottom half of the income distribution. As this makes plain, 25 to 34 year olds are spending a high proportion of income on housing, and have seen the biggest increase in their housing burden over time. Poorer pensioners have actually seen slight declines in their housing cost to income ratio in the last 20 years.
So, housing pressure is felt most keenly by young, lower income people. But the social housing sector has not been able to respond to this major shift in need. Indeed the opposite has happened: these families are less likely to live in the social rented sector than in the past (which is one driver of the higher housing stress shown above). Acres of press coverage have been devoted to the dramatic falls in home ownership for the young. But the fact that young, lower income families have seen as big a fall in rates of social housing as they have in home ownership – both have fallen by 11 percentage points in the last 20 years – is never mentioned (see Figure 3).
Housing pressures also mean that more under 35s are living at home with their parents today than were in the past. As Figure 3 shows, a similar proportion of young people today live in a home their family owns – it’s just much less likely they will have their name on the deeds. While the increase is bigger in absolute terms among home owning parents, what is increasingly clear is that many more young adults are only able to access the social rented sector by remaining at home with their parents. In fact, as Figure 4 shows, there is now a higher chance that a social renting household will include an adult child (or children) than an owner occupied one.
To some extent these trends are an obvious function of the decades-long contraction of the social rented sector. Indeed, older people have been affected by this too with a major decline in the proportion of over-65s housed in the sector. But as Figure 5 makes clear, this drop is far less concerning given that in the last 20 years cohorts moving into older age have much higher home ownership rates than their predecessors, in part because they were big beneficiaries of the introduction of Right to Buy. More generally, the over 65s have seen falling housing costs relative to income in the last two decades, with the social sector doing a good job for older pensioners who are much more likely to be on low incomes than recent retirees.
It is a well known fact that as the social housing stock has fallen, a residualisation into housing lower income families has taken place. Over 80 per cent of those in the social sector are now in the bottom half of the income distribution, compared to just over 60 per cent in the 1960s (Figure 6). But when reflecting on the match between shifts in where housing need lies and what the sector is able to provide today, it is important to note that this shrinking towards the bottom of the income distribution has happened as housing stress has spread up the distribution.
Of course these are national trends and the sector will find different answers to housing needs in different places. In Stoke that might mean a focus on regeneration and employment support, while in London responding to surging housing need while protecting mixed communities and providing stable and high quality renting options are more likely to be the priorities.
These differences should not be the tensions within the sector they sometime become – they are instead signs of the strength of a not for profit sector responding to its founding mission of addressing housing need as it manifests itself differently across time and place.
Replacing internal rows with national championing of the value driven work the sector can do is needed, not least if it is to raise its ambition to reflect a changing mood about the role of the social housing sector in 21st Century Britain. Government of course should step up to support that ambition, not least given their own housing ambitions, and so should the rest of society.
Our philanthropists could also join with a return to recognising that housing need can be best addressed by the not for profit movement their predecessors helped build. After all, endowing a university is nice, but building the affordable homes your town needs is something almost holy…