Over the last century, the structure of home ownership in England and Wales has changed. Policies and economic developments have transformed the tenure structure over the century from a largely renting to an owner occupier population. The last decade however has seen the first rise in the percentage of households renting, since 1918.

Key Points:

In 1918 the majority, or 77%, of households in England and Wales rented, with the remaining in ownership.

From 1953 ownership started to increase at a faster rate than in previous decades and by 1971 there was an equal percentage of households owning and renting.



Ownership continued to increase, reaching a peak of 69% in 2001, however in the last decade it has fallen to 64%.



Within the rental sector policies following the World Wars impacted on the percentage of those socially renting. In 1918 just 1% of households socially rented and this reached a peak of 31% in 1981.



Between 2001 and 2011, the number of households buying their homes through a mortgage fell by 749,000. Some factors that might have impacted on mortgage buyers are: high house prices, low wage growth and tighter lending requirements.



The percentage of households renting increased in all English regions and in Wales in the decade to 2011. London had the highest percentage of renters, accounting for 50.4% of households in the region.

Show transcript This is a video looking at a century of home ownership and renting in England and Wales We will firstly look at the percentage of households that are owner occupied, shown by the red bars, and rented, shown by the blue bars back to 1918. In that year just 23% of households were owner occupied, while the remaining 77% were rented. The percentage of households that were owner occupied rose in the early part of the 20th century and in 1971 an equal percentage of households were owner occupied and rented. The share of households that were owner occupied continued to rise up until 2001 where 69% of households owned their homes and just 31% rented. Between 2001 and 2011 we have seen the first fall in ownership since records began, down to 64% while the remaining 36% of households were rented. Within the rental sector the split between private and social renting has changed over the past century and looking at this chart we can see that in 1918, 76% of households were renting from private landlords while only 1% of households were socially renting. Moving along the chart we can see throughout the mid part of the 20th century the percentage of households privately renting fell sharply and the percentage of households socially renting grew, following the Housing Act of 1919. In recent decades we have seen a reversal of this, the percentage of households socially renting has fallen from a peak of 31% in 1981 to 18% in 2011 following the introduction of the “Right to Buy” scheme, and the percentage of households privately renting has been on the rise, from 11% in 1981 to also stand at 18% in 2011. Looking in more detail at what has happened between 2001 and 2011, we can see that the number of households in England and Wales has risen by 1.7 million over this period, from 21.7 million in 2001 to 23.4 million in 2011. The majority of this rise is attributable to an increase in the number of households that are renting their accommodation, this number rose from 6.7 million in 2001 to 8.3 million in 2011. In comparison there has only been a marginal increase of 110 thousand in the number of households that are owner occupied. Looking more closely at this increase in renting we can see there was an increase of 1.7 million in the number of households being rented from private landlords and a small decrease of 100 thousand in the number of socially rented homes. Moving across to focus on the change in ownership, there was an 826 thousand rise in the number of households that own their home outright and a fall of 749 thousand in the number of households buying their home through a mortgage. Some of the factors that may explain this increase in renting include house prices which have risen at a faster rate of over the last decade than in previous years. This makes housing more expensive and therefore more difficult to buy. Secondly, looking to the right, since the end of 2009 the growth in prices shown here by inflation, the light green line has been faster than the growth in pay shown by the dark green line. This means that pay has not been stretching as far as it used to, which can impact on savings and therefore the ability to buy a house. Thirdly, because the increase in house prices has been greater than the increase in wages, the house price to wage ratio, which is obtained by dividing average house prices by average annual wages, has risen over the last decade. This means that houses are less affordable now than they were previously. Finally, following the 2008 recession banks have tightened lending requirements which means that the deposit required to buy a home is now higher than it was previously. That was a century of home ownership and renting in England and Wales.

Home ownership falls for the first time since 1918

In 2011 the number of households in England and Wales stood at 23.4 million, an increase of 1.7 million from 2001. Of this number 64% were owner occupied – bought outright or through a mortgage, while the remaining 36% were rented.



Historic Perspective

1918 - 1939

In 1918, 77% of households were renting – of which 1% were socially renting, while the remaining 23% were owner occupiers. Within the inter-war period 1918 to 1939, a social housing policy which came into effect in 1919 saw a shift within the rental sector from private to social renting, as local authorities were required by law to provide social housing. Rent subsidies meant social housing was cheaper than private renting and therefore more desirable, especially among low income earners. By 1939 the percentage of households socially renting had risen to 10%, while those privately renting were down to 58%. Economic recovery after the First World War fostered the growth of stable employment, enabling more people to own homes, as more wage earners were able to access credit. This resulted in the proportion of owner occupiers rising to 32% by 1939.

1939 – 1961

After the Second World War, Britain began a process of rebuilding, due to the destruction of property suffered during the war. The need to provide homes, especially for households who lost theirs in the war, drove investment in the provision of social housing, and the shift from private to social renting, which started three decades earlier, continued. By 1961, about a quarter of all households were socially renting, while those privately renting were down to 34% from 76% at the start of the century. Growth in owner occupancy picked up in the 1950s, as wages grew at a faster rate than the increase in house prices. This made houses relatively more affordable, and the percentage of home owners increased from 32% in 1953 to 42% in 1961.

1961 - 1991



The growth in home ownership which started in the 1950s continued through the 1960s and by 1971, the proportion of owner occupiers was equal to those renting. This marks the tipping point in home ownership, which remained higher than renting from this point on. By 1981, 58% of households were owner occupied, and for the first time, the proportion of renters was less than home owners. The increase in home ownership between 1971 and 1981 was partly due to the sale of some social housing to the resident households, the start of what was to be the ‘Right-to-Buy’ policy of 1980. The percentage of owner occupiers subsequently went up to 68% by 1991. The data suggests that most of the expansion in owner occupancy since 1981 has largely been a result of movement from social housing to owner occupancy, rather than from private renting as was the case in the 1950s and 1960s. The decline in the number of home owners among those privately renting could be linked to the decline in the number of new buildings over the years and the relatively high annual increase in house prices since the 1970s.



Another policy which came into effect during this period was the ‘Large Scale Voluntary Transfer’ (LSVT) policy of 1988, allowing local authorities to transfer housing stock to housing associations and registered social landlords. The 1988 Housing Act also introduced ‘assured shorthold tenancies’, through which landlords and tenants were free to negotiate rent levels, as opposed to rent controls which were first introduced in the Increase in Rent and Mortgage Interest Act of 1915.



In 1989, the Local Government and Housing Act relieved local authorities of the requirement to keep housing stock. As a result of these policies, the percentage of households in social housing declined to 23% in 1991 from its peak of 31% 10 years earlier. 1991 also marked the end of 70 years of decline in the percentage of households privately renting, which was at its lowest rate of 9%.



1991 - 2001



Between 1991 and 2001, there was relatively little change in the tenure structure in England and Wales, as owner occupation stayed relatively unchanged at about 7 in 10 households. The significant change over the decade was within the rental sector, where the proportion of households privately renting increased for the first time since 1918. 12% of households were privately renting in 2001, while those socially renting had decreased to 19%.



2001 - 2011



Renting from private landlords almost doubles over the decade



Over the decade to 2011, the number of owner occupied households in England and Wales remained more or less unchanged at about 15 million, while the number of households increased. This means that the overall proportion of owner occupier households fell by 5 percentage points to stand at 64%. The number of households who were renting went up 1.6 million to 8.3 million.



Among the 8.3 million renters in 2011, those renting from private landlords or letting agents were up 1.7 million to 3.6 million compared to 2001, while those socially renting decreased by about 100, 000 to 4.1 million. All regions in England and Wales had increases in private renters, of which 343,000 were in London, 233,000 in the South East and 209,000 in the North West. Wales and the North East had the lowest increase with about 75,000 and 73,000 households respectively.



The rapid increase in the number of households privately renting could be linked to the decline in the number of households getting on the housing ladder, usually through a mortgage. This is mainly because of the increasing difficulty for first time buyers to raise deposits for a mortgage. A few possible factors contributing to this include:

High house prices. The average house price for those who were first time buyers increased by about 96% between 2001 and 2011. This meant larger deposits which are linked to the house price, were required.

Tighter lending requirements, especially in the wake of the recent recession meant a larger percentage of the house value was required as a deposit, as the era of near 100% mortgages became a thing of the past.



Declining wage growth and rising inflation over the period exerted pressure on household spending and eroded the value of savings. While in 2001 the average house price in England and Wales was six times the average gross wage, by 2011 the average house price was nine times larger than the average wage. This meant households needed to save for a longer period in order to provide a deposit.

The fall in people buying their homes and the subsequent rise in people privately renting has seen schemes such as ‘Buy-to-Let’ flourish over the decade.



Social renting falls by 100,000 over the decade



The number of households socially renting decreased slightly to 4.1 million in 2011 from 4.2 million in 2001. Over the decade, there was a transfer of housing stock from local authorities to Private Registered Providers (housing associations and registered social landlords in Wales). This was in a bid to increase the share of social housing that met the Decent Homes Standard in England and the Welsh Housing Quality Standard in Wales. This policy began before 2001 in England and in 2002 in Wales, and partly accounts for the increase in the number of households renting from Housing Associations and Registered Social Landlords to 1.9 million in 2011, from 1.3 million in 2001. Subsequently, the number of households renting from local authorities declined by 660,000 to 2.2 million in 2011. With the decline in social housing provided by local authorities greater than the increase in social housing provided by new social landlords, households having to rent were more likely to look towards private than social renting.



Number of mortgage financed owner occupiers declines by 749,000 since 2001



While the number of owner occupiers between 2001 and 2011 remained relatively unchanged at about 15 million, those owned through mortgage or loan finance fell by 749,000 to 7.6 million, while the number of outright owners rose by 826,000 to stand at 7.2 million. Households in shared ownership accounted for about 178,000 home owners in 2011. The increase in outright ownership could be due to the ageing population, with more older people who had paid off their mortgage. Households could also have taken advantage of the historically low interest rates since 2009 to pay off their mortgage loans, as saving becomes less rewarding.

Over half of all households in London were rented in 2011

The percentage of households renting increased in all English regions and in Wales, in the decade to 2011. London had the highest percentage of renters, accounting for 50.4% of households in the region. This is about 15 percentage points higher than the average for England and Wales. The second highest region was the North East with 37.8%, while Yorkshire and The Humber with 35.5% had the third highest rate. These regions consequently had the lowest percentage of owner occupiers. The region with the lowest proportion of renters was the South East at 31.3%. Some reasons why London had the highest proportion of renters include:



High House prices: The average house price in London in 2011 was about £401,000, which was 2.6 times that of the lowest region – North East at £157,000, – 1.6 times the average for England and Wales at £251,000, and 1.4 times that of the next highest region – South East at £296,000



Younger population: About 23% of the population of London was within the age group 16 -29, the highest across the regions. Younger people earning relatively less than older and more experienced people, are less likely to be able to afford to buy houses



Labour mobility: London has a highly active labour market, which could encourage renting, making it easier for individuals to move to take up employment



High migrant population: Compared to other regions, London attracts the highest proportion of migrants with 37% of its usual population born outside the UK.

Other reasons why migrants are more likely to be renters include:



Little or no aspiration to own homes if intended stay is short term. Lack of credit history to support mortgage applications. Proof of ability to remain in the UK for the long term (i.e. long term visa), is required to secure a mortgage.

Renting



Of the 50.4% of renters in London, private and social renters account for an equal share, with about 24% of households in each category, while the remaining are in the ‘Private rented: other’ category which includes those living rent free. London is also the only region with more households privately renting (776,000) than owning homes outright (690,000).



Table 1: The highest and lowest percentage of renters among English regions and Wales

All renters % From Private Landlords % Social renting % England and Wales 35.7 England and Wales 15.3 England and Wales 17.6 Highest Highest Highest London 50.4 London 23.7 London 24.1 North East 37.8 South West 15.2 North East 22.9 Yorkshire and The Humber 35.5 South East 14.7 West Midlands 19.0 Lowest Lowest Lowest South East 31.3 North East 12.4 South West 13.3 East 31.7 Wales 12.7 South East 13.7 South West 31.8 West Midlands 12.8 East 15.7

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At a sub-regional level, the top three areas with the highest percentage of renters are Inner London boroughs at the heart of the capital city. They are also areas where social housing accounts for more than half of total renters. They subsequently have the lowest percentage of owner occupiers.

Table 2: Areas with the highest and lowest percentage of renters in England and Wales

All renters % From Private Landlords % Social renting % England and Wales 35.7 England and Wales 15.3 England and Wales 17.6 Highest Highest Highest Hackney (London) 73.8 Westminster (London) 37.6 Hackney (London) 43.7 Tower Hamlets (London) 73.3 Kensington and Chelsea (London) 34.0 Southwark (London) 43.7 Islington (London) 70.2 City of London 33.1 Islington (London) 42.0 Lowest Lowest Lowest Rochford (East) 16.9 North East Derbyshire (East Midlands) 6.5 Castle Point (East) 5.4 Castle Point (East) 17.2 Torfaen (Wales) 7.5 Wokingham (South East) 7.0 Blaby (East Midlands) 18.5 Copeland (North West) 7.6 Wyre (North West) 7.2 Oadby and Wigston (East Midlands) 18.5 South Staffordshire (West Midlands) 7.6 Rochford (East) 7.6

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The three areas with the highest percentage of renters from private landlords are also inner London boroughs, where the foremost centres for finance, commerce, entertainment and central government are situated. Homes in these areas would be very expensive when they come to the market.

Ownership



A common factor among the three regions with the highest percentage of owner occupiers, apart from their relatively lower house prices compared to London, is the existence of strong transport links into London from many areas, making these areas ideal for commuters. These regions also had the lowest percentage of renters.





Table 3: The highest and lowest percentages of owner occupiers across English regions and in Wales

All Owner Occupiers % Outright Ownership % Mortgage or loan ownership % England and Wales 64.3 England and Wales 30.8 England and Wales 32.7 Highest Highest Highest South East 68.7 South West 35.4 South East 35.1 East 68.3 Wales 35.4 East 34.7 South West 68.2 East 32.9 East Midlands 34.5 Lowest Lowest Lowest London 49.5 London 21.1 London 27.1 North East 62.2 South East 28.6 South East 32.0 Yorkshire and The Humber 64.5 Yorkshire and The Humber 30.6 Wales 32.0

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Within owner occupiers, the top three regions with the highest percentage of households owning their homes outright also had the highest proportion of people aged 60 and above, who are more likely to have paid off their mortgage.

Table 4: Areas with the highest and lowest percentage of owner occupiers in England and Wales

All Owner Occupiers % Outright Ownership % Mortgage or loan purchase % England and Wales 64.3 England and Wales 30.8 England and Wales 32.7 Highest Highest Highest Rochford (East) 83.1 East Dorset (South West) 48 Wokingham (South East) 44.2 Castle Point (East) 82.9 East Devon (South West) 47.1 Bracknell Forest (South East) 43.6 Oadby and Wigston (East Midlands) 81.6 North Norfolk (East) 45.8 Blaby (East Midlands) 42.8 Lowest Lowest Lowest Hackney (London) 26.1 Hackney (London) 8.5 Isles of Scilly (South West) 10 Tower Hamlets (London) 26.6 Tower Hamlets (London) 8.5 Kensington and Chelsea (London) 12.8 Islington (London) 29.7 Southwark (London) 9.8 Westminster (London) 12.9

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At a sub-regional level, the three areas with the highest percentage of owner occupiers also had the lowest percentage of renters. While the three areas with the highest percentage of outright owner occupiers, have close proximity to the coast, making them ideal areas for retirees wishing to move away from busier towns and cities. The areas with the lowest outright ownership on the other hand were inner London boroughs with high rates of renters.

Background Notes:

1. A household is defined as one person living alone, or a group of people (not necessarily related) living at the same address who share cooking facilities and share a living room or sitting room or dining area.



A household must contain at least one person whose place of usual residence is at the address. A group of short-term residents living together is not classified as a household, and neither is a group of people at an address where only visitors are staying.



2. The broad ownership category includes those who own their homes outright, those who have bought with a mortgage, and those with shared ownership – part owned and part rented.



3. The broad renting category covers households in homes rented from private landlords or letting agents, local authorities, housing associations or registered social landlords, and 'private rented, other'– including those living rent free.



4. Private rented, Other: Accommodation that is ‘private rented, other’ includes accommodation that is rented from an employer of a household member, relative or friend of a household member, or other non-social rented accommodation.



5. Data on home ownership and renting for 1918 to 1953 were obtained from Table 801 of Department for Communities and Local Government (DCLG) Live tables on household characteristics. Census data was used for 1961 to 2011.



6. The Census asked respondents to identify who their landlord is and the results reflect the responses they gave. In the past decade half of the local authorities in Wales have transferred the management of all their local authority housing stock to other social landlords. Individuals responding to the Census will report their understanding of their landlord and this may not reflect the actual management arrangements in all cases.



7. House price inflation for first time buyers was derived from the House Price Index (HPI) - mixed-adjusted house prices index.



8. Average regional house prices are from the House Price Index - simple average house prices.