Private rents are ‘stubbornly high’ as homes get smaller

Rents as a share of income have remained stubbornly high while the average floor space per private renter in England has fallen by 16% over the past 20 years, research reveals.

According to Resolution Foundation research, the lost floor space equates to a city the size of Nottingham.

The Foundation’s latest Housing Outlook notes that while the Government has set out welcome support for families to cope with rising energy bills, many households still face a tough winter with other costs, from food to rent, also increasing at a pace.

Private renting households are feeling the pinch

While rising interest rates have put the spotlight on mortgage cost pressures, the research shows that England’s 4.4 million private renting households are already feeling the pinch.

And rent levels for new tenancies have risen by more than 10% over the past year.

The research shows that annual rents overall increased by 3.4% in August – that’s more than double the average rate of 1.3% seen between 2018 and 2021.

These price rises are particularly challenging for low-income households, who typically have rents equivalent to half of their income, compared to a third for the private renter population.

The higher rental costs, the report points out, might be less resented if they reflected higher quality housing, says the Foundation.

Non-decent homes halving from 47% to 23%

But while there has been some progress in this area – the share of non-decent homes halving from 47% to 23% between 2006 and 2019 – in terms of space, things have got worse.

For example, the proportion of overcrowded households in the private rental sector has more than doubled since 1996-97 – from 3.1% to 6.7% by 2019-20.

This rise in over-crowding has been driven by a 16% fall in average floor space over the past 20 years – from 43m² per person in 1997-2001 to 36m² in 2017-19.

Collectively this reduction in floor space amounts to 75km² – equivalent to the size of Nottingham.

In contrast, average floor space for homeowners has increased by 10% over the same period – from 39m² to 43m².

25-34-year-olds have the smallest average space per person

Low-income private renters have experienced the greatest decrease in space, losing three times more than high-income renters (21% compared to 7%), while 25-34-year-olds have the smallest average space per person at just 30m².

The report’s authors note that this is largely driven by more people sharing a similar amount of space over time, such as the rise of families with children living in rented accommodation.

Additionally, while there have been significant improvements in rental properties’ energy efficiency recently – the proportion of private renters in homes with EPC rating D or below has fallen from 98% in 1996-2001 to 67% in 2017-19.

And more than 70% of low-income and older private renters – that is someone over the age of 55 – will live in expensive-to-heat homes this winter.

Deal for renters is ‘bad one’

Felicia Odamtten, an economist at the Resolution Foundation, said: “The deal that 21st Century Britain offers private renters is a bad one.

“Rents have risen and floor space has fallen, with renters losing space equivalent to the size of Nottingham over the past 20 years.”

She added: “With rental prices growing at twice the pace they were two years ago – and hitting double digits for new tenancies – renters are facing considerable financial pressure, even despite the government’s welcome support with energy bills.

“This is in part because much of our private housing stock is so poorly insulated.

“As well as ensuring that landlords hit the target of making all properties energy efficient by 2028, policymakers also need to massively increase the number of new homes being built.”

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