Housing: MW 430

The Need for Housing

1. The UK has a housing crisis. Put simply there are too many people chasing too few homes. In 2004 the Barker Review estimated that 240,000 additional homes needed to be built in the UK every year to cope with demand. However, in the last ten years an average of just 165,000 have been built (find the latest statistics on house building here).

2. The House of Lords Select Committee on Economic Affairs has now concluded that 300,000 new homes would be needed annually in the UK. The government has committed to building one million new homes across the UK by 2020, which the House of Lords Committee said ‘will not be enough’.

What is driving demand for housing?

3. The Office for National Statistics make projections about future growth in the number of households in England. Their latest statistics (covering the period 2016-2041) project that if net migration to England was to continue at the level of 214,500 per year (it has has averaged 208,000 in the last ten years but was 218,000 in 2016), then 190,000 new homes would be needed each year in order to keep up with demand, around half of which will be due to immigration. We will therefore need to build one home every six minutes in order to meet the demands generated by immigration - that's over 240 per day.

4. However, these DCLG projections only account for the impact of future migration. The existing migrant population - who number 8.4 million in England – will also be driving future household formation but this has been misleadingly designated as ‘natural change’ among the existing population as a whole rather than as also partly due to previous migration. (To read our paper on the impact of immigration on housing demand in England see here)

5. The demand for housing is closely related to the number of households (a household can vary from one person living alone to a family with children or a group of unrelated people sharing a common space like a kitchen or living room). Household formation depends on changes in the population’s age-structure, social changes including trends in cohabitation, marriage and divorce, and the birth and death rates. It is also influenced by the availability and cost of housing. For much of the 20th century the number of households rose faster than the population and the average household size fell. However, recently average household size has changed very little so population growth is now the key factor driving household growth (see here).

6. One way of measuring the impact of immigration on housing is to look at the additional number of households formed that are headed by an immigrant. There is wide variation in the size of immigrant households but, on average, household size tends to be greater amongst the non-UK born and they are also more likely to live in overcrowded conditions. So, person for person, immigrants have required less housing than those born in the UK.

7. However, official Labour Force Survey data shows that over the last ten years 90% of the additional households created in England were headed by a person born outside the UK. That is 1.1 million additional homes out of 1.2 million between 2005 and 2015. In London in the last ten years, all of the additional households have been headed up by someone born overseas.

8. That is not to imply that most newly built housing is occupied by migrants, indeed many migrant households move into existing urban areas. The majority of new migrants to the UK, live in the private rented sector and that sector has grown as the migrant population has grown. Indeed in 2015 there were 2.2 million more households in private rented accommodation in England compared to 2000 and almost half of all private rented households in England now have a non-UK born heads of household, compared to one quarter in 2000. (Link to new paper)

9. Over time patterns of accommodation change and migrants who have been in the UK for a long time are likely to have similar levels of home ownership to the UK born.

The impact of the housing shortage

10. The UK’s housing shortage has a huge impact on people’s lives. High housing costs in many parts of the country take a large portion of their income. The English Housing Survey found that 43% of income is spent on housing costs amongst those in the private rental market and for those living in London, the average rent is over 70% of the main householder’s income.

11. For some young people the high cost of renting means that they have to spend longer living in house shares or with their parents and some families are forced to live in overcrowded conditions or move away from their local area to find suitable accommodation that they can afford.

12. Young people who are having to spend a significant proportion of their income on rent are finding it more difficult to save for a deposit and for many young people high house prices are ruling out the prospect of home ownership. The percentage of 25-34 year olds who own their own home, either outright or with a mortgage has fallen from 59% in 2003/04 to around 38% in 2015/16. This fall mirrors the reduction in the number of first time buyers in England. (Link to new paper). Home ownership amongst all age groups is now at its lowest level since 1984 and has fallen from 68% in 2005 to 62% in 2016.

13. A recent survey conducted by the housing and homelessness charity Shelter found that 59% of 18-44 year olds were expecting to have to put their life on hold in some way due to housing problems. This includes one in five who were putting off having children or would in the future delay having children, and one in six who had postponed marriage. (To see more results from this poll click here)

14. The high cost of living can also trap people in areas with low housing costs and fewer opportunities by pricing them out of areas with higher housing costs.

Social Housing

15. The social housing sector, which provides accommodation at below market rents, is overwhelmed. Very large waiting lists (1.18 million families were on the social housing waiting list at the last count (year ending April 2016] mean that only those deemed most in need will ever get allocated a social home. The number of people on social housing waiting lists has fallen in recent years, they reached a peak of over 1.8 million in 2012, however this is because the Localism Act, introduced in 2011 gave local authorieies the power to amend the qualification criteria. In an attempt to limit the numbers on waiting lists many councils introduced a local connection condition and as such many families were removed from the waiting list. (For more on this see here)

16. There is a long standing controversy over the granting of social housing to immigrants. This has not been helped by local authorities’ reluctance to publish the relevant information. Some immigrant groups have very low use of social housing whereas others are more likely to be in social housing than the UK born. There is absolutely nothing in the rules that states that immigrants should get preferential treatment and the Localism Act 2011 allows local authorities to bar applicants from joining the waiting list if they cannot demonstrate a local connection, such as living in the area for at least two years. However, priority for social housing is largely determined by need so some ‘high need’ immigrant families will gain access to housing over longer standing local residents deemed to be of lower need. This can be contentious.

17. Between 2000 and 2015 the number of UK born households in social housing in London fell by around 100,000 meanwhile the number of non-UK born in social housing increased by around 80,000. Indeed, almost half of all social housing in London is now headed by someone born abroad, up from 36% in 2000. For this trend to have occurred, it seems likely that the majority of new lets of social housing made when a property becomes available have been going to immigrant households.

The impact on London

18. Nowhere is the housing crisis more apparent than London. Its population has grown by over one million in the past decade and now stands at 8.8 million and is projected to keep growing to over 10 million by 2030. This growth is entirely down to immigration (see here). Despite being presented as a success story, London loses more people each year to elsewhere in the UK than any other region of the country and one of the primary reasons for those aged in their 30s and 40s is the cost of housing. The number of households headed by persons born in the UK has actually fallen since 2000 (see here). Waiting lists for social housing in the capital almost doubled between 2000 and 2012 but have since fallen due to the 2011 Localism Act. Close to half of all social housing in the capital is now headed by someone who was born abroad.


19. In the short term the UK needs to build more homes. In the future, any housing strategy must address both supply and demand. Immigration is a major part of housing demand. Unless net migration is reduced to a manageable and sustainable level a large house building programme will have to continue indefinitely, with all the costs and loss of amenities involved.

Updated 21 September, 2018

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