Every year, the government produces one of the industry’s most in-depth reports on the state of the private rented sector (PRS). It provides some fascinating insights into key issues such as the makeup of households, their demographics and aspirations. The report also analyses rental costs and affordability, as well as the condition of the UK’s private rental stock.

 

So, who actually lives in the private rental sector?

The PRS is comprised of 4.6 million households or approximately one-fifth of all of England’s homes. Compared to other sectors, its inhabitants are by far the youngest. The average tenant is currently 41 years old, although the most common age group is between 25 and 34. In the social rented sector, the average age is considerably older at 53 and for owner occupiers, the average is 57. PRS tenants are also far more ethnically and nationally diverse – 26% of them are non-UK nationals, compared to 8% for social housing and 4% for owner-occupiers. 23% are from ethnic minorities compared to 19% in social housing and 8% for owner-occupiers.

Money, affordability and subletting

Private renters typically spend around 33% of their income on rent, which is significantly more than social renters (27%) and those with mortgages (22%). Despite rising rents, the majority of private tenants (74%) say they find it relatively easy to pay their rent, although certain groups face more significant hurdles. For example, those living in London, those receiving housing support or who work part-time, and households with children tend to report the most difficulties paying their rent. And, despite perceptions, only 3% of private renters were currently in arrears, although another 4% had been at some point during the year. Those receiving housing support were most likely to be in arrears, but at 5%, that’s just 2% above the average.

In order to help pay the rent, just under 1% admitted taking in lodgers (around 17,000 households) and 3% said they sub-let their accommodation on an informal basis (around 129,000 households).

How long do tenants stay and where do they go afterwards?

Unsurprisingly, private tenants tend to stay the least amount of time in their accommodation, typically around 4.4 years. That’s significantly less than social renters (12.7 years) and owner-occupiers (17.6 years). The majority of PRS tenants had been in the sector for 3 to 9 years (39%) but nearly a third (32%) had been in the sector for over a decade.

Despite what you might read in the press, when PRS tenants did move on, the vast majority did so voluntarily. The most common reasons for moving were:

77% wanted to move on
11% moved because their tenancy period had come to an end
10% moved by mutual agreement
4% were asked to leave
3% left because of poor relations with their landlord
2% left because the property was connected to a job that ended

What are their homeowning aspirations?

Just under two-thirds of renters (2.8 million or 62%) expected to buy their own home at some point. 28% planned to buy within 2 years. Just over a third (37%) planned to buy in 2 to 5 years, and 35% in 5 years or more. Unsurprisingly, the most commonly cited barrier to owning a home was being ‘unlikely to afford it’. During the period studied, 19% of the private tenant population moved home (863,000). 22% (192,000) bought a property but 72% (620,000) stayed within the sector and 91,000 homeowners moved in the opposite direction.

Typical rental stock

Private rented stock tends to be older than both owner-occupied and socially rented dwellings, a third of which was constructed before 1919. The majority is comprised of converted terraced houses and purpose-built flats.

As to their condition, homes in the private rented sector were the most likely to fail the Decent Homes Standard (23% or 990,000 dwellings), whereas only 10% of the social rented sector and 13% of owner-occupied homes did so. Damp was a particular problem for 11% (465,000 dwellings) of privately rented homes compared to 4% of socially rented homes and 2% of owner-occupied homes.

The PRS also performed poorly for energy efficiency – 14% of homes had the worst EPC ratings (E to G) against just 3% in the social rented sector, although this may be a result of PRS homes being older.

Conclusions

Overall, the report highlights a number of serious concerns for the sector, mostly surrounding the condition and energy efficiency of the PRS’ stock. It also busts a few myths about affordability and evictions. However, as the study took place during 2021 and 2022, it doesn’t take into account the rapid rent increases of 2023, nor does it look into the biggest issue of all – the huge imbalance between supply and demand.