Accredited official statistics

English Housing Survey 2022 to 2023: affordability and cost of living - fact sheet

Published 18 July 2024

Applies to England

The English Housing Survey (EHS) collects data on costs and finances of households in England to monitor affordability of housing and understand better how this might impact people’s relationship to their housing. Analysis for this report shows that, while the majority of households do not report issues with affordability, certain household characteristics can make people more vulnerable to cost-of-living increases.

Households more likely to be experiencing affordability pressures include those in lower income groups, those without savings, or those who are not in work. However, this is also the case for households with dependent children which, while tending to have higher incomes and spend a smaller proportion of their income on housing, generally report more difficulty paying rent or mortgage, falling behind on their housing costs or utility bills, or paying for their energy via more expensive means – such as prepayment meter.

This data for this report was collected across the 2022-23 financial year (April 2022 to March 2023) and against a backdrop of rising household costs. Toward the end of the fieldwork period, we also saw increases in inflation and, consequently, interest rates. The scale of these increases will not be reflected in the data this year but, even so, we find an increasing proportion of mortgagors reporting difficulty affording their housing. 

This factsheet explores the impact of the increases in cost of living for households in different tenures and details findings on the characteristics that may make a household more vulnerable to these increases.

1. Proportion of income spent on housing

The calculation of the proportion of income spent on rent or mortgage is based on household income including any income from benefits. This provides a measure of all the income a household has available and so assumes that all household members contribute to the rent or mortgage. For this analysis, income quintiles are divided based on all households, rather than within each tenure.

On average, private renters spent a nearly a third (32%) of their household income on housing costs compared to social renters (26%) or mortgagors (18%). Private renters in all income quintiles spent the highest proportion of their household income on rent, Annex Table 1.1. It is notable that, over the past decade and a half, affordability ratios have remained relatively stable, EHS Headline Report, 2022-23, Annex Table 2.5.

Average proportion of income spent on rent in the private rented sector ranged from 59% of gross household income in the lowest quintile to 18% in the highest. For social renters, those in the lowest income quintile spent 36% and those in the highest spent 7%. For mortgagors, those in the lowest income quintile spent 41% of their household income on their mortgage, compared to 13% of household income for those in the highest quintile.

Private renters at all income quintiles spent the highest proportion of their household income on rent.

Certain groups were more likely to pay a higher proportion of household income on their housing costs.

Social and private renters without dependent children spent a higher proportion of their income on rent, though this pattern didn’t hold for mortgagors. Social and private renters in receipt of housing support were also more likely to spend a higher proportion of their household income on rent. Private renters and owner occupiers without savings also tended to have higher housing costs.                                                                             

Certain groups – households with a low income, those without savings and those in receipt of housing support – were more likely to spend a higher average proportion of income on housing costs.

2. Affordability of housing: the 40/30 ratio

The 40/30 ratio is an indicator of affordability that shows the proportion of households in the bottom two income quintiles – the lowest 40% – who spend more than 30% of their income on housing. The underlying assumption is that households that have a higher income and spend more than 30% on rent can more easily do so, as they have a higher residual income for other living costs. This is not necessarily the case for households with a low income. The 40/30 ratio therefore provides an indication of the extent to which high housing costs may cause certain households financial stress.

Nearly three-quarters (72% or 1.2 million households) of private renters in the lowest two income quintiles spent more than 30% of their household income on rent. This is compared to 45% (or 1.3 million households) of social renters in the lowest income quintiles, and 34% of lower income mortgagors (360,000 households), Annex Table 1.2.

Nearly three-quarters of private renters in the lowest two income quintiles spent more than 30% of income on rent.

Households in certain groups were also more likely to spend more than 30% of their income on housing, though this varies according to tenure. Half of social renters without dependent children and in the lowest two income quintiles spent 30% or more of their income on rent (50%), compared to a third of social renters with dependent children (33%). Private renters in the lowest income quintiles paid a similar amount on rent regardless of whether they had dependent children.

3. Ease of paying housing costs

The EHS asks respondents whether they had difficulty paying their rent or mortgage over the past 12 months. Most households do not report difficulty with housing costs – 89% of mortgagors, 71% of private renters and 73% of social renters report they find it easy or very easy to afford their mortgage. Despite relatively high levels of affordability, more mortgagors report difficulty with affordability in 2022-23, compared with the previous year – 11% of mortgagors report difficulty paying mortgage, compared to 7% in 2021-22, EHS Headline Report 2022-23.

Certain households were more likely to report difficulty paying housing costs. Despite paying a lower average proportion of household income on rent and mortgage, most renters and owners with dependent children were more likely to report difficulty than those without dependent children and were more likely to be in arrears or to have fallen into arrears over the past 12 months, Annex Tables 1.3 and 1.4.

Households with dependent children were more likely to report difficulty paying rent and renters with dependent children were more likely to be in arrears.

Overall, renters and mortgagors in the lowest income quintiles, with dependent children, without savings and who receive housing support, found it more difficult to cover their housing costs.

4. Utility bills and savings

Overall, 23% of social renters, 15% of private renters and 8% of owner occupiers report being behind on paying utility bills, either in the past 12 months or currently, Annex Table 1.6.

Renters and owners without savings were more likely to have fallen behind on utility bills in the past 12 months, highlighting the impact of having a savings safety-net. Over a quarter of social renters (29%) without savings were in arrears, as well as 23% of private renters and 15% of owner occupiers, compared with 10% of social renters, 9% of private renters and 6% of owners with savings.

Similar to findings on housing costs, private and social renters with children were also more likely to have fallen behind on their utility bills in the last 12 months. Nearly one tenth (9%) of owner occupiers, 24% of private renters and 34% of social renters with at least one dependent child in the household were behind on utilities, compared with 6% of owner occupiers, 11% of private renters and 18% of social renters without children.

Renters and owners without savings were more likely to have fallen behind on electricity and gas bills compared to renters and owners with a savings safety-net.

5. Means of paying for electricity and gas bills

While the majority of renters and owners paid their electricity and gas costs via direct debit, the proportions differed between tenure, with nearly all (90%) owner occupiers, almost three-quarters (74%) of private renters and half (50%) of social renters paying their electric and gas bills this way. Social renters were more likely to pay via pre-payment meter (36%) compared to private renters (13%) or owner occupiers (2%), Annex Tables 1.7 and 1.8.

Most renters and owners paid their electricity and gas bills via direct debit, but social renters were more likely to pay via pre-payment meter compared to the other tenures.

6. Means of paying for bills by household characteristics

Particular groups were more likely to pay for electricity and gas with a pre-payment meter, including those with dependent children, those without savings, and those receiving housing support.

Of all tenures, social renters were the most likely to pay for their electricity via pre-payment meter (36%) but those without savings were even more likely - 41% paid by pre-payment meter compared to 22% of those who reported having savings. Those with dependent children were also more likely to pay for electricity via prepayment meter (44% compared to 32% without children) as were those receiving housing support (41% compared to 29% not in receipt of support), Annex table 1.7.

While a smaller proportion of private rented households paid for electricity via pre-payment meter, they showed a similar pattern within particular groups. Private renting households without savings were more likely to have a pre-payment meter (19%) than those with savings (8%). Households with dependent children more likely to pay this way (20% versus 10% without children) as were those in receipt of housing support (28% compared with 8% not in receipt of support).

Social and private renters with dependent children, with no savings safety net or receiving housing support were more likely to pay their electricity bills via pre-payment meters.

7. Perceived change in home value

During the pandemic, the stamp duty holiday was introduced to stimulate the housing market. After the tax break ended in October 2021, interest rates started to increase in 2022. According to ONS’ House Price Index from April 2023, the average house price in England slowly started to increase throughout 2022 (from £290,016 in January to £310,960 in December) and then slowly started to decrease during 2023. The fieldwork period for EHS 2022-23 was carried over between August 2022 and March 2023, coinciding with a period in which house prices both increased and fell. In terms of average house prices throughout the EHS fieldwork period covering eight months, average house prices fell from £310,186 in August 2022 to £305,731 in April 2023.

Although house prices decreased during the fieldwork period, when owners were asked whether the value of their home changed in the past 12 months, the majority of owner occupiers (66%) said they thought the value increased. A small proportion (4%) thought the value of their home decreased, 21% thought it stayed the same and 8% said they don’t know whether the value of their home changed, Annex Table 1.9.

When asked if they expected the value to change over the next 12 months, 31% thought the value would increase, 20% thought it would decrease, 36% thought it would stay the same and 14% said they don’t know whether it will change. Mortgagors were more likely than outright owners to think the value of their home would increase (33% compared to 29%), Annex Table 1.10.

The majority of homeowners said they thought the value of their home increased over the last 12 months but were less optimistic about the coming year.

8. Current interest rate

Mortgagors were most commonly on a fixed interest rate of five years or more (38% or 2.6 million households) or a fixed rate of two but less than five years (33% or 2.2 million households). Of the remaining mortgagors, 14% (908,000 households) were on a fixed rate for less than two years, 8% (504,000 households) were on their lender’s variable rate, and 5% (320,000 households) were on a tracker rate. The remaining reported mortgage types included capped- and discounted- variable rates, other interest rates or interest-free mortgages (3% or 181,000 households), Annex Table 1.11.

In the context of interest rate rises, it is notable that about half a million households report being on their lender’s variable rate. These rates tend to be higher than fixed or tracker rates, and would have made these households more vulnerable to rate rises that took place throughout 2023.

Those who took out their mortgage more recently were more likely to have a fixed rate mortgage than those who took out their mortgage before 2018. Of mortgagors who took out their mortgage in 2021 or 2022, 97% were on some type of fixed rate, compared to 95% of those who took out a mortgage between 2018-2020 and 76% of those who took out their mortgage before 2018.

Most mortgagors had a fixed rate to their mortgage, with recent mortgages more likely to have a fixed rate compared to other interest rates.