The future of home: a mutual approach - NBS Internal - NBS Internal - Nationwide Building Society Media Centre
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
NBS Internal
The future of home:
a mutual approach
NBS Internal
Nationwide Building Society would like to thank the following
organisations for contributing to this report:
Thank you to all the organisations who contributed their insights to our report.
The content and research are the work of Ipsos MORI and Nationwide.
2 3
Contents
Page
06 Key Insights 26 Rosie Toogood,
CEO, Legal & General
• Foreword Modular Homes
• Key stats: The way we live now
• Key insights: Doing housing differently after Covid 33 Ben Beadle,
CEO, National Residential
• Creating a better future for homes
Landlords’ Association
16 Home truths: 35 Polly Neate,
CEO, Shelter
How we feel about our
36 Leigh Pearce,
homes after Covid Chief Executive,
Nationwide Foundation
22 Availability: 41 Bukky Bird,
Group Sustainability
Getting the housing mix right Director, Barratt Developments
Guy Anker,
45 Deputy Editor and
28 Affordability: Head of Operations,
The key to tackling homes MoneySavingExpert.com
crisis for owners and renters Sara Kinsey,
48 Head of Historical Archives,
Nationwide Building Society
28 Sustainability:
Green houses
54 Appendix:
Methodology and references
4 5
Foreword from Sara Bennison committed to come back with
recommendations on the actions 7/10 Majority
we believe could create momentum
in building more homes, the right Homeowners live in their 'forever home', of people unconcerned with
Chief Product & Marketing Officer, Nationwide Building Society homes for the nation’s needs and
where they feel settled - only half of
private renters feel the same
carbon emissions of their home
greening homes.
As we recover from the pandemic
Home. It’s always been a word which So although much in our world has collaboration. That’s why we invited and look towards a net zero future, Post-covid We need to retrofit
means more than its four letters. And changed, fundamentally the drivers of dozens of organisations from public, we have a real opportunity to shape a quarter of renters two homes per
it definitely means more than ‘house’ these different experiences are the private and third sectors, to come our housing market for the better. If,
or ‘flat’. The meaning of ‘home’ same thorny issues we have been together to discuss these problems
are further from minute to decarbonise
having read this report, you would home ownership our homes by 2050
expanded ever further through the wrestling with for years – the and agitate for better answers. like to join us, we would be delighted
pandemic: home was not just ‘where availability and affordability of homes to have you aboard.
The rules of the game were simple.
the heart is’ or ‘an Englishman’s people want to live in. In other words,
No admiring of the age-old problems.
castle’. Home became our world. the pandemic has magnified some of
No taking of the age-old sides. This
We wanted to understand the human
the inequalities in the housing
was a time to find the silver linings Sara Bennison
market. On top of that, we are 1/3 of Generation Z
and other impacts of the pandemic on from the Covid clouds. Chief Product & Marketing Officer
wrestling with a new challenge – think older people living in large 1 in 5 would like to live in a
our homes and how we live in them. Nationwide Building Society
sustainability. More specifically, how I was astounded by the generosity of homes should downsize multi-generational household
Many people enjoyed spending more
do we tackle the enormous task of the people who took part in our
time at home but, according to the
reducing the carbon emissions from conversations and the willingness to
research we commissioned from Ipsos
MORI, people’s experiences differed
our homes? cross traditional divides to work for Energy Private gardens
the mutual good. Thank you. efficiency are still the most
hugely. Homeowners generally had a Availability, affordability and
better lockdown than renters. Older sustainability. These are the three key Indeed, the ideas which flowed were Over four in 10 say important feature that
generations were happier with their housing challenges we face. How do so rich that we didn’t want them to energy efficiency has become makes a good home
more important after Covid
homes than younger people. Home we move forward from stating the stop with the publication of this
ownership remains a key aspiration challenges to solving them? research. It is all too easy to call on
others to find solutions – the ‘they’ Among homeowners
for the majority, but seems further out £
Among the many lessons of the
HALF
£
of reach than ever to many. who should sort it all out. Instead, we
pandemic we have seen that big £ £
agreed to look to ‘us’ which is why
problems are best solved through say they have done
First time buyers in London
four cross industry groups have nothing to improve their
energy efficiency over the are spending 51% of take £
last five years home pay on a mortgage
£
Statistics sourced from survey findings and other sources, as detailed throughout the report
6 7
Availability Affordability
Key 1. We need to 2. Responding to trends 3. We need urgently to 4. Smarter taxes/ 5. Home ownership
insights: modernise the
housebuilding process
such as remote working,
multi-generational living and
fix inequalities between
homeowners and renters
incentives could make
the housing market
further away after
Covid as buyers
to deliver homes smaller households could that were magnified work better struggle to raise
Doing housing we need ease pressures on housing by Covid deposits
differently
after Covid “The planning system needs to “Building more smaller homes “Aspirationally, 80% of people want “We need to avoid demand side “We need to make home
deliver the numbers of high quality needs to take into account the to buy. Be careful about the claim measures like help to buy and ownership more accessible. People
homes we need, at the pace we types of household that might want that Gen Z don’t want to own things. introduce a progressive property want to own their own home.”
need them. Central and local to move into them e.g. a two bed The reality is that they are poorer at tax replacing stamp duty and David Renard, LGA Housing
government can have a much flat that was big enough for their age than previous council tax.” Board Chair and Conservative
more proactive role in getting someone to downsize into from a generations.” Anya Martin, Director, Leader Swindon
homes built.” four bed house.” Ben Page, CEO, Ipsos MORI PricedOut Borough Council
David Thomas, Chief Executive, Chris Norris, Director of Policy &
Barratt Developments Practice, NRLA “The problem is that people simply
“We can reduce pressure on the “As well as building more social
market by building more social housing surely we need to at least aren't able to save because of the
“Modernising the home building “There is a huge opportunity if in the housing. We also need to ensure suspend the right to buy? If we giant cost of housing, and the fact
process will involve bigger picture future people are able to work from people can downsize so that there’s need to increase availability then that wages haven't risen in line
changes around resourcing, skills more remote rural areas, allowing more flow in the private market.” we need to stop social housing with rents or prices.”
and competency.” young people to remain in rural being lost.” Charlie Trew, Head of Policy,
Charlie Trew, Head of Policy,
Mark Farmer, Chief Executive, communities and make a living.” Shelter
Shelter Fiona Howie,
Cast Consultancy Maddy Fitzgerald, Chief Executive, TCPA
The Prince's Countryside Fund
“We need to increase diversity in “Is there a smart way to address
the way homes are supplied and the need for more social housing
who supplies them. Community-led by local authorities and housing
housing has much unrealised associations taking on the
potential to do housing differently.” repurposing of void retail and
Leigh Pearce, Nationwide office space.”
Foundation Robin Fieth, CEO, BSA
8 9
Affordability Sustainability
Key 6. Reform of the PRS 7. Consumers need 8. Eco-complexity 9. Fair and affordable 10. Better together:
insights: could deliver better
availability and
convincing of the need
to green homes
standing in the way of
sustainable homes
green funding formula
urgently needed
public-private sector
collaboration
affordability essential to net zero
Continued
“We need to get the PRS back to “Most people don’t recognise that “Awareness of the need to green “Customers are understandably “The retrofit construction sector
what it does well, including greening their home is one of the homes is increasing – but when people concerned about saving money, needs a set of long-term policies
providing flexible accommodation top six ways to reduce their carbon do renovations or improvements, they and our challenge is to to incentivise innovation and
for those that need it and a place footprint. There is a mismatch are overwhelmed by the scale and demonstrate that energy investment in the industry to
for young people to live.” between support for climate complexity.” efficient homes are also the create systemic change.”
Lord Best, Chair of the change and people’s perceptions Cécile Troquart, Customer cost effective choice.” Emily Braham, Strategy
Affordable Housing Commission of their homes.” Insight Director, Kingfisher Bukky Bird, Group Sustainability and Operations Director,
Julie Hirigoyen, Director, Barratt Developments Energiesprong UK
“We can’t forget the workers who Chief Executive, UKGBC “We need to introduce a ‘building
keep cities alive through our renovation passport’ that sets out “Without investing in supply side “There needs to be better
thinking – they have to have “We cannot new-build our way to clearly what needs to be done on development, we cannot make cooperation, facilitated by
affordable housing options.” decarbonising the housing stock. each home to make energy enough retrofits and never get the government, to allow people and
Paul Broadhead, Head of New-build does not provide a route efficiency improvements.” mass market engaged as prices companies to talk cooperatively
Mortgages & Housing, BSA to net zero.” Jessica Levy, Federation of will be too high.” without fear of breaching
Darach Ó Braonáin, Group Vice Master Builders competition rules.”
Soren Nellegaard, Business
President, Publicis Sapient Development Manager, Claire Tracey, Chief Strategy
RetrofitWorks and Sustainability Officer,
“A PAS 2035 retrofit process could
“For too long, conversations about Nationwide
provide the roadmap for the
leading a green lifestyle has been progressive decarbonation of an “Green changes could be
about giving things up, but in reality existing property. Couple this with a incentivised through, say,
better homes help us to lead lives financial payback plan to assist stamp duty reform.”
that are cleaner, cheaper and owners with what makes the Julie Hirigoyen,
healthier. Surely that is something difference, the sequence in which it Chief Executive,
everybody wants.” needs to be addressed and which UKGBC
Michael Lewis, Chief Executive, types of accredited organisations to
E.ON UK use and we have a scalable solution.”
AJ Eaton, Divisional Director,
10
Mi-Space 11
Key Insights
Creating a better
future for homes Housing delivery action group
Why?
Addressing the historic undersupply of housing is
key to addressing the availability and affordability
of homes across all tenures, moving the emphasis
from planning reform to process reform.
Availability Affordability Sustainability What will the action group focus on?
Speeding up the delivery of new homes by
These were the themes coming out of our consumer removing inefficiencies in the system, building
trust between parties and adopting more agile
research and the cross-industry roundtable discussions. approaches by, for example:
• Streamlining and modernising the construction
process, through different methods of
If that’s what we need, what does it construction.
take to get there? • Exploring how changes to the planning and land
use systems can ensure land is available for
That’s the question which the organisations involved in development.
this project want to tackle together with a brief to find • Making the most efficient use of development
practical solutions to some age-old challenges. Solving sites, including ensuring more social housing is
funded and built.
every problem all in one go is clearly an impossibility.
• Addressing the skills shortages so that we have
But taking some first steps, using our convening power enough workers to build the homes we need.
to form action groups to address a number of distinct
but interrelated needs, and seeing where they
lead, is well within our grasp.
12 13
Key Insights
Green homes action group New homes action group Rental action group
Why? Why? Why?
Making the nation’s homes greener can – and must – be a There’s a fundamental disconnect between demand The private rented sector provides homes to 1 in 5
major part of any transition to net zero. If this is to become and supply right across the housing market, households, but the experience of tenants varies widely,
a reality, we’ll need to see a wide range of industries (and irrespective of tenure and lifestage. This is resulting in with private renters the least happy with their homes.
Government) work together. We need major collaboration in the paradox of rising numbers of households that are
order to deliver the policies and consumer consent needed to overcrowded and rising numbers of those that are What will the action group focus on?
meet the UK’s ambitions. That’s why we are developing an underoccupied. Creating a private rented sector that works for the
action group to tackle some of the key obstacles and mutual good of landlords and renters, by for example:
opportunities on the path to ‘net zero homes’. What will the action group focus on? • Ensuring those who aren’t in a position to own a
How to increase the number of new homes being built home have an affordable place to live where they feel
What will the action group focus on? across all tenures, ensuring they meet the differing secure and are part of a community.
How organisations and government can work together needs of young people, families, empty-nesters and
to build awareness, identify solutions, close the skills the rising number of single households, considering • Building trust between landlords and tenants.
gap and make sure it’s fairly financed by, for example: how, for example: • Ensuring landlords provide good quality homes for
• Convincing customers of the need to green their • To build the types of homes people most need, their tenants.
homes, giving them the confidence and knowledge considering whether the pandemic has changed • Protecting tenants through a national landlord
to make sustainable green home improvements. how people trade off between location, cost and register and reform of tenancy deposit.
• Constructing property data, perhaps through a building space to live. • Supporting and incentivising landlords to retrofit
passport, that outlines the changes and upgrades • To achieve an optimum tenure mix, including properties with low-carbon technologies.
necessary to an individual home. sufficient social housing to meet demand. • Making sure people can afford to move out of the PRS
• Exploring how a National Retrofit Strategy from • To remove barriers and disincentives to moving to and into home ownership if that’s what they aspire to.
Government, including addressing the skills gap, increase velocity.
could help drive change. • To ensure the property tax system, including stamp
• Considering how to build a manufacturing process duty and council tax, is working effectively to
for green improvement that lines up new build and encourage people into suitable homes.
retrofit to deliver scale for both sectors much quicker. • To support aspiring homeowners to raise a deposit.
• Ensuring that the homes we are building now are • Lenders can help those who want to buy a home,
sustainable and future-proofed. such as innovating around loan to income limits
• Considering how grant schemes, private sector and stress rates.
funding, tax and VAT incentives can ensure green
homes are financed in the fairest possible way.
14 15
What are the dynamics at work in today’s housing market? And have they changed as a result of
Home truths: Covid, and 18 months of ‘stay at home’ orders?
While it’s clear that people have experienced the pandemic very differently, depending on where
they live, how they live, and who they live with, our research shows that in the main the pandemic
has magnified existing trends in the housing market. Looking ahead to our post-pandemic world,
we need to learn from these experiences to make the housing market work better for everyone.
Longstanding inequalities
Homeowners happier than renters
between homeowners and
renters deepen after Covid How satisfied or dissatisfied with each of the following? (% satisfied)
75%
Perhaps the most striking divide is an Your current home 63%
old one – between homeowners and 63%
73%
renters. Dealing with the sharply Your family life 68%
different experiences of homeowners, 66%
68%
How we
private and social renters is more Ability to pay your 61%
rent/mortgage 64%
urgent than ever. 65%
The amount of leisure
feel about
63%
Homeowners are more content with time you have 62%
their homes, and report better Your ability to get by
65%
our homes
50%
physical and mental health. Three- financially 50%
quarters are satisfied with their home, 47%
62%
Your mental health
which other data sources show tend 45%
to be larger than they need, with 48%
60%
Your physical health
affordable mortgages. In the main, 41%
after they feel happy and settled where 60%
Your household income 37%
they live and have no plans to move. 44%
They have significantly better mental
Covid
51%
Your social life 46%
and physical health than renters. 42%
51%
Although tenure is not the only factor, Your work life 51%
there is a clear correlation between 36%
tenure and wellbeing. Homeowners Private renters Social renters
16 Source: Ipsos MORI 2,985 adults aged 16-75 in the UK, interviewed online 25-28 June 2021 17
Home Truths
Renters report higher levels of
dissatisfaction with their home, as
Crisis, what crisis?
Although the housing crisis narrative is deeply embedded in the Becoming more Italian?
well as worse physical and mental national consciousness, fewer people worry about it today than four
health. This may reflect the fact that years ago. However, the views of owners and renters diverge sharply, In some countries the most common living arrangement for young adults is to
three in 10 of renters are living in with a much deeper sense of crisis among renters. live with your parents – in Europe this is most common in Italy, where seven in 10
homes that are too small for their young adults aged 18-34 live with their parents. In the UK more adult children are
needs – twice the proportion of To what extent do you agree or disagree... (% agree) living with their parents for longerA.
homeowners – and also because 25-year old Simran, a council employee, lives with her parents out of choice. “I
other data shows they are more likely 66% 68%
am incredibly lucky to be living with my family,” she says. “I know people want to
63%
to be under financial pressure. 60% move out as soon as they can, but I don’t see myself doing that.” Living at home
56%
Within the rental sector, there are 49%
does mean she can save money – probably for a “large house deposit.”
clear differences between those who Other young adults are living with their parents out of necessity – and the
rent privately and those who rent 39%
number could rise sharply if young people lose their jobs as pandemic-related
33%
socially, such as through a housing support schemes are withdrawn.
association.
Andrew Gall, Chief Economist at the Building Societies Association, wonders if
Social rent households are generally this will be a short-term trend or a more decisive shift. “Could we see the
happier than those renting privately. numbers living with parents extend to a rise in multi-generational living, so the
Six in ten (60%) social renters feel family home becomes a multigenerational asset?” he asks. “It could be a solution
There is a housing crisis in Britain/the UK There is a housing crisis in my local area
happy and settled and are not looking to affordability challenges, long term care, childcare costs, while using the fact
Total Homeowners Private renters Social renters that a number within older generations have wealth in the form of large houses.”
to move, a figure that drops to under
half (48%) for those renting privately1. Source: Ipsos MORI. 2,985 adults aged 16-75 in the UK, interviewed online 25-28 June 2021
The one in fivehouseholds2 that rent
privately are the least satisfied with
their home. Fewer than half are happy People’s aspirations for their Almost two million more households There are significant regional of London property. The result is It is not only aspiring homeowners
and settled for the long term, and homes haven’t changed but would own their own home if Britain differences. Home ownership is most that a lot of people feel trapped and who are struggling to find the home
almost four out of 10 are unhappy had been able to maintain home common in the South East and South unhappy. “In comparison to buying they want. There is significant unmet
with where they live and actively fewer are able to achieve them
ownership at its 2003 peak, when West, where seven in 10 households a property with a mortgage, I feel demand for social rentals with 1.1m
looking to move3. Eight out of 10 people aspire to more than seven in 10 households are owner-occupiers. Home like I am chucking my money away people on the social housing waiting
become homeowners – a figure that were owner-occupied. Home ownership is below average in several at the moment. But I don’t have the list and 38% of private renters saying
has been steady for decades, but ownership rates have edged up a northern regions, despite being more possibility to buy either, which is that, given the choice, they would
many believe the journey from little in recent years, but are still affordable, and falls to just 50% in frustrating,” says 26-year old prefer to rent from a social landlord
renting to owning is further away seven percentage points below London, reflecting the very high cost Alexandra. than a private one.
than ever. their peak at 63.8%.
18 19Home Truths
“There is a huge
opportunity, if people
are able to work from
more remote rural
areas, for young people
to remain in rural
communities and make
a living, providing
economic benefit to the
wider community and
potentially rejuvenating
rural areas.”
Maddy Fitzgerald,
The Prince's Countryside Fund
Escape to the country? space – whether in the form of a this result in a boost to the economies says Lizzi Hearn of CPRE, the income households would benefit make a swift return to city
garden, bigger property, or to get of those areas, open up home countryside charity, but points out most rather than low-income workspaces. And attitudes
What impact, if any, will new working away from urban life. So far, it has ownership to more people and that “for many rural properties households. Lower earning jobs are change slowly. “There is a lot of
from home trends have on where we only sent house prices spiralling – up relieve pressure on housing digital connectivity is an issue and often workplace-based, and might not narrative about a flight to the
choose to live? Will people widen by 13%4 in a year. hot spots?” linked to isolation”. have the same flexibility about where countryside, but values change
their property search area if a daily they work. slowly” cautions Ben Page of Ipsos
“Will people who have more flexibility Nicholas Boys Smith, Director of Rural communities may benefit from
commute is now a twice weekly one?
about where they work take Create Streets, believes the revealed remote working if people who may Ultimately, it is too soon to know the MORI. “Even before the pandemic
Will affordability improve?
advantage of the opportunity to move potential of remote working could be have previously had to move to towns full impact of the pandemic and home Britons were some of the least
In the surge in home moving in the enthusiastic about city living.”
to a lower price area in order to be the catalyst to an exciting potential and cities for highly skilled jobs are working on our homes. Some
year since the first lockdown, the able to stop renting and be able to shift in the housing market. Flexible now able to stay but any benefit may businesses, including Nationwide, are
signs are that people are seeking buy?” asks Leigh Pearce, Nationwide working would “give greater access to be minimised if house prices rise too advertising jobs without a fixed work
Foundation, Chief Executive. “Could a wider range of job opportunities,” much. It is also possible that middle location. Others expect employees to
20 21Home ownership rate % (2018)
Availability
100
90
80
70
60
50
40
30
20
10
0
Croatia
Austria
Greece
France
Portugal
Italy
Poland
UK
Belgium
Germany
Norway
Ireland
Netherlands
Sweden
Finland
Spain
Denmark
Switzerland
Source: Eurostat
The UK has seen huge shifts in housing tenure over the last century, with many millions of people
moving from renting privately into home ownership or affordable social housing. That trend has
reversed in recent decades. Today, with many people not living in their preferred tenure type, we
need to ask what is the right housing mix?
Achieving the right balance radically in the 20th century, when number of tax advantages. As a result,
between home ownership, home ownership took off and social investors have snapped up homes
housing dominated the rental sector. coming onto the market, reducing
social and private rentals
Between 1930 and the mid-1980s, availability to first time buyers.
Although Britain has a reputation for the proportion of homeowners
Getting
Consequently, the share of households
being obsessed with home doubled and private renters shrank
renting privately has doubled in the
ownership, as late as the end of the dramatically, from over 54% of
second world war, only 25% of people households to just 10%5. last 20 years, although many would
wanted to buy their own home. Many prefer to rent from a social landlord.
In the last two decades, the pendulum
the housing
European nations also have higher Achieving the right balance between
has swung back towards private
mix right
home ownership rates than Britain. home ownership, private and social
rentals in Britain. Low interest
Wind back a century, and the majority renting will be one of the biggest
rates have made returns on rental
of people rented their homes from challenges for the foreseeable future.
properties very attractive to investors,
private landlords. That changed
who until recently also enjoyed a
22 23Availability
Through the keyhole: trends in tenure
The Semi-detached: housing
overcrowding- needs to meet people’s Smaller home starts fell in the last
100%
Housing tenure by region, England
decade. Despite the growth in single
underoccupancy changing needs person households, which are 90%
13% 13% 15% 18% 17% 17% 17% 22% 22%
paradox adds Markets work best when they align predicted to grow by a quarter 80% 16% 17% 16%
17% 17%
supply with demand, but there is a between 2016-2041 7, the number of 20% 20%
to pressure on
70% 15%
significant mismatch between the one and two bed properties has fallen 60%
28%
housing supply homes people need and those being from two thirds of new builds in 2009
50%
built in the UK. to less than half in 20198. By contrast
40%
Overcrowding is on the up, three and four bed houses took a
Housebuilding was on the increase 71% 70% 69% 66% 65% 63% 63% 63%
particularly in the social and larger share. 30%
pre-pandemic but homes are not 50%
private rental sectors, while many always being built where they are Nor are we building enough attractive
20%
homeowners are living in under- most needed. As many houses are housing for the 12m Britons over the 10%
occupied homes. 746,000 homes being built in areas with the lowest age of 65. The retired population is 0%
were considered overcrowded in
S East
East
E Mids
London
N East
S West
W Mids
Yorks & H
N West
population growth as in areas with still growing, but there are only
2018, up 14% in a decadeB. the highest population growth6. around 735,000 purpose-designed
Meanwhile the number of homes homes for retirees. Owner occupier Private renters Social renters
with two or more bedrooms to Nor are the homes being built
spare rose 10% to 8.6m over the responding to housing needs. The dearth of attractive housing for
same period. More and better Starter homes, small homes in city older people means they stay in their
retirement housing could centres, more attractive retirement family homes long after they have England - Home ownership rate
release larger homes onto housing and social homes, including outgrown them. This is causing a
the market. larger social homes, bottleneck in the housing market – 75%
are in short supply. and resentment among younger 70%
people. A third of Generation Z think 65%
older people living in homes larger 60%
than they need should sell their 55%
properties so those who need them 50%
more can buy them9. 45%
40%
More large homes are also urgently
needed in the social rented sector, 35%
where some 340,00010 families live 30%
in over-crowded homes in England. 25%
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Source: MHCLG
24 25Availability
VIEWP INT CASE STUDY
Alexandra’s story:
By Rosie Toogood, CEO, a significantly shorter construction the UK economy after Covid-19,
Alexandra works in sales and rents a room
Legal & General Modular Homes programme, both resulting in address the housing shortage and
much less disruption for local lead the transformation of the in a house that she shares with her landlady.
The UK housing market faces two
residents. house building market by Her next rental will be a place of her own.
significant problems; climate
delivering high-quality sustainable
change and a chronic shortage of As we drive towards net zero,
homes set in beautiful
housing. By adopting a modular modular housing has some natural Comfort and sociability:
communities, and at speed.
approach we can reduce carbon advantages. Using precision
emissions and build more houses. engineering, lean manufacturing Home is somewhere I feel comfortable […]
techniques and quality assurance The advantage of living with other people is you’re not
Using design and manufacturing
results in homes which are more alone, the loneliness is not a factor. Price as well, it’s
techniques already matured in
airtight and better insulated. The cheaper in general […]
industries like automotive and
modular approach also generates
aerospace, modular homes can be I’ll miss the affordability factor, and knowing somebody
far less waste than traditional
built on a production line through a
standardised process which results building methods. We have also The advantage of else is around. Being able to pop into another room and
somebody else is there. Other than that, I am very
taken a fresh approach to heating
in a quicker build process and
improved quality when compared and ventilating incorporating heat living with other excited to live by myself […]
with traditional home building pumps and photovoltaic cells
which, combined with high-quality
people is you’re not Affordability and the future:
techniques. This results in modules
with all internal fit out work build standards, will bring alone, the loneliness At this point, I’m ready to find my own place.
significant energy savings for
completed and inspected for Somewhere with an outside space, like a balcony or
quality before they leave the residents of the new homes. But is not a factor. Prices a garden. It’s annoying because you have to keep
it’s not just about the home itself,
factory. Modules are installed on
foundations, then bricks and roof delivering great places where as well, it’s cheaper searching. A lot of places I would like to live
in are out of my budget, so I’m saving at the
assembled, services connected, residents can enjoy the local
environment is central to this new
in general…” moment […]
landscaping complete and the
modular approach. I’ve been using online calculators, in terms of
homes are then ready to be lived
budgeting. They help you see if you can afford to rent
in. The approach significantly We have to Build Back Better after
reduces the work carried out on Covid-19. Modular provides a real some places and how much you’d have left over […]
site meaning less traffic to site and opportunity to ensure we stimulate
26 27Britons spend more of their income on housing than any
Affordability other developed nation. Housing swallows 26% of disposable
income, a quarter higher than the OECD average11.
The burden of the high cost of income they had left after paying
housing in Britain weighs on lower rent/bills,” one employer told us.
earners and younger generations. “We pay at least the living wage,
“Until the pandemic, we didn’t realise but some people were still relying on
how many of our people were renting food banks and extended family.”
and sofa surfing, how little disposable
Key % of Gross Adjusted Disposable Income Spent on All Housing Costs
(Bars show 2019, Diamonds show 2014)
to tackling
28
26
homes
24
22
Crisis for
20
owners
18
16
14
renters
and
OE y
rm a
Sw et h
an
d
en
Fin ark
Po ce
J ap a
ay
Ir e D
Au a in
C a ly
Fr m
De UK
No US
ce
Be wit.
Sp l
NZ
Gr nd
ga
d
an
Ge trali
It a
lan
C
u
ee
an
rw
ed
na
la
rt u
N
nm
lgi
S
s
Source: OECD Better Life Index (BLI)
28 29Affordability Home ownership
Scots and northerners enjoy the
third (35%) say they can’t afford Relying on the
Widening gap in affordability between regions the mortgage and other costs of
most affordable homes, which
ownership such as insurance19. 29% bank of mum
Be careful about the
First Time Buyer House Price to Earnings Ratio by Region (Q2 2021) cost just over 3x income,
of renters can’t afford to buy a home & dad
10
meaning that they could save a claim that where they want to live20 .
9
20% deposit in just 5½ years, A growing number of first time
Generation Z don’t
8
and mortgage payments are Even when renters have managed to buyers are turning to their
7
about a fifth of take-home pay. want to own things; save a deposit, they cannot always raise family and friends for help to
6
London has been consistently the the reality is that a mortgage on affordability grounds - raise a deposit. In 2018-19,
5
9.6 even if they are paying as much or around 40% of first time
4
least affordable region for over they are poorer at more in rent. This is because regulators buyers used money from an
7.3 30 years. Today starter homes
3 6.6 6.5
5.6 5.5 their age than insist on an affordability ‘stress’ test, to inheritance, gift or loan from
5.2 5 4.6 4.6 cost over 9x incomes, raising a
2 4.2 4.1
3.5 3.4
deposit would take nearly 16 previous see that a buyer can afford the family or friends to help raise
1
mortgage at much higher interest rates. a deposit. This was up from a
0
years and mortgage payments generations.”
swallow half of take-home pay. In the experience of LV’s Nicola quarter in 1995-621.
UK
nd
s
s
E
lia
s
t
t
H
et
d
r th
n
Dunning, for many lower earners, “their
es
es
d
a le
d
do
rS
l an
M
Ben Page, CEO, Ipsos MORI
s&
g
Mi
Mi
la
W
No
SW
An
te
W
n
Ir e
er
ot
rk
Lo
E
W
N
Ou
Sc
t
E
Yo
Ou
rent was more than a mortgage but
N
Source: Nationwide Building Society they couldn’t buy because they couldn’t
afford a deposit”.
“The question is whether affordability
The affordability paradox: Today, the average first home costs For those who can raise a deposit, Journey from renting to and stress tests are a social good or a
5.6x the average income, much mortgage payments are affordable, blocker on renters achieving their
high house prices dwarf higher than the long-run average of thanks to historically low interest owning harder after Covid dreams of sustainable home
low mortgage rates 3.7x incomes. rates. Mortgage payments for first The dream of home ownership lives ownership,” says Robin Fieth, Chief
time buyers are about 28% of take- on. Eight out of 10 Britons want to Executive of the Building Societies
With interest rates at their lowest in The impact of high house prices is not
home pay today, just below the long- own a home of their own16 but almost Association, whose members provide
300 years, why is it so hard to get on just that property costs a lot. It makes
term average15. However, the a quarter (23%) of all renters say it about a quarter of all mortgage
the housing ladder? The answer lies it much harder for first time buyers to
affordability of a mortgage varies by will be harder for them to buy a home lending in the UK. “Is there a better
in house prices that are high raise the deposit needed to secure a
occupation. Carers, labourers, after Covid17. way to assess affordability as part of
compared to incomes. The house mortgage. A 20% deposit for a starter
salespeople, couriers and other low responsible lending?”
price to earnings ratio – a simple home is the equivalent of 104% of Costs are the biggest barrier to home
earners will find their mortgage
calculation of how many multiples of pre-tax income12. So, while almost one ownership. 41% of renters say they Altogether, optimism about home
payments swallowing over 40% of
your income you would need to buy a in five renters are currently saving for are having to rent because they can’t ownership is low: over two-thirds of
take-home pay.
first home – is close to a record high. a deposit13, it will take between 6-16 afford a deposit and other upfront renters don’t believe they will ever be
years for a first time buyer to save a costs to buy a home18. Just over a able to afford a home (68%).
20% deposit14.
30 31Affordability Rentals
VIEWP INT
Ben Beadle, CEO, National However, for all the challenges, experience they have and the
Residential Landlords’ government data shows that 83% housing they rent. It is through this
Association of private tenants are satisfied with lens that future measures proposed
their accommodation – a higher in the White Paper should be
Throughout the pandemic the vast
proportion than those in the social developed.
majority of private landlords and
rented sector.
tenants have worked well together
to sustain tenancies. More private renters are satisfied
Lower earners need access sold in the 1980s under ‘right to buy’ confusion and contradiction of PRS As the sector leaves emergency with the way their landlords carry
out repairs and maintenance than
to affordable social gave millions25 a leg up to home regulation, and the forthcoming restrictions, the planned White
tenants in the social sector, whilst
housing, not private rentals ownership, but dramatically reduced Renters’ Reform bill will give tenants a Paper on rental reform provides an
the availability of social homes for new suite of rights. Looking ahead, the proportion of private rented
important opportunity to ensure
People on low incomes were lower earners. Many of these people the UK’s commitment to net zero by households with at least one of the
the rental market works for both
struggling with housing costs pre- most serious category one hazards
now rent privately – out of necessity. 2050, will require a green overhaul of tenants and landlords. For too long
pandemic, with 40% of lower earners has more than halved over the past
Given the choice, 56% of all renters the nation’s homes. “The cost of debate on the future of the sector
decade.
paying more than 40% of their would prefer to rent from a social green improvements might be the has been dogged by a sense that
income in rent22. No wonder that landlord rather than a private one26. final straw for many landlords,” says tenants and landlords are in We are looking to the proposed
renters say they are more likely to “Renting privately is not the best way Susan Aktemel, of Homes for Good. conflict with one another. The reform of the sector to provide a
focus on the cost of their rent rather to house large numbers of lower White Paper should be used as an set of rights and processes around
If landlords sell up, there may be an opportunity to demonstrate the the repossession of properties that
than the condition of the property income earners,” says Affordable opportunity to rebalance housing
when deciding which home to rent Housing Commission Chair, Lord Best. positive virtues of landlords, are clearer and fairer to both
tenure in the UK says Lord Best, Chair tenants and government working landlords and tenants. We also
(53% versus 35%)23. “We need social housing to do that.” of the Affordable Housing in partnership with one another. want the opportunity to be taken to
“The pandemic has compounded the Commission. Policy incentives could drastically reform the dispute
encourage sales to homeowners and We are not blind to the challenges
problem, so many more are Reform of the PRS and the sector faces. Too often it has process so that as far as possible,
struggling now,” says Reuben Young, social landlords, rather than to mediation is used and where this is
green incentives could investors. Another option might be to
been undermined by the actions of a
Affordable Homes Lead of PricedOut. not possible, court processes are
Two in five people renting privately
boost affordable housing use a ‘green’ incentive to encourage
minority of private landlords who fail
much quicker and easier to access
to provide the standard of housing,
now claim housing benefit and 63% Has the private rental market peaked? buyers to decarbonise these for both tenants and landlords.
or service, they should. Not only does
have no ‘rainy day’ savings to fall back Many of the financial incentives for properties. this leave tenants in a vulnerable Too often it is forgotten that in the
on24. They are only just managing. landlords have been withdrawn. There position, but it also tarnishes the vast majority of cases landlords and
is a substantial regulatory burden on reputation of the vast majority of tenants enjoy a good relationship
The root cause of this problem is the
landlords, due to the complexity, landlords who do the right thing. and tenants are satisfied with the
decline of social housing. The homes
32 33Affordability Rentals
Renting in retirement: a
ticking timebomb?
They will face much higher living
costs in retirement than those who
own their own home29.
600,000 retired households who are
renting privately could struggle with
housing costs31.
VIEWP INT
Private rentals were once the preserve Today, nearly 8 out of 10 older people “An awful lot more pensioners are Polly Neate,
mainly of the young, but in the last (79% of 65+) own their own home. going to be renting in the future. Rent CEO, Shelter
decade the fastest growth has been With no outlay on rent or a mortgage, is going to take up a significant It is now widely recognised that England’s private rented sector
among the middle aged. Private their housing costs are limited to proportion of monthly income,” says is in dire need of reform. The sector has doubled in size in the
renters aged 45-54 rose by 56% in utilities, council tax and maintenance. Lord Best, Chair of the Affordable past 20 years – and regulation has not kept up. Despite many
the last decade, and among 55-64 Housing Commission. “There is time landlords looking after their tenants and properties, the
year olds, they rose 73%27. The Rents that are affordable with a pandemic has proved beyond doubt that the private rented
to do something before the bulk of
Centre for Ageing Better predicts salary, will be unaffordable on a sector, home to 11 million people, is not fit for purpose. Too many
this ‘generation rent’ has this
that a third of over-60s could be pension. Private renters aged 65+ children had to ‘stay home to save lives’ in mouldy, unsafe
problem, but it needs to be done
renting privately renting by 204028. spend 39% of their income on properties. Too many parents were forced to choose between
soon.”
housing30. By the mid-2040s, over paying the rent or putting food on the table. And too many
people had nowhere to turn when things went wrong. Even
while the ban on evictions was in place, renters could still be
served with a Section 21 ‘no-fault’ eviction notice if they
complained about disrepair.
Building trust between The upcoming Renters’ Reform Bill is a truly once-in-a-
generation opportunity to create a professionalised private
tenants and landlords rented sector that works for landlords and tenants alike. The
government can give renters security by scrapping ‘no-fault’
evictions for good. It can professionalise the sector by
Almost a quarter of private tenants live in ‘non-decent’ homes32 – the highest of any housing sector – and while introducing a landlord register. And it can allow both landlords
and tenants to navigate the system by ensuring clear routes to
most tenants are happy with their relationship with their landlord, a significant minority (9%) are not.
redress and well-resourced courts.
Nationwide wants to help build a better landlord-tenant relationship, underpinned by high standards and
At Shelter, we see a real chance to improve the lives of England’s
tenants’ rights. We’ve added our voice to grassroots campaigns to help secure better tenants’ rights. Working 11 million private renters. But we’ll only get there if we work with
with our long-term partner, Shelter we helped show ‘no DSS’ clauses in rental contracts are unlawful. We hope other organisations who represent not just renters but landlords
‘no fault’ Section 21 evictions should be banned in the forthcoming Renters’ Reform Bill, thanks to the efforts of too. The private rented sector has to work for everyone if it’s
campaigners, small and large, and supported by Nationwide. going to provide the safe and secure homes we need.
As a major lender to landlords, we offer a Landlord Lifeguard service to help them stay abreast of their legal Ultimately, we want every single person in this country to have a
and other obligations. safe, secure and affordable home. The private rented sector can
play a key role in helping us achieve this vision – but only if these
vital reforms take place
34 35Availability
VIEWP INT CASE STUDY
Simran’s story:
Leigh Pearce, Chief Executive, Financially, community-led housing
Simran is living with her parents
Nationwide Foundation makes complete sense too. Capital
Economics found that over 10 while saving to buy her first property.
A key tool to be used in rebalancing
years, each £1 of public investment
our housing system is community-
delivers £1.80 of public benefit,
led housing; a grassroots, Intergenerational living:
rising to £2.70 when health and
community solution that builds
benefit savings are included. The To answer the question of what home means to me - I
homes where they’re wanted,
research found that community-led think it's just feeling comfortable, a happy place and my
needed, and at prices locals can
housing saves the NHS money by place to return to […]
truly afford. At the Nationwide
creating homes that are warm, dry I adore my current housing situation. I am incredibly
Foundation, we first became
and safe, and so reducing illnesses lucky to be living with my family. I know people want to
excited about the potential of the
and health conditions brought on
community-led housing sector in move out as soon as they can, but I don’t see myself
by poor problems. It also reduces
2009, and we’ve supported it ever doing that […]
since, watching it go from strength
to strength.
the overall cost of Housing Benefit
because homes are truly
affordable.
The market is Lockdown has definitely shown me how important
green space is. But I know that that would be hard, in
Research published last year by
the National Community Land
There’s now a strong base of
evidence signalling the positive
crazy right terms of location, to also have a green garden […]
Trust Network demonstrated that
there is strong demand and a
robust pipeline of projects, with
contributions of community-led
housing. The future of housing will,
now […] Home ownership and affordability:
I have a Lifetime ISA and a Help-to-Buy ISA. I am
putting money aside every month […]
almost 12,000 homes poised and
waiting to be built. These are
of course, need government
support. But, people across the UK for first time I think finding the right mortgage will be difficult. We
aren’t waiting for the green light weren’t taught this thing in school…all the different
new homes planned across the
country, often in areas where the
affordability crisis bites hardest
from Westminster. They’re taking
things into their own hands and
buyers aspects that come with a mortgage - interest rates, fixed
mortgages… it’s quite a confusing topic. I am still trying
creating homes for the future; to educate myself on it […]
and local people find themselves
homes that are truly affordable and
priced out of the market.
have the power to transform the
lives of people living in them.
36 37The Green Generation Gap
% unconcerned about their home’s carbon emissions % interested in greening their homes
Sustainability 55%
56%
69% 52%
61%
64%
50% 65%
34% 72%
Overall Baby Boomer Gen X Millennial Gen Z Overall Baby Boomer Gen X Millennial Gen Z
Ipsos MORI. 2,985 adults aged 16-75 in the UK, interviewed online 25-28 June 2021
The UK has made ambitious commitments to net zero. As Britain’s 29 million homes directly produce
15% of the UK’s emissions, greening them will play an essential role in meeting our 2050 commitment.
And as we need to decarbonise homes at the rate of two per minute by 2050, there’s literally not a
minute to lose.
The task presents challenges and opportunities. This report focuses on three challenges in particular:
consumers, complexity and costs. Consumers need to own the change. Costs need to be shared fairly.
Complexity needs to be simplified.
Consumers need While over half of homeowners are They have not fully grasped the full scale
interested in greening their homes of the challenge of decarbonising their
convincing of the need (see chart), almost as many are homes and think they are already doing
to green their homes unconcerned about the carbon their bit. 60% of consumers don’t think
emissions of their current home. their energy consumption at home has
Green
People’s concern for the environment People think they are doing enough: much of an impact on emissions34.
has been rising along with sea levels. half of homeowners say they have People think that the things they are
Concerns rose by 24 percentage carried out some form of energy already doing – such as recycling,
points between 2013 and 202033 as efficient home improvement in the turning off lights, using energy efficient
David Attenborough’s Blue Planet last five years. But these bulbs – are the most important, whereas
series and the young activist Greta improvements are more likely to be the vast majority of home emissions are
houses
Thunberg caught the public’s small steps like updating gas boilers from heating.
imagination. But while consumers or replacing lightbulbs, which by If we are to meet net zero challenges,
have taken active steps to, say, themselves will not add up to we will need to convince consumers
reduce plastics use, they are giving enough change to meet ambitious of the need to decarbonise their
mixed signals about the much net zero targets. homes, including installing new
bigger challenge of decarbonising heating and hot water systems.
their homes.
38 39Sustainability
Fair and affordable funding
formula will be key to
lightbulbs alone. We will need to
replace gas-fired boilers with low
carbon alternatives, such as air and
VIEWP INT
Customers are
greening homes ground source heat pumps, or a Bukky Bird, Group Sustainability We’re committed to becoming a
hydrogen-ready boiler. As a result, understandably Director, Barratt Developments net zero business by 2040 and all
Costs are one of the biggest barriers
to green improvements. Consumers
decarbonising a home is likely to cost concerned about We have reached a critical
our homes will be zero carbon from
tens of thousands of pounds. It may saving money, and 2030. Last year we became the
simply aren’t prioritising green issues inflection point in the fight against
also result in higher, not lower, bills first major housebuilder to set
in their spending. Making green
unless energy pricing is reformed. our challenge is to climate change – with our homes
science-based carbon reduction
adaptations to a home ranked 10th in on the frontline of mitigating and
a list of post-pandemic spending It is essential that a fair and affordable
demonstrate that adapting to climate change.
targets and joined the UN’s Race
to Zero.
priorities. Holidays, meals out, and formula for sharing the costs between energy efficient As well as homes fit for the future,
To get there we need to design
buying clothes and books, all ranked the consumers and the taxpayer is homes are also the housebuilders can be part of a
sustainable places and test
much higher. found if we are to achieve widespread green economic recovery as we
acceptance of the government’s green
cost effective innovative construction techniques
“Even where they want to go green, emerge from the pandemic,
home agenda. Jenna’s experience choice.” creating jobs and opportunity
and smart technologies. Some
many people put their pockets first,” trials will succeed, some will not –
illustrates the potential pitfalls. “My Bukky Bird, Group Sustainability across the country.
says Guy Anker, Deputy Editor & Head but all will move us forward.
brother had solar panels and lost Director, Barratt Developments Policymakers can set the direction.
of Operations at Money Saving Expert, Ultimately, the customer must be
quite a lot of money – they cost quite The Future Homes Standard will
pointing to the green energy market. at the heart of our plans and the
a lot initially, but over time then I drive a step-change in how we
“We're now seeing bigger interest in homes of the future will need to
think you’re supposed to recoup it. build and how our customers live
green household energy as there's no be accessible, affordable and
But because they then moved, they in their homes – but we need
longer a premium for getting it,” he aspirational. Customers need Finally, all parts of the housing
never made any money on it. Because clarity on critical elements of the
says. “When it cost more, there wasn't to see and feel the value of a market needs to work together.
we saw how that turned out, we transition today, as well as a bold
that demand.” greener home. Planners need to be well-
decided not to do it.” long-term, cross-sector roadmap. resourced, with consistent carbon
This points to a substantial gap Building sustainable homes on a standards. Green mortgages must
People will be reluctant to upgrade However, this is not just a
between the level of environmental national scale requires strong become more commonplace,
their homes if they don’t see clear challenge for government - every
concerns, and real-life actions. planning and collaboration. rewarding customers who make
financial benefits, or fear that they business needs to take
Developing key industries, along
Untangling the value-action gap and may end up paying twice over. responsibility. For housebuilders, the move to a sustainable home.
with the right skills, will be critical.
understanding the cost drivers will be the industry will see more change There is much to do, but the
We are working with our supply
essential to making our homes this decade than it has over the industry is up for the challenge of
chain so they are ready to meet the
greener, especially as the costs are so previous fifty years. It will not be building the sustainable homes
demands of 300,000 new homes a
easy, but as the UK’s largest and neighbourhoods we need for
high. This is because we cannot year, while tackling the millions of
housebuilder, we have already future generations.
achieve net zero in our homes existing inefficient properties
started our journey.
through insulation and low energy across the country.
40 41You can also read
