Renters are considerably more likely to have low living standards than compared to homeowners. That is according to a new report by the Institute for Fiscal Studies (IFS).

The report examines patterns of housing tenure, quality and affordability for people on lower incomes.

It finds that social and private renters have poverty rates of 46% and 34% respectively, compared with 12% for owner-occupiers. And they are also far more likely to be materially deprived or to live in food insecurity.

The report also found that a growing number of low-income households are in the private rented sector, whereas the share of social housing households is declining. Furthermore, the data indicates that low-income individuals from younger generations are ‘especially likely’ to be renting privately.

Another finding is that younger renters experience a higher rate of private rents compared to those born in the 1960s or 1970s. The report says: “For low-income adults born in the 1960s or before, private renting rates ranged from 5% to 20% at almost every age. But for those born in the 1970s it has persistently been in the 25–30% region, and for those born in the 1980s around 40–50%, as social renting and owner-occupation have declined. These patterns suggest that private renting will become even more common among low-income families going forward.”

And while costs are higher among private renters, the IFS observed that, at least for low-income families, the quality of homes is worse.  “Among lower-income families, those in the private rented sector are more likely than social renters or owner-occupiers to be living in a home that is unsafe, in disrepair, difficult to adequately heat or lacking modern facilities. 25% of their homes would therefore fail the Decent Homes Standard required of social housing, compared with 18% of owner-occupied homes and 12% of social rented homes.”

In the wake of the pandemic, when the local housing allowance (LHA) rates were increased to the 30th percentile of local rents, 23% of private rental properties (as listed on Zoopla) were deemed affordable for housing benefit recipients. In Q1 of 2023, LHA rates have since been frozen in cash terms, but rents for new lets have risen to the point that now just 5% of private rental properties are affordable for housing benefit recipients.

The knock-on effect of this, according to the IFS, is that as the share of properties being affordable to housing benefit recipients is decreasing, so is the relative quality of properties that are affordable. Relative to the rest of the nation, ‘affordable’ homes were 15% more likely to have an energy rating of D or below, and had 19% higher heating and hot water costs in Q1 of 2023.

Affordable properties are also generally more likely to be in low-employment and high-crime areas, though have slightly better access to local services such as post offices, supermarkets and GPs.

In the report, the IFS adds: “On average, housing costs amount to 11.4% of UK households’ incomes. Housing tenure is strongly predictive of living standards: social renters have a poverty rate based on incomes after deducting housing costs (AHC) of 46%, private renters 34%, mortgagors 11%, and those who own their home outright 15%.

“A large part of this is due to housing costs, especially for private renters, as shown by the fact that renters’ poverty rates are so much higher on an AHC basis than when total income is used (BHC). Similar patterns are seen in rates of material deprivation and food insecurity. Any serious attempt to boost living standards, and particularly to tackle poverty, is likely going to have to grapple with housing costs.”

You can read the full report here.