Evaluation Scotland Wales
The UK Strategy for Financial Wellbeing is taking forward the work of the Financial Capability Strategy Opens in a new window

insight

Coping with housing costs during the coronavirus crisis

Evidence type: Insight i

Context

Coronavirus has had a serious impact on people’s employment, earnings, benefits, expenditures and living situations. This study focuses on levels of housing stress, and how families in different housing tenures are coping. This is an important question given that housing is usually a family’s largest single outgoing each week; that it is a cost that is difficult to flex with ease; and that serious consequences can arise if families cannot keep up with payments.

The study

The report presents findings from a survey on the early impact of coronavirus on living standards amongst working-age people in the UK, which was commissioned by The Resolution Foundation, an independent think-tank focused on improving living standards for those on low to middle incomes. It was conducted using an online interview administered to a sample of 6,005 adult members of the YouGov Plc UK panel. The findings were weighted to be representative of all UK adults (aged 18+) according to age, gender, and region. The analysis considers people in the following housing tenure groups:

  • Own with mortgage
  • Private renter
  • Social renter

People who own their houses outright were excluded from the analysis because they don’t typically have significant housing costs.

Key findings

  • Income shock is evenly distributed but renters are more likely to have fallen behind: While the earnings hit has been widely experienced across tenure groups, renters are one-and-a-half to two times more likely to have fallen behind with their housing payments compared to mortgaged home owners.
  • Owners are advantaged: Mortgaged owners entered the crisis with lower average housing costs and a bigger financial buffer than renters, and have also been more successful at directly reducing housing costs in recent weeks. While just one-in-twelve home owners applying for a mortgage holiday have been refused, that figure stands at one-in-two for those renters who have sought a rent reduction.
  • Benefits system can leave gaps: While the social security system potentially offers a (more generous) backstop for renters, eligibility rules and caps leave some renters without adequate support. The survey shows that one-third of new benefit claimants are in housing cost arrears.
  • Families are cutting back: Across tenure groups, cutting back spending on other items has been the most common way in which families have managed housing costs during the crisis. Worryingly, a majority of renters who have done so are also at risk of material deprivation.
  • Moving in with parents: A small group of (especially younger) people have moved to another home, but this is largely the preserve of those with parents willing and able to provide accommodation.
  • Implications: The authors argue that the benefit is rightly the main backstop for renters at present, but that the system needs to be all-encompassing (e.g. by suspending capital rules), and provide adequate support (e.g. by lifting the benefit cap). Thought should also be given to how landlords and tenants can best be supported to work through arrears in future months.

Points to consider

  • Methodological strengths/weaknesses: The sample used was weighted to be representative of UK working-age adults only by age, gender and region.
    • The authors state that it couldn’t be weighted to produce a nationally representative tenure picture, but that the sample does not differ significantly from a representative study conducted by the Office for National Statistics, which they cite. This gives credibility to the findings. Confidence intervals are not stated, however 6,005 is a good sample size for this type of analysis.
  • Relevance: The study is highly relevant, despite being conducted in the early days of coronavirus, as the impact will continue to be felt by the most affected families for some time.
  • Generalisability/ transferability: The study is specific to working-age adults in the UK and can’t be applied to any other markets or audiences as the response and impact of coronavirus has been so different in every country.
    • This report is applicable to anyone with an interest in the impact of coronavirus on living standards, such government, support agencies, policy makers, policy implementers, regulators or educators.

Key info

Client group
Year of publication
2020
Country/Countries
United Kingdom
Contact information

Lindsay Judge, The Resolution Foundation