Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk

Find out what is going on

Latest News

Home Ownership Overestimated and Tenants Underestimated

Home ownership numbers are examined regularly by government offices and independent organizations. But what if the approach is flawed? Then home ownership numbers are overestimated, and a portion of tenants are statistically unaccounted for.

So how could such a mistake occur? As reported by the BBC, the Resolution Foundation, a think-tank, knows how.

Home Ownership and Family Units

It’s no surprise that more attention is paid to home owners than tenants. Often, the percentage of home owner’s is an indicator of an economy’s health. But the definition of what comprises a family unit can throw off the figures.

A family unit represents an individual, a couple, and one or two parents and their children. However, multiple single adults living in a single residence count as multiple family units. While that doesn’t inherently cause a problem, when only one of those adults is counted (presumably the home owner) then the four other adults can fall through the cracks.

Private Rental Sector

Tenants residing in traditional rental properties are trackable. But those renting privately are easily missed. For example, if a home owner has a single adult living as a tenant within the domicile, that single adult is harder to track. Conventional housing data might be missing an estimated 5.8 million family units that reside in the private home of someone else.

The Office for National Statistics Census data determines the allocation various public services throughout England and Wales. It also directs policy making decisions throughout the region. The collection of census data potentially misses those renting privately. Census questionnaires are directed to households, completed by residents, and returned through the post or online. The system already has the potential for error, as gathering information from an entire population is a tall order. But, if some people are essentially excluded incidentally, then the results are at least somewhat inaccurate.

So, what does that mean? It means that the “official” 64 percent home ownership rate provided by the Office for National Statistics might be off by approximately 13 percent. The Resolution Foundation believes home ownership rates are closer to 51 percent.

Why This Matters?

Potentially inaccurate numbers seem innocuous on the surface. However, many government spending decisions are based on data such as this. Housing and development projects are budgeted based on statistics regarding home ownership and tenant rates, and certain regulations regarding landlord and tenant relationships are impacted as well.

The number of low-income tenants being underestimated causes goals to be based on faulty data. That means efforts to provide affordable housing to those most in need are insufficient.

Additionally, if rental prices continue to rise, more “family units” may end up in private rental arrangements. This means a larger percentage of the population will be inaccurately tracked if the standard approach for measuring the population are used into the future.

Granted, initial awareness about the problem helps encourage government officials to find a solution. However, correcting inaccuracies at this level can take a significant amount of time, as new mechanisms are required to better track the state of the population.

Latest News