Household housing expenditure to income ratio

The household housing cost ratio is the ratio of the total expenditure on the main residence to household income.

Expenditure includes:

• for homeowners, mortgage repayments for the purchase of the property, including capital repayments, council tax, service charges and water and energy costs associated with the property. These exclude the cost of capital tied up in the property and therefore differ from the cost of using the property.
• for tenants: rent, service charges, and water and energy costs associated with the property.

Income includes income from paid or self-employed work, replacement income (sickness and unemployment benefits), pensions and early retirement benefits, social and family benefits, and investment income. It is measured before tax and does not include housing benefit.

The housing cost ratio is referred to as ‘net’ if the housing benefit received by the household is deducted from housing expenditure, and ‘gross’ otherwise.

This indicator measures the proportion of household expenditure accounted for by housing costs and the ‘solvency-enhancing’ effect of housing benefits.