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Today we are looking into whether the fall in judgments could be accredited to specific regions or areas of the UK. To measure this we are going to look at average house purchase and rental prices.

We hypothesise that areas which have seen the largest decrease in judgment levels in January 2020 have also, on average, higher house prices. Higher house prices may indicate that the area is in general a more affluent area that sees less financial vulnerability. If an area has seen big decreases in the number of judgments, does this indicate the financial stability of an area is changing, which may be reflected in the house prices of the area?

To explore this, it is necessary to appreciate what has happened to housing and renting prices in the last year. Rightmove produce monthly reports through their house prices index. At the start of 2020, they were reporting a bounce in the housing market post-election [1]. The month’s 2.3% increase in new seller asking prices was the largest increase Rightmove reported on since 2002. For Rightmove’s property expert Miles Shipside, this surging house price market suggests a level of economic stability beginning to be felt across the country through reduction in political uncertainty [1].

For this investigation, I selected the local authorities that had both the greatest decreases in judgments and those that had seen the greatest increases in judgments to allow for a comparison. Eleven areas in total which identified, which were; Castle Point, Eden, Halton, Ipswich, Kettering, North Norfolk, Redcar and Cleveland, Runnymede, South Cambridgeshire, West Devon and Winchester.

The table below shows the year on year changes in the number of judgments in each area, as well as the region of the UK the local authority is located in, and the judgment density [2] per 10,000 population for 2019.

judgment density table.png

There appears to be no particular trend in the regions of the UK that the biggest increase and the biggest decreases. This is in line with the overall trend that saw all regions decrease by an average of 30%.

The next table considers each local authority by the average house price in the area [3] and the average weekly rent [4].

rent table.png

In initially comparing the data, it appears that there is a correlation between judgment density and weekly rent. Namely, the higher the judgment density, the lower the weekly rent. Within the eleven local authorities we reviewed, we saw the greatest judgment density per 10,000 population in Ipswich. In 2019, there were 135 judgments per 10,000 population and the weekly rent was averagely £88.61. This compares to South Cambridgeshire which saw the lowest judgment density at 38 per 10,000 population and an average weekly rent of £110.50.

Therefore, it is fair to ascertain that areas that see higher levels of weekly rent and house prices, are less likely to see high levels of judgments. However, we are testing the change. Therefore we need to turn to the % change year on year on house prices.

This reveals a relationship. All the local authorities that saw a decrease in house prices between 2018 and 2019, saw an increase in the number of judgments issued in January 2019. This is indicative of financial hardship in the area. However, this trend is not continued with the percentage changes between 2019 and 2020. This therefore suggests that changes in the house and weekly rent prices have not directly affected the drop in judgments seen in January 2020.

It could be in the subtleties that the changes have occurred. In going back to the data, there is a distinct set of groups that have seen the biggest drops in numbers of judgments; the lower value judgments. There is a clear divide between the local authorities that saw increases and decrease in judgment levels in January 2020 and the behaviour of judgments under £1,500. In local authorities that saw a fall in the number of judgments, there was an average decrease in smaller value judgments of 58%. In those local authorities that saw increases in the number of judgments in January 2020, the increases in smaller value judgments averaged 54%. From this it can be ascertained that changes in the small value judgments for the period drove the overall changes in number of records. As only four local authorities saw increases to the number of records during the period, it is understandable that this relationship may have contributed to the fall in number of judgments. But as it is the smaller value judgments, we have to assume that more specific changes to spending habits or local funding may have changed the prominence of judgments under £1,500.

Overall, it is clear that changes in housing prices, although somewhat correlated to judgment figures, are not sufficient to explain the fall in judgment levels seen in January 2020. Instead, it appears that lower value judgments have played a key part in the fall and therefore further investigation needs to address this category.

In the next blog, I will be addressing the political changes which may have affected the judgment levels, such as the outcome of the political election. We reported on this at the time (check it out here) and I will be updating it with how things have progressed.

If you want to find information on the geographical spread of judgments, visit RTView or to see more detailed statistical analysis of Q1 2020, check out our data dashboard.

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[1] https://www.rightmove.co.uk/news/articles/property-news/post-election-bounce-as-optimism-returns/

[2] Based on population estimates. Available at: https://www.nomisweb.co.uk/datasets/pestsyoala

[3] https://landregistry.data.gov.uk/app/ukhpi

[4] https://www.gov.uk/government/statistical-data-sets/live-tables-on-rents-lettings-and-tenancies