Should I include information about my mental health in my masters personal statements? I graduated in 2016 with a 2:2, which I feel was lower than what I could have achieved.

I had had some minor issues before starting university, however I had an amazing support system and managed to get these in check. I completed my first year with only the normal issues (homesickness at first and adjusting to living away from home) until just before the end. I failed the last two exams of the year, partly due to the same issues that reoccurred later. 

I had been struggling with one of my elective modules and after talking with my tutor, he recommended not worrying about it as I could fail 20 credits and as a 10 credit module, it would not affect my grade. However, the day of I woke up and completely panicked, zoning in and out all morning. I walked to the exam, and blanked and ended up in my department building instead of the exam hall, which was 20 minutes away and I had to run down a very steep hill to make it to the exam. But I made it and sat the exam.

I injured my knee while running. The problem with this is that my main coping method is exercise and I was on crutches. I then managed to completely space out for the last exam of the year. Meaning I failed both these modules, which was my 20 credit allowance. Despite this I averaged a high 2:1 for the year.

I went into my second year, with added roles and responsibilities. I had lived in catered accommodation in first year and moved to self catered in my second year. I became the social secretary of the physics society and started another sport (total of three) I had been a super human in my first year and wanted to do more. This turned out to be a bad idea, as my mental health started to decline, and my grades took a hit.

I then tried to pull them back up in my third year, but poor living conditions caused a physical health decline, which then exacerbated the mental health problems to a point where some days I couldn't get out of bed.

The main problem being that in my third year I was living with some really shitty people and they were really scathing of mental health issues, meaning I didn't seek the help I needed and am now getting and didn't apply for special circumstance. Hindsight really is 20:20.

I have taken time out of my career to get this sorted and to make sure that I am taking the right path for me. I have now ruled it down to three possible paths and want to apply to see what I can do. 

I just want to know whether I should mention these issues and the steps I've taken in my time off to overcome these, on my personal statement. I don't seem to get anywhere else to put this and none of my previous lecturers know about this to mention on any references.
You should not. But if you write it in the way you wrote the question explanation (rich in useless details) nobody would consider it. Another aspect you need to work on: given the text, the only thing important to you are/were the grades, not career development and knowledge. The major reason you attend classes is to acquire knowledge and wisdom, with grades being a metric of how this acquisition went. If you go for grades without actually acquiring knowledge, your career will get very dull.

The statement is about your passion to the field (which is ... ?), about how you want to teach, sing, dance, engineer, heal, fight, prosecute or whatever the degree is about, how enthusiastic you are about it. While pushing this concept can be enforced by your past, the statement shouldn't be a judgement of what you did in the past.

We all have ups and downs. Finding the one responsible for downs (like the shitty people from the junior year for example) is an evidence of lack of personal responsibility. You had your down, you overcame it, that's good for you, but it was because of you, not because of other people.