Patrick Mooney, housing consultant and news editor of Housing, Management & Maintenance magazine says the social housing market is in the doldrums, after a Budget which missed the opportunity for wider economic stimulus.

The domestic housing market is a notoriously fickle beast and it relies heavily on stability in the political world, the economy and financial markets in order to thrive. Levels of demand clearly affect prices, but they have much less of an effect on the supply side of housing than you might think.

My opening paragraph is the end of my ‘All You Need to Know about Housing’ tutorial, but needless to say it might explain why there is so much turmoil in the housing markets operating all over the country at the moment. Elections naturally create uncertainty and instability (except in countries governed by a single party or a despotic leader) and it is estimated that approximately half of the world’s population is entitled to vote in general elections taking place this year. All of which means that our domestic housing market is being buffeted by events happening all across the globe, over which we have absolutely no control.

There are further complications in the provision of new social and affordable housing which is heavily reliant on a host of other factors, such as the level of need, the local planning framework and the availability and cost of land. But above all else it depends on the amount of subsidy which social landlords can put in and how much financial support they get from Homes England and/or a host local authority.

MISSED OPPORTUNITY

The budget in March provided the UK Government with a golden opportunity to provide a lot of stimulus, investment and reassurance to domestic housing markets, but sadly it failed to do so. As a result, we are potentially facing a year when record low levels of new houses for sale and for rent are delivered. But this is not a new problem. For decades, governments of all persuasions have failed to build enough social homes (in particular) and every year we lose more than we build through right-to-buy sales and demolitions. Last year alone, there was a net loss of nearly 11,700 social homes, while 1.3 million households are stuck on social housing waiting lists in England.

This matters hugely because the housing sector is already failing to meet the needs of those on lower than average incomes. Social rents are generally around 50% cheaper than private rents and these homes are the only genuinely affordable housing by design, as rents should be tied to local incomes. In human terms we are seeing young children being raised in temporary housing to the detriment of their life chances and a growing number of councils facing bankruptcy and budget cuts running into billions of pounds. Among the recent figures released
on homelessness by the Department for Levelling Up, Housing and Communities, are the following:

• The number of homeless households living in temporary accommodation hit a record high in England with 109,000 households in temporary accommodation which is up 10% in a year;   
• Some 142,490 children are homeless and living in temporary accommodation with their families. This is another record high and it is up by 16,960 (14%) in a year;
• These figures include nearly 20,000 babies aged under one, nearly 9,000 infants aged between one and two and about 8,200 aged two to three, with over 40,000 children of primary school age in temporary accommodation, fractionally under 1% of all state primary pupils across England;
• An investigation into child deaths found that living in temporary accommodation was a factor in the unexpected deaths of 55 children between April 2019 and March 2023, with 42 of the deceased under 12 months of age. 

To this rash of horrific statistics, we can add:

• The number of people sleeping rough in England has more than doubled since 2010 when the data started being collected – rising by 120%; 
• The latest count shows 3,898 people were recorded sleeping rough on a given night in 2023, a 27% increase in one year;
• 26,311 households in England have been removed from their homes by court bailiffs as a result of Section 21 since
  the Government first promised to scrap no-fault evictions in 2019;
• In the past year 9,457 households were kicked out of their homes by bailiffs, up by 49% from 6,339 households in 2022;
• A further 30,230 landlords in England started Section 21 no-fault eviction court proceedings in 2023 – a 28% rise in one year.

As if these figures are not frightening enough, the housing charity Shelter has found that most renters move out before the end of their notice period to avoid the eviction claim going to court, so the repossession statistics only show part of a much bigger problem. Shelter adds that it takes a third of tenants (34%) longer than two months to find a new home the last time they moved.

The Government first promised to scrap no fault evictions back in 2019 and in May 2023, it finally committed to the policy by publishing the Renters (Reform) Bill. But more recently they said the ban will only be introduced after unspecified court reforms take place, threatening to deny and delay the change renters were promised almost five years ago, until some unspecified date after the election.

These are all symptoms of a supply system which is suffering from extreme stress, particularly in the under-provision of new social homes being provided by councils and housing associations. The number of social homes being built has been on a downward trajectory for years, but has now reached an absolute low point. In short, the situation is pretty dire.  

A ready-made solution

Yet just before the budget, the National Housing Federation (NHF) and Shelter teamed up to submit a growth plan to the chancellor which could have delivered about 90,000 social (or affordable) homes and which more than paid for itself in just three years by providing a massive boost to the rest of the economy and in particular the construction sector. Jeremy Hunt could have been a hero by embracing this plan, but instead he identified the need to cut benefits from those voters who would normally occupy these low rent homes and who he considered to be non-deserving. In deciding to take this line, he instead became the villain of the piece.  

The plan showed that within just three years, the 90,000 social rent homes will have paid for themselves and returned £37.8bn back into the economy, largely by boosting the construction industry. It would directly support nearly 140,000 jobs in the first year alone. In addition the new social homes would generate huge savings for the taxpayer across multiple departments, as follows:  

• £4.5bn savings on housing benefit;  
• £2.5bn income from construction taxes;  
• £3.8bn income from employment taxes;   
• £5.2bn savings to the NHS;  
• £4.5bn savings from reduction in homelessness; and  
• £3.3bn savings to Universal Credit.  

The total economic and social benefits of building 90,000 social rent homes would generate £51.2bn net over 30 years (which is £86.5bn gross), including a £12bn profit to the taxpayer. Given the state of the nation’s finances, these figures are far too large to just be dismissed out of hand, yet Mr Hunt appears to have done just this.

Investment is the solution

Polly Neate, chief executive of Shelter, commented: “Homelessness is a political choice. By ignoring the vast number of people losing their homes, he is harming both the economy and people whose lives are being wrecked by homelessness. The Chancellor is right that investment is the best way to improve productivity. Had he invested in building 90,000 social homes a year he could end homelessness, save the taxpayer money, boost jobs, reduce the burden of poor housing on our NHS and improve children’s life chances.

“If this Government or the next is serious about wanting the economy to grow and people to thrive, investing in genuinely affordable housing is a no brainer. Building 90,000 social homes would pay for themselves and return an impressive £37.8bn back to the economy in just three years.” 

Alongside the Budget, the Government set out a vision for Leeds to unlock 20,000 homes, and in London, it is establishing the Euston Housing Delivery Group with plans to deliver up to 10,000 new homes. It is also stimulating housing delivery in 20 cities and urban areas, where housing delivery has dipped. Following on from the £188m allocated to housing projects in Sheffield, Blackpool and Liverpool in early March, the Budget allocated over £240m to projects in London, unlocking up to 7,200 homes in Barking and a new life sciences hub and up to 750 homes in Canary Wharf. The trouble is as impressive as these plans and funding allocations are, they will take time to have an impact and they are too late to help today’s homeless. 

One measure that could help local authorities to deliver more affordable housing, is that the Government increased the cap (from 40% to 50%) on the percentage of the cost of a replacement home that can be funded from right-to-buy receipts. But once again this could be deemed as being too little and too late. It will not have an impact on today or this year’s supply of new social homes. The children living in temporary accommodation today will need to be patient if they are to benefit from this. But in the meantime their schooling will be badly disrupted. A 2023 study by Shelter found that over a third of the children placed in temporary accommodation had missed more than a month of school.

In closing Kate Henderson, chief executive of the National Housing Federation said: “Our research showed not only that the housing crisis can be solved, but that this can be done in a
way that will save the taxpayer money, boost jobs and bring huge benefits to the wider economy. 

Building more social homes is a win-win solution. It will immediately boost the construction industry, supporting thousands of jobs, and will save the Government and taxpayer
money over the longer term. It also brings huge benefits to people affected by the housing crisis through reducing homelessness, increasing employment and boosting children’s life chances.” So, why has the Chancellor chosen to ignore the plan?