Social Housing Weekly - 7 October 2024

Dust yourself off and try again

This week we are once again setting out the challenge the Government faces when it comes to housing. Peter zeros in on the desperate need for more social housing and just how big the gap is between new social homes rolling off the factory line and the number of people on council housing lists. The situation is dire and you'd be justified in pointing out that we here at SHW often say that but don't usually offer much in the way of a fix...

That's probably because there isn't a quick fix. The state of Britain's housing market is such that you would need to reform almost every part of it to tackle the unaffordability of almost every kind of home.

You also need money; something Rachael Reeves is increasingly insistent there isn't any of. Her ominous request that all government departments model a 10% cut in spending is yet more evidence that her approach of treating the Government budget like a household one is a firmly held belief we will have to pry from her cold, dead hands.

Meanwhile, new research by The Housing Forum has found that the average cost of building a home will soon surpass £250,000 due to new building safety and environmental requirements. We know that building a social home in London is nearly double this. 

So how can we address a crisis that is so much about money without more money? Well, for a start we might consider no longer accepting the framework in which we have always worked. The notion that the only way to deliver social housing is to force private developers to build it as a kind of tax on profits from building private homes has only led, in London at least, to a dearth of mid-market homes being delivered as developers have sought to close the gap by building prime or super-prime properties overwhelmingly not purchased by Londoners. This has driven up prices, pushing middle and lower income households further out of the city and, in some cases, onto ever-bloated housing lists. 

I am far from suggesting that reform alone can solve this problem; money is going to be essential and the Government is either going to have to cough up by increased borrowing (or taxes) or pull a jolly good rabbit out of the hat to leverage international capital investment. Still, I can't help but hope that in some room in Whitehall, there is a group of very clever people and a blank whiteboard, asking themselves the question, 'what if we just tore it all up and started again?'

Harriet Shone

LCA Director

Tailor Your Experience

At LCA, we believe in catering our insights to your specific interests. Choose the content that aligns with your needs and stay informed about the areas that matter most to you.

Weathering the "perfect storm"

Tackling the barriers to delivering new social homes - by Peter Lord

Today, the Home Builders Federation has claimed that social and affordable housing supply is under threat from a "perfect storm" of financial and other barriers which are preventing new social homes being built, despite sites being earmarked.

The need for new social homes is acute, with 1.3 million individuals and households currently on waiting lists. Even former Tory Housing Secretary Simon Clarke has this week claimed that his government failed to take the housing crisis sufficiently seriously. Shelter and the National Housing Federation have previously called for 90,000 social homes to be built each year, but there is no getting away from the fact that this is more than ten times what is currently being delivered, with fewer than 5,000 new social homes completed in 2023/24.

Nonetheless, the solution to providing more social homes cannot rely entirely on the expensive and time-consuming business of building new homes from scratch. This week, The Times reported that there are 70,000 social homes lying vacant in England. At the current rate, this is more homes than could be built in 14 years. 

While this doesn't provide a single solution to the 1.3m households on waiting lists for social housing, it would be an economical move compared to the cost of housing these people, however temporarily, in the private sector.

Then there is the thorny issue of replacing the stock lost under Right to Buy. A number of London Councils operate buy-back programmes for former council housing stock, with Islington recently repurchasing 246 homes, in what it believes to be one of the largest in the country. However, there is no getting away from the fact that buy-backs can only provide new council homes in the hundreds, rather than the thousands, for each local authority.

There are no easy answers, but we need to acknowledge that there is a real and urgent need to increase delivery, buy up suitable stock where available, and re-occupy vacant homes, if we are to make a dent on those social housing waiting lists.

Housing in the headlines

Rayner calls on Khan to increase housebuilding in the capital

The Deputy Prime Minister, Angela Rayner, has warned the Mayor of London that London housebuilding must ‘markedly increase’ as the rate is lower than half of what it should be. Rayner also confirmed that the Ministerial Direction by the previous Secretary of State, Michael Gove, directing the Mayor to partially re-write the London Plan has been cancelled.

Rental market tightens as landlords sell up

Pressure on the rental market continues to increase this autumn despite the market cooling earlier in the spring, with more landlords selling up and more tenants looking for short-term homes, according to the Office for National Statistics. Average UK private rents increased by 8.6% in the 12 months to July 2024, while rents in London increased by 9.7%.

Sector calls for more cash to bridge the gap before the new Affordable Housing Programme

The Government’s next five-year Affordable Homes Programme is not expected to be announced until Spring 2025. This is because it is unlikely to be announced before the Government’s Spring Spending Review, which sets the limits of department spending for the next three years. Housing sector bodies are calling for a cash injection to tide over the current Affordable Homes Programme ahead of the review next year.

Let's get political

Shapps calls for Tories to adopt "Gails Strategy"

Conservatives Together, run by former defence secretary Grant Shapps, has advised that the Conservatives should emulate the ‘Gail’s strategy’ used by the Liberal Democrats during the general election to target middle-class voters. The strategy targeted constituencies with a branch of Gail’s bakery.

Reeves to cut capital spending as borrowing costs rise and business confidence falls

The Treasury has asked members of the cabinet to model cuts to their investment plans of up to 10% of their annual capital spending as part of this month’s spending review. This is despite the Chancellor pledging to invest more to grow the economy, with economists warning that such cuts to capital spending could end up damaging the economy.

The Bank of England has warned that financial markets are in danger of a ‘sharp correction’ that could trigger a credit crunch and increase borrowing costs. 

 The Institute of Directors’ economic confidence index, which measures business leaders’ optimism about the economic climate, registered a decline from -12 in August to -38 in September.