Social Housing Speed Read – Affordable and social rented homes have decreased by almost 11% in the past 12 months
5th February, 2018
Analysis by the Chartered Institute of Housing (CIH) and statistics published by the Ministry of Housing, Communities and Local Government (MHCLG) reveal figures showing a large decrease in the amount of affordable and social rented homes that are available.
What are the figures?
According to the CIH, more than 150,000 of the most affordable rented homes have been taken out of the social housing sector over the last five years. If losses continue, the CIH predict a loss of a further 230,000 affordable homes by 2020 – made up of 158,642 council homes and 70,972 housing association homes between 2012 – 2020. The CIH have based these predicted losses on assumptions such as right to buy sales continuing at current rates and high value council house sales continuing due to the uncertainty around the extension of the right to buy scheme to housing associations.
The Housing Statistical Release published by the MHCLG on 30 January has revealed the following:
- A loss of 103,642 local authority homes and 46,972 housing association homes for social rent between 2012 – 2017
- Social housing lettings by private RP’s decreased by 11% to 231,000 in 2016/2017
- Local authority lettings decreased by 9% to 103,000 in 2016/2017
- General needs private RP lettings at social rent level on a fixed term basis increased to 23% from 18% in 2015/2016 whereas local authority lettings fell 8% in that same period
What is the effect of this?
The majority of the loss of socially rented homes is attributable to properties being sold through the right to buy scheme or social rent homes being re-let at a higher ‘affordable rent’. Demolition of houses is also a contributing factor to the losses.
‘Social rent’ is generally 30% – 40% lower than market rent. Government funding for social rent was cut by the coalition Government in 2010 with funding now aimed at ‘affordable rent’ which can be calculated up to 80% of market rents. These cuts, along with decreasing availability of affordable housing, make it very difficult for low income earners to afford homes of a decent standard.
Chief executive of the CIH, Terrie Alafat, said: “For many people on lower incomes, the only truly affordable option is social rent. It is simply unacceptable that we are losing so many of our most affordable homes at a time when more and more people are in need.”
What needs to be done?
Increasing the number of new homes being built for the purpose of social letting would be a big step in the right direction. There has not been any real indication from Government as to how or when this will be implemented, despite the Prime Minister’s promise to make housing a priority.
In addition to this, 79% of the housing budget up to 2020/2021 is directed towards private housing with only 21% targeted at affordable housing. Terrie Alafat said that “rebalancing this budget, so that more money is spent on affordable homes, could make a big difference”. Government changes to the Right to Buy scheme could also help increase the amount of affordable homes that are available. For example, helping authorities to build homes to replace those sold through the scheme and ensuring funds created through the scheme are invested into new homes to rent at similar rates to those lost; changes that the CIH would support.
Commenting on the scheme John Healy MP, Labours Shadow Housing Secretary, said “it is indefensible that communities are losing much-needed affordable homes … Labour will suspend the right-to-buy, only allowing properties to be sold if they are replaced like-for-like and build at least 100,000 genuinely affordable homes a year including the biggest council house building programme in thirty years.”
There are clearly calls for the Government to make the necessary changes that will ensure affordable homes are available for people in the right places. Balanced against the Government’s pledge to “fix the broken housing market” it will be of significant interest and social importance to see how this develops.
If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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