Social Housing Speed Read – Government urged to build 600 affordable homes a week to meet demand

What does the research show?

The Joseph Rowntree Foundation (JRF) has analysed the housing market and concluded that the Governments current plans result in a shortfall of 500% in affordable housing production against what is needed. Current Government proposals will deliver less than 100 new affordable rented homes per week; a number falling significantly short of the amount the analysis considered necessary.

The analysis also shows the following:

• In order to meet demand, 78,000 low-cost rented and shared ownership homes per year, or 1,500 every week, are required. However, there has been a shortfall of 182,880 homes over the last six years with an average of 47,520 affordable homes having built per year since 2011.
• In over 53% of the country, private rents are considered unaffordable for low income earners. In 171 out of 323 local authorities, those in the bottom quartile of local earnings rental costs represents over a third of monthly earnings. These families need low-cost rented housing at social rents or similar levels.

What does this mean?

If supply of low-cost rented and affordable homes continues at this rate, the JRF predict a shortfall of 335,000 affordable homes by the end of this Parliament.

Providing more affordable homes would relieve pressure on families with lower incomes and enable them to leave the insecure and expensive private rented sector. Improving living standards for such households will also require an increase of incomes and lowering of the cost of essentials. Movements such as the Campaign for the National Living Wage are looking to address the former.

Failure to respond to the shortage of affordable homes will increase pressure on the housing benefit bill and leave more people struggling financially because of housing costs. Boosting the supply of low-cost homes could help cut the housing benefit bill, which was £23.4billion in 2016/2017.

Analysis conducted in 2015 by the JRF showed that an investment of 80,000 affordable homes per year could reduce the housing benefit bill by £5.6billion per year by 2040. Similar analysis conducted by Capital Economics and Savills found the same potential in savings.

What needs to be done?

The JRF has called on the Government to utilise the upcoming Social Housing Green paper to commit to building 78,000 affordable homes per year so poorer families can have a better standard of life and enjoy some security. The JRF also say the Social Housing Green paper must answer important questions about ‘location of supply, levels of rent and management’.

Campbell Robb, chief executive of JRF said “the forthcoming social housing green paper must commit to increasing the supply of low-cost rented homes […] By fixing our broken housing market, we can help release people from the grip of poverty.”

Some steps have been made by Government in the right direction. As we know, Theresa May announced last year an investment of £2billion was to be made in affordable housing. However this is only expected to deliver 5,000 additional social rented homes each year, creating less than 100 per week. To see real change and benefit, delivery of low-cost homes needs to significantly increase quickly whilst ensuring the housing cost for these homes are actually affordable.

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.