The House of Commons Library have released a report looking at looks at social rented housing, barriers to development, and prospects for a “step change” in supply, including data on need and supply.
It can be seen here, and covers:
Housing policy has focused on the overall supply of housing in recent years. Commentators also highlight the need to deliver housing that is genuinely affordable to improve living standards and address poverty levels. This paper considers the case for social rented housing, barriers to its development, and prospects for a “step change” in supply.
Why social rented housing?
Social rented housing has historically delivered rents at around 50% of market rates alongside long-term security of tenure. Calls for a large-scale delivery programme to address housing deprivation predated the pandemic. Evidence pointing to connections between inadequate housing and poor health outcomes in the context of Covid-19 has given these calls new impetus.
Other arguments advanced in favour of social rented housing include the need to move rising numbers of homeless households out of temporary accommodation; unaffordability in the private rented sector; and the potential to reduce expenditure on housing benefits by moving private renters into social housing. Commentators also argue for a social housing delivery programme to provide an economic stimulus, pointing to housebuilding as a proven form of counter-cyclical investment. The 2022 UK Housing Review (PDF) questioned the degree to which ‘levelling up’ between the regions could be achieved without delivering more social rented homes.
Some commentators (PDF) are also referring to social housing with affordable rents as a means of insulating residents from the cost of living crisis.
How much social rented housing is needed?
Research for the National Housing Federation (NHF) has estimated there are around 1.6 million households with unmet housing need that would be best met through social renting (PDF).
Research conducted by Heriot-Watt University for the NHF and Crisis (2018) called for 145,000 new affordable homes per year of which 90,000 should be for social rent. These estimates were based on an analysis of the backlog of housing need at that time (eg homeless households in unsuitable accommodation), combined with projections of household growth.
The Housing, Communities and Local Government (HCLG) Select Committee endorsed the Heriot-Watt research in 2020, saying there is “compelling evidence that England needs at least 90,000 net additional social rent homes a year.” The Affordable Housing Commission, an independent group of housing experts established by the Smith Institute think-tank, also endorsed the call for 90,000 homes for social rent in its March 2020 report.
These organisations recommend increasing the supply of social rented housing as a remedy for unmet housing need.
How has the supply of social housing changed?
The social housing sector has declined in size in the long-term. 5.5 million homes were provided by local authorities and housing associations in 1979. This number declined by around a quarter over the next 40 years, reaching 4.1 million in 2021.
While the number of homes provided by the sector has grown slightly in the last decade, the availability of homes for social rent has fallen as different products such as Affordable Rent, have become more common.
There isn’t official data on how the number of homes for social rent has changed over time, something that has been challenged by the HCLG Select Committee. In this paper we estimate the number of homes for social rent fell from 4.0 million in March 2013 (around 98% of social housing providers’ stock) to around 3.8 million in March 2021 (around 91%).
The fall in the number of homes for social rent is due to factors including Right to Buy sales, conversions from social rent to Affordable Rent, and low levels of new supply of homes for social rent. The focus on delivering new Affordable Rent and affordable home ownership products has meant the supply of new homes for social rent has declined. 11% of the 52,100 new affordable homes delivered in 2020/21 were for social rent. This is a sharp decline compared with the period before 2011/12, when social rent made up most of the affordable housing supply.
The social housing sector also loses stock through sales and demolitions. Right to Buy sales account for most of the losses.
Prospects for growth
Following Theresa May’s reference to building a “new generation of council homes to help fix our broken housing market” in August 2018, and the subsequent lifting of Housing Revenue Account borrowing caps, the sector began to consider a return to large-scale development of social rented housing. The Government envisioned that lifting the caps would enable councils to build around 10,000 new homes per year.
Research identified an appetite amongst authorities to take advantage of the new borrowing freedoms despite other barriers to development. These include limited grant funding and restrictions on the use of Right to Buy receipts.
In preparation for the Comprehensive Spending Review, which was expected in 2019, the Chartered Institute of Housing (CIH), Shelter, NHF, Crisis and the Campaign for the Protection of Rural England, joined forces to call for a subsidy of around £14.6 billion per year over ten years to secure 90,000 new social rented homes annually over the period.
The March 2020 Budget announced an additional £9.5 billion in funding for the Affordable Homes Programme (AHP), bringing the total programme to £12.2 billion from 2021 for five years. The 2021-26 AHP is expected to deliver 32,000 social rented homes.
The Levelling Up white paper (February 2022) referred to “significant unmet need for social housing” and contained a commitment to increase supply. Then Secretary of State, Michael Gove, spoke of the need to develop more social homes. During an evidence session with the Levelling Up, Housing and Communities Committee on 13 June 2022, he agreed with the Chair’s suggestion that there was more to do to achieve that aim.
In April 2022, Shelter published Unlocking Social Housing which looks at the barriers to developing social rented housing in England. It covers several of the issues and suggested responses referred to in this paper.
The effect of Covid-19
The Local Government Association called for the response to the pandemic to include “steps, measures and reforms” to “support councils to work towards delivering a new generation of 100,000 high quality social homes per year”.
The NHF wanted the November 2020 spending review used to “transition to a longer-term plan and investment programme to build a new generation of social and affordable homes to rent and buy.” The NHF launched its Homes at the Heart campaign in 2020, which is described as a “national campaign and coalition calling for a once-in-a-generation investment in social housing.” The HCLG Select Committee (July 2020) said: “A social housebuilding programme should be top of the Government’s agenda to rebuild the country from the impact of COVID-19.”
The Government response to the HCLG Committee’s July 2020 report, Building more social housing, rejected calls for a revised definition of affordability, to treat social housing investment as infrastructure spending, and for a social housebuilding programme as a specific response to the pandemic.