Patrick Mooney argues that post-appointment of a new PM, the case for building more social and affordable homes for rent has never been stronger.
A review of official reports and statistics published over the summer has revealed the huge scale of pent up demand for new social rented housing, but as a topic it barely featured in the Conservative Party
leadership contest.
The debates were dominated by differing approaches to tackling the cost of living crisis and boosting the economy. Whether the new Prime Minister will support a major investment in housebuilding by councils and housing associations remains to be seen, but the signs are not looking promising.
Failing to act decisively though could spark the conditions for a full-blown homelessness crisis with tens of thousands of families forced out of their homes and facing a very uncertain future, while unscrupulous landlords rake in millions of pounds in rent and other charges for unsuitable properties that are in poor or unsafe conditions.
At the end of March, some 95,060 households were staying in temporary accommodation, such as bed and breakfast hotels or short-term lets in the private rented sector. This included 58,910 families with children.
During the previous three months a total of 74,230 households were assessed as homeless or at imminent risk of homelessness, and owed a statutory duty for re-housing by local authorities. This represented an 11 per cent rise in three months, and a 5 per cent rise on the same period last year.
In the following three months another 3,405 households in the private rented sector were evicted from their homes by bailiffs in England – up 39 per cent on the previous quarter. Many of these families will be added to the homeless figures and allocated to some form of temporary accommodation.
The housing campaign group and charity Shelter is warning that the total number of eviction proceedings is now back at pre-pandemic levels, before the eviction ban took effect during the Covid lockdowns.
Additional research by Shelter found that with soaring costs across the board, almost two in three private renters (64 per cent) said the current economic climate meant that, if they were evicted, they would struggle to afford the costs of moving.
LENGTHY WAITING LISTS
A year ago it was reported there were 1.19 million households on local authority waiting lists, an increase of four per cent from 1.15 million in 2019/20.
The National Housing Federation estimated the figures omitted around another 500,000 people hoping to be housed in the sector, while the Local Government Association thought the waiting list figure would rise to more that 2 million over the course of 2021/22.
We await the publication of the waiting list figures for this year, but it is fair to predict the total will be higher than 1.19 million. The past 12 months has seen both house prices and rents surge, with inflation at a 40 year high and record energy costs adding to the pressures on household budgets.
With housing benefit frozen at 2020 levels, Shelter has been calling on the Government to reverse this decision and to allow benefit levels to reflect real housing costs. It is difficult to see this happening given the billions of pounds such a decision would add to the welfare benefits budget.
There are just over 4 million homes owned and managed by social landlords.
Last year some 246,000 homes were re-let, a decrease of 20 per cent or 60,000 lets from the previous year. This continues a downward trend since 2013/14 when 396,000 homes were re-let across the sector.
With fewer social homes for rent becoming available each year, more families are being referred to private landlords, whose rents are nearly always much higher and where there is less security of tenure.
The Government’s main body for delivering new housing (mainly through providing loans, grants or land) is an agency called Homes England, and in reporting on its performance for last year, it revealed that it failed to hit any of its new housing targets.
MISSED TARGETS
Overall it aimed to support the completion of 44,275 homes, but only 37,632 properties were delivered – 15 per cent below target. Within the overall target figure, it aimed to support the completion of 34,349 affordable homes but only helped deliver 26,953, a shortfall of 21.5 per cent.
Affordable rent schemes saw the largest reduction in the number of starts on new homes, with just 5,606 started; a massive 48 per cent reduction on the previous year.
The agency supported 38,436 housing starts on site in the 12 months up to March 2022, but of these the number of social rent homes started in the past 12 months was just 1,981 – a 23 per cent decrease on the previous year’s figure.
Affordable rents are normally set at about 80 per cent of the local market rents, whereas social rents are typically set much lower at between 40 and 60 per cent of market rents. Housing benefit payments will normally cover the whole of a social rent, but will rarely cover the full amount of an affordable rent.
Since 2020, social housing landlords in England have been able to increase rents by the Consumer Price Index (CPI) inflation rate plus one per cent each year. Last year, all major English housing associations raised rents by the maximum allowed.
But CPI is currently running at very high levels. It rose by 10.1 per cent in the 12 months to July 2022, up from 9.4 in June, with the Bank of England warning it could hit 13 per cent by the end of the year. If the upward trend continued, councils and housing associations were in line to raise rents by double digit percentages from April 2023.
RENT CAP LOOMS
Amid mounting calls from charities, campaigning groups and representative bodies for the Government to freeze or restrict the annual increase in rent and service charges for social housing tenants, the Housing Secretary announced a quick consultation over limiting next year’s rent increase to 3, 5 or 7 per cent.
While any limit on the rent increase will be welcome to tenants, it does create difficulties for social landlords who will have to look at savings to cut the gap between their income and expenditure – particularly as the consultation also seeks views on whether to set a further limit on rents in 2024/25.
Social housing landlords, whether they are housing associations or councils, have also been lobbying Ministers for greater freedoms and powers to build more homes. Councils in particular want to use all of their Right to Buy receipts to replace homes sold to sitting tenants.
Since 2012, councils have sold 96,126 homes under the Right to Buy scheme and started building 32,901 homes. Assuming all starts are completed this represents a loss of around 63,225 social rented homes.
Housing associations rely more on private loans and their own resources to build new homes for rent, but they are facing a squeeze caused by new building safety requirements, a huge bill for retrofitting energy efficiency works and pressures from their lenders and credit agencies.
Without more assistance from the Government, it is difficult to see how social landlords will be able to contribute newly built homes in the numbers required to make any meaningful impact on the homeless and waiting list figures.
While solving the affordable housing conundrum has not been at the top of the new PM’s in-tray, Shelter’s chief executive Polly Neate has warned: “Too many people are losing the battle to keep a roof over their heads. The housing emergency was already tipping thousands of people into homelessness before the cost of living crisis took hold.
“Our frontline services hear from families every day who’ve got nothing left to cut back on. High housing costs are a major part of the cost of living crisis, but they are being ignored. To pull struggling renters back from the brink of homelessness, the new Prime Minister must unfreeze housing benefit so people can afford their rent. But to end homelessness for good, building decent social homes with rents pegged to local incomes is the only answer.”