Our regular social housing correspondent Patrick Mooney argues that, with homelessness at record levels and councils pushed to the brink, only a bold new approach can deliver the affordable homes Britain urgently needs.
With record levels of homelessness being experienced, the demand for social housing has never been higher, but collectively we are struggling to deliver new homes in the volumes required and a new approach is badly needed.
A possible solution, which could see up to 90,000 new social homes a year being built, was recently floated by a group of public and private sector bodies. In a timely move it was published just a month before the Budget, and borrows from a model already being used successfully to deliver affordable housebuilding in the United States.
The proposed model would use a tax credit system to raise billions of pounds in corporation tax each year, while at the same time creating huge numbers of construction and service jobs, as well as cutting the use of temporary accommodation, lowering housing benefit costs and generating better health outcomes for residents.
Companies would pay 10 years of corporation tax to HMRC early and get a discount, enabling the Government to raise capital upfront without impacting public borrowing.
The tax receipts would be ring-fenced and given to Homes England for allocation to social landlords to build social homes.
Much of this will be attractive to Chancellor Rachel Reeves, who is closely associated with the Government’s ambitious house building targets and contentious reforms to speed up and relax the planning system. Despite the changes already made, these have yet to feed through into significantly more planning approvals, or property starts and completions.
The paper, titled ‘Making Social Rent Homes Viable,’ has been backed by businesses and individuals from across the housing sector, including L&Q, economist Dame Kate Barker, property agency Savills, housebuilder Vistry, investor Long Harbour, the Association for Rental Living, law firm Capsticks and the Policy Liaison Group for Housing Delivery & Growth.
An essential investment
Building social rent homes is “essential” and “an investment in the UK’s future prosperity and social stability,” the paper says. It justifies the model on the basis that the low rental income generated by social rent housing cannot support the capital investment required for development and ownership, even over very long timescales. Therefore, the only way to build social rent homes at the scale needed is with “substantial public subsidy to bridge the viability gap.”
The involvement of housing association L&Q is particularly significant as they are the largest developer of homes in the social sector, but they are being forced to cut back on new build programmes while they focus much of their investment into improving property standards to their existing housing stock. The 2,316 new homes completed by L&Q last year were its lowest level of development for a decade and well down on its 2022 peak of 4,157. The number of homes it started also fell from 813 to 519. This is a situation which is being replicated among social landlords all across the sector.
Addressing this point, the paper makes a series of other recommendations, including that Section 106 agreements should “fix” affordable housing land values at the planning stage to stop social landlords competing for homes against each other and driving up prices. It also calls for further reform of Right to Buy to preserve affordable housing stock, flexible social rents that are linked to household income and measures to recapitalise the housing association sector, in addition to the Government’s 10-year rent settlement.
This collective body of policies is consistent with measures being demanded by the National Housing Federation, the Chartered Institute of Housing and many campaign groups, influencers and charities. It also builds upon the Government’s own commitment to spend £39bn to deliver 180,000 new social homes for rent over the next 10 years.
In a foreword to the paper, Helen Gordon, chief executive of Grainger, wrote that “policy pronouncements and lobbying efforts” sometimes overlook the “complex economic realities” underpinning social housing delivery. She continued: “We believe that an effective response requires an all-tenure approach, with social rent housing playing a central part alongside other housing types.”
The paper is a “constructive step towards bridging the knowledge gap and fostering the collaborative, evidence-based approach needed to make social rent homes a practical and achievable part of today’s housing landscape,” she added.
A timely reminder
The paper’s publication was particularly timely, as it coincided with the release of Government figures showing that 172,420 homeless children are being raised in temporary accommodation across England – the highest number since records began 21 years ago. This is due to the chronic shortage of affordable homes and the lengthy waiting lists for social rent homes.
In addition close to £3bn was spent by councils on temporary accommodation in the last financial year, an increase of 25% on the previous year and a figure that is threatening many councils with the equivalent of bankruptcy. This is highly wasteful and represents poor value for taxpayers’ money.
The figures for April 2024 to March 2025 also reveal that in England:
- The total amount councils spent on temporary accommodation has more than doubled (a 118% increase) in the last five years.
- One third of the total £844m was spent on emergency B&Bs and hostels; the worst type of temporary accommodation for families, as they have to share kitchens and bathrooms with strangers.
- 40% of the total of over £1bn was spent on nightly paid, self-contained accommodation. This is a 79% increase, the biggest increase in spending in one year. This privately managed accommodation is often the most expensive, some families living in conditions as cramped as B&Bs.
Meanwhile, councils across London are paying an estimated £5.5m a day on emergency housing and while the capital has always been the worst affected, other parts of the country are now witnessing bigger increases in homelessness. For many smaller local authorities, the cost of temporary accommodation they are bearing is so high that it is threatening their ability to comply with financial regulations.
The regions that have seen the biggest increases in children growing up in temporary accommodation in the past year are Yorkshire and the Humber (23.9% increase) and the North West (14.0%). The regions that have seen the biggest increases in households in temporary accommodation are the North West (12.6%) and the West Midlands (8.6%).
Charities like Crisis and Shelter are warning that a generation of homeless children are growing up in unsuitable and often dangerous housing conditions with little or no prospect of them ever living in a safe, secure and affordable home.
Matt Downie, chief executive of Crisis, said: “Tragically, we have now become totally accustomed to seeing record levels of children growing up in temporary accommodation. We are talking about children with no space to play, no place to do homework, no safe, stable place to call home. So we have to ask, as living costs increase and the supply of social homes recedes, when this will end. The truth is that only the Government can stop this with an ambitious homelessness strategy. It’s essential this helps councils co-ordinate efforts and plan longer term.”
To further underline the pressing need for more social housing to be built, it was also reported that the number of people who died while homeless in the UK reached a record high last year. The Museum of Homelessness, which compiles the data, said that 1,611 homeless people died in 2024. The figure is 9% higher than the year before, with the majority of deaths being linked to suicide or drugs. Matthew Turtle, director of the museum, said the deaths “show how homeless people continue to be failed.”
Decision time
With the private housing market experiencing a severe slowdown and many sites operating at reduced activity levels, a boost for social housing could pick up this slack and make good use of spare labour and other resources without driving up construction inflation.
The latest RICS UK Residential Market Survey revealed that subdued momentum continued to characterise the housing market in the Autumn. Buyer demand and agreed sales remain in negative territory while forward-looking sentiment points toward this muted picture persisting into early 2026. Surveyors across the country cited concerns over the Budget, which many expect to include further property related taxation. Respondents reported growing caution among buyers and sellers, with affordability and sentiment acting as key constraints.
Across the private rental market, the imbalance between demand and supply remains acute. Landlords continue to exit the sector amid ongoing regulatory changes and cost pressures. As a result, rents are projected to rise steadily through 2026, exacerbating affordability challenges for tenants and raising the prospect of further increases in evictions and homelessness figures.
RICS head of market research & analytics, Tarrant Parsons, said: “The housing market continues to struggle for momentum, with seemingly no clear catalyst on the horizon to spark a turnaround over the near term. Buyer demand remains subdued, while agreed sales are still on a downward trend, reflecting a broader hesitancy in the market. Ongoing uncertainty around the Budget is also adding to the prevailing cautious sentiment.“
This is the challenging context facing politicians, policy makers and practitioners, with higher levels of demand for housing of all tenures but an economy which is struggling to deliver a stable platform for investors and developers. If we accept the premise of the new model (or something similar), then we need to get behind it and start delivering the much needed new social rent homes. Otherwise we are condemning thousands of children to many more years of life in wholly unsuitable housing conditions.