Housing policy has focused on overall supply in recent years. There is broad consensus in the sector over this approach and various measures have been introduced to stimulate housebuilding. Commentators, however, highlight the need to deliver housing that is genuinely affordable to improve living standards and address poverty levels.

Why social rented housing?

Social rented housing has historically delivered rents at around 50% of market rates alongside long-term security of tenure. Widespread calls for a large-scale delivery programme to revitalise the sector and address housing deprivation predated the pandemic. With evidence pointing to connections between inadequate housing and poor health   in the context of Covid-19, they’ve been given a new impetus. According to the UK Collaborative Centre for Housing Evidence, the disproportionate impact of Covid-19 on Black, Asian, minority ethnic and refugee (BAMER) communities is linked with a housing aspect:

Black, Asian, minority ethnic and refugee (BAMER) communities have been hit hard, with coronavirus intensifying their housing stress. Evidence shows BAMER households are more likely to live in overcrowded, inadequate housing, within our most disadvantaged communities. They are also less likely to own their home, and more likely to be private renting than white households.

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.

How much social rented housing is needed?

Research conducted by Heriot-Watt University for the National Housing Federation (NHF) and Crisis (2018) called for 145,000 new affordable homes per year of which 90,000 should be for social rent. These estimates of need are based on an analysis of the backlog of housing need at that time (e.g. 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.

A separate report from Shelter’s commission on the future of social housing – A Vision for Social Housing, published in January 2019 – recommended a total of “3.1 million more social homes” be built over a 20-year period. This represents an average of 155,000 new homes per year.

These organisations recommend increasing the supply of social rented housing as a remedy for unmet housing need, evidenced by increasing numbers of homeless households in temporary accommodation and growing overcrowding in the social and private rented sectors. Commentators also point to affordability problems in the private rented sector, particularly in London, as an indication that more genuinely affordable options are needed.

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 a quarter over the next 40 years, reaching 4.2 million in 2020.

Line charts showing that renting from a social housing provider has become less common. The first chart shows that while 5.5 million homes were rented from social providers in 1979, this reached a low point of 3.9 million in 2008 and rose to 4.1 million in 2020. The second chart shows that 31% of all homes were rented from social providers in 1979, falling to 17% in 2020.

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 affordable 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 that the number of homes for social rent fell from an estimated 4.0 million in March 2013 (around 98% of social housing providers’ stock) to around 3.8 million in March 2020 (around 93%).

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 homes for social rent. The focus on new supply of Affordable Rent and affordable home ownership products has meant that new supply of homes for social rent has declined. 11% of the 57,600 new affordable homes delivered in 2019/20 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.

The sector was optimistic, research identified an appetite amongst authorities to take advantage of the new borrowing freedoms. This optimism existed despite other barriers, such as limited grant funding and restrictions on the use of Right to Buy receipts. Research published in January 2020, Local authority new build programmes and lifting the HRA borrowing caps, concluded that, despite wide variations in authorities’ plans and approaches, most with retained stock planned to expand their housing delivery. At that time, the Treasury’s estimate of authorities delivering 10,000 homes following the lifting of borrowing caps, was likely to be met and possibly exceeded.

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, bringing the total programme to £12.2 billion available from 2021 for five years.

The sector welcomed the certainty delivered by this funding but pressed for information on the proposed tenure mix the Government had in mind, particularly the number of social rented homes. Of the 180,000 affordable homes the 2021-26 programme is expected to deliver, around 32,000 will be for social rent. The Government resisted the HCLG Select Committee’s calls to publish annual net addition targets for specific tenures, including social rent.

The effect of Covid-19

The Covid-19 outbreak  and subsequent lockdowns have shifted the landscape in ways that are still becoming apparent. The experience of the post-2008 financial crisis led commentators to predict a contraction in the construction industry as the economic downturn takes hold.

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 National Housing Federation (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.”

When giving evidence to the Committee on 8 June 2020, the Housing Minister, Christopher Pincher, said more affordable and socially rented homes were needed but refused to be drawn on any tenure-mix targets. 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. 

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