Housing keyring, REalyse

A recent cross-party report by MPs and housing charity, Shelter, revealed that England needs 3 million new social homes by 2040, which is a rate of 150,000 per year.

As the political debate rages on, could the UK housing market be about to reach breaking point? There is a clear supply and demand issue at play, with demand for new social homes in England significantly outweighing the current supply rate.

The figures do not lend themselves to large swathes of optimism: construction for social homes for the rental market has decreased by 80% within the last decade. Throughout 2017-18, the UK housing market saw just over 6,000 new homes built, which is 144,000 fewer than the amount needed per year according to a recent cross-party report on upcoming social housing requirements in the UK.

Read time: 8 minutes

Why the need for more social homes?

The number of homeless people sleeping rough on the streets in England has increased to 8,000, according to Crisis, the national UK charity for homeless people.

Spiraling rents and an increasing number of families who are unable to buy their own homes have added to this particular issue. Poor living conditions for many in privately-rented homes have also been problematic, with the tragedy of Grenfell Tower bringing the topic to the forefront of the public sphere.

In the wake of Grenfell, which saw 72 people lose their lives after a fire broke out in the building, the government has planned new legislation on social housing, including the provision of more money for council housing. Yet, there is plenty to do to reach the 3 million figure by 2040.

A look at the current reality

In the last decade, new social homes for rent have fallen by four-fifths, leaving over 1 million people on the waiting list. Research from Heriot-Watt University reveals that England’s total housing-need backlog has reached 4 million homes.

At the current rate of construction, it will take 170 years for the supply of social housing to match current demand, thus providing housing for all the families on the existing waiting list. Despite the decline in new social housing, the number of “affordable housing” (private sector only) rose by 12% to just over 47,000, with the bulk of those constructed labelled as “affordable rent”.

However, many of these “affordable rent” properties are still largely unaffordable for people on the social housing list.

A look at the projections

A recent study, which involved MPs from both Labour and the Conservative Parties, was led by housing charity Shelter. The finding of this investigation suggested that 3 million new homes need to be constructed in the UK by 2040. To put this into perspective, this figure is higher than the number of homes that were built in the entire 20 years after World War II.

Shelter maintains that the number of people currently being considered for social housing should be expanded. There are over 1.2 million people on the list who live in hazardous or overcrowded homes, or are homeless or disabled. The report suggests that over 1 million young people and 700,000 elderly people, who are otherwise trapped in private rental arrangements, should also be considered.

If the government were to act on the report, England would see 150,000 homes built each year for the next 20 years, in what is estimated to cost £225 billion. Those figures equate to five times the amount spent of the UK Defence Budget. However, savings to the £21 billion annual housing benefit bill and new jobs created by the program would see it pay for itself within 40 years.

What happens next?

There is a pressing need to address with the lack of social housing in England – a need felt all the more conspicuously by the Shelter report findings and the harrowing impact of Grenfell Tower. But, with the government’s hands currently tied up by Brexit, it could be a while longer before there is a definitive conclusion and a clear plan of action is put in place.

In the meantime, projects like ‘build to rent’ have grown in prominence and aim to tackle issues in the private rental sector by providing longer tenancies and a singular company taking care of maintenance issues. While ‘build to rent’ initiatives provide an option for those privately renting, not address the needs of those on the social housing waiting list.

What happens next will likely shape the UK housing market for generations to come.

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