At the National Housing Federation Annual Conference, Chief Executive David Orr will today warn that social housing funding is in crisis, unless the Government is prepared to make a break with the past and start funding new genuinely affordable homes.
The warnings come as the Federation – which represents housing associations, social landlords to over 2.7 million homes – publishes a report outlining dramatic shifts in public spending in housing. The report shows that the nation's commitment to building homes has fallen from £11.4bn in 2009 to £5.3bn in 2015 – from 0.7% to 0.2% of the total GDP. Despite this, more than a million families remain on the housing waiting list.
While the amount of money going into building new social homes has fallen precipitously, the nation is spending more than ever supporting people to live in costly rental properties through housing benefit. Over the last 20 years, spending on housing benefit has risen from £16.6bn to £25.1bn.
Housing someone in the private rented sector instead of a social home costs an additional £21 every week. In fact, the report found that the amount of housing benefit going to private landlords has almost doubled over the last decade to £9.1bn in 2015/16.
And yet there is currently not a single penny available to build social rent, affordable housing for those on the lowest incomes. Following the 2010 Government decision to halt funds to social rent, construction dropped off sharply. In 2010/11, work was started on almost 36,000 social rented homes, the next year on just over 3,000. Today, housing associations are still delivering some social rented homes through their own cross-subsidy, but nothing like at previous or needed levels.
Demand for new homes is not slowing down; the population of England is projected to increase by 17% until 2039 – an additional 9m people.
Making more capital available to social homebuilders, like housing associations, and then giving them the flexibility to charge rents appropriate to residents' incomes is the way forward. The £1.1bn that remains unspent on Starter Homes should be redirected to building homes for social rent. With this money, housing associations could build 20,000 of the most affordable homes.
David Orr, Chief Executive at the National Housing Federation said: "It is absurd that we're spending less on building social housing than we did in the nineties – there are even more people today on housing waiting lists than then despite increasingly stringent criteria.
"We know we need more, better quality social housing. And yet, rather than putting public money into building the homes we need, we are propping up rents in a failing market. Ultimately, this is poor value for the taxpayer and has a knock-on effect on everyone struggling to rent or buy.
"The Prime Minister is right that we've not paid social housing enough attention. After the tragic fire at Grenfell, this crisis can no longer be ignored. The Government must be bold and make a break with the past by making money available to build genuinely affordable homes.
"There's more than a billion pounds that remains unspent on Starter Homes. Let’s put this money to use and let housing associations build 20,000 of the genuinely affordable homes the nation needs."
Meanwhile, new analysis from CIH shows that government investment in the private market dwarfs support for affordable housing. It is due to spend £32 billion (79 per cent of its housing-related budget) on programmes such as help to buy up to 2020/21, and just £8 billion (21 per cent of the budget) on programmes such as shared ownership and affordable homes.
The number of affordable homes funded by the government has plummeted by 50 per cent between 2010/11 and 2016/17 from 56,000 to 28,000, according to figures from the Department for Communities and Local Government analysed in CIH’s UK Housing Review briefing. At the same time, the number of homes for the cheapest social rents built using government finance has collapsed, from 36,000 to just over 1,000.
The government no longer funds homes for social rent, which tend to be around 30-40 per cent cheaper than market rent. Instead, funding is targeted towards homes for ‘affordable rent’, which can be up to 80 per cent of market rents.
CIH argues that ministers must focus on affordability as well as building more homes to fix the country’s broken housing market. Chief executive Terrie Alafat CBE said: “People on lower incomes are finding it increasingly difficult to make ends meet as they experience the impact of stagnant wages, rising inflation and welfare reform cuts. These factors and the shift towards “affordable rent” all mean that housing is becoming increasingly unaffordable in many parts of the country.
“We know we need to build more homes to get to grips with our national housing crisis – our UK Housing Review briefing highlights that annual supply remains at least 30,000 homes short of household growth. But it’s not just about building more homes; it’s about building more affordable homes for people on lower incomes. The government needs to take an urgent look at rebalancing the housing budget and investing more in genuinely affordable homes for rent.
"The November budget gives the government a golden opportunity to rebalance investment away from the private sector towards affordable housing without having to increase its overall commitment to housing.”
