Mark Cantrell, Author

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Society: Evidence Shows UK Needs More Social Housing

Posted by Mark Cantrell on June 30, 2017 at 11:45 AM

Breaking the tenure of last resort

By now it ought to be obvious that we need to build many more social homes if we’re to make a start on fixing the broken housing market. The evidence continues to mount, writes Mark Cantrell, so why are we still dragging our feet?

EVIDENCE of a critical need for more social housing in the UK continues to mount, but with councils still blocked from building on a large scale, and the housing association sector gripped by an ambition to become up-market property developers, it appears likely that we’ll see no end to the dystopian situation for some years yet.

The problems are particularly acute in England. Earlier this week, at the start of its annual conference in Manchester, the industry’s professional body, the Chartered Institute of Housing (CIH) launched its latest research, analysing the way that the costs of securing accommodation are escalating beyond people’s reach. The implications are grim.

Over the last 20 years, private renting has become the second largest tenure type, housing some 4.5 million people in England, according to the English Housing Survey (EHS). Renting from a private landlord has overtaken social housing’s market share and is ‘nipping at the heels’ of home ownership, which has itself declined from its 2002 peak.

In a way, it is kind of ironic that, for many, private renting has become something that it is often hurled as a term of abuse at social housing – the tenure of last resort.

One of the drivers for this shift in relative fortunes has been the marked decline in the availability of social housing over the last 30 years. A consequence of selling off social homes under right-to-buy (and stock transfer) and the decline in the construction of new homes has resulted in the physical depletion of the national stock.

This was exacerbated by the Conservative-led coalition Government of 2010 and its successors, when it redirected government funding towards various means of supporting first time buyers at the expense of investment in new social housing.

Government policy further ‘muddied the waters’ over affordability when it launched its Affordable Homes Programme – insisting that new homes built be let at up to 80 per cent of the local private market rents. In many parts of the country, this form of sub-market affordable housing was anything but.

Meanwhile, rising house prices and the scale of a deposit needed to buy a home has undermined levels of homeownership, as prospective buyers found they were unable to access the market. Private renting has become the only place where the exiles from homeownership and social housing can secure a place to live.

That said, private renting is notoriously insecure and short-term in its nature; it’s common for people to be kept near-constantly on the move. Rents are also rising while for those on low incomes – and even moderate in some parts of the country – are facing a squeeze on help with housing costs too. For those who still cling to the dream of buying a home, the high cost of renting eats away at any savings towards a deposit they might have made. It’s a cruel twist of the knife.

On that note, we turn to the research published by the CIH this week; this compared the average private rents and average earnings in England between May 2011 and May 2017. A snapshot, of course – and averages hide many variational disparities – but all told it adds to the pile of evidence showing a need for more low-cost forms of housing.

Rents in England grew an average of 14.6 per cent during the period under review while wages are projected to have increased 10 per cent over the same timeframe. It’s worth noting that the Office for National Statistics (ONS) has revealed that over the last three quarters of the year, Britons have endured the longest squeeze on household disposable incomes since the 1970s.

Housing costs are an inevitable part of our falling disposable incomes; as rents rise, pay stagnates (or rises slowly), then we have less cash – spare or otherwise – to spend in the wider economy on essentials or luxuries. In a way, the more we pay for a roof over our heads, the tighter the belt squeezes around the UK’s consumer economy; not good if you’re a financial policymaker who wants to boost productivity and performance.

In London, meanwhile, the picture on rents the CIH presented is much more severe. In the capital, rents increased 22 per cent over the period; nearly four times faster than the projected increase in average earnings of just six per cent. While in the South East rents increased 15 per cent compared to a projected seven per cent increase in average earnings.

“This analysis reveals just how stark the growth in private rents is in London and the South East, where it is clear there is now a very significant gap between the amount people earn and the cost of their housing,” said Terrie Alafat, chief executive of the CIH.

"Our concern is that if this trend continues, more and more people will be unable to afford to rent a home – significantly increasing their risk of falling into arrears or becoming homeless.”

Homelessness is a pertinent issue. The strain on wallets will sooner or later break a households’ grip on its home, if the spiralling affordability crisis can’t be challenged. People become homeless for many reasons – it’s not exclusively about housing costs – but the upwards motion of rents is playing its part nonetheless.

Published ahead of the CIH’s research, the latest government homelessness statistics revealed that the number of households placed in temporary accommodation after being accepted as homeless by their local authority was up eight percent on the previous year, and up 61 per cent on December 2010 – its lowest point.

The figures for statutory homelessness for England, covering the period of January to March 2017, revealed:

  • Between 1 January and 31 March 2017 local authorities accepted 14,600 households as being statutorily homeless, up one per cent on the previous quarter and down one per cent on the same quarter of last year. These are households that are owed a main homelessness duty to secure accommodation as a result of being unintentionally homeless and in priority need.
  • The total number of households in temporary accommodation on 31 March 2017 was 77,240, up eight per cent on a year earlier, and up 61 per cent on the low of 48,010 on 31 December 2010.
  • Local authorities took action to prevent and relieve homelessness for 56,140 households between 1 January and 31 March 2017, down two per cent on 57,060 in the same quarter of 2016.

Such figures are “extremely worrying but sadly not surprising”, said Faye Greaves, a policy and practice officer at the CIH. She pointed out that all forms of homelessness have been “steadily rising” since 2010 due in part to “pressures on the housing market” and welfare changes that have been implemented in recent years.

"We are particularly concerned about the continuing rise in the numbers of households in temporary accommodation,” she added. “The number of households trapped in bed and breakfast accommodation has also risen, and includes thousands of families with children. This type of accommodation is often very poor quality and highly unsuitable, especially for families.

"There has also been a jump in the number of households placed outside their local authority district, which may be down to the increasing cost of housing, especially in London. This issue has been in the spotlight over the past week following the horrendous events at Grenfell Tower. The cost of housing can make it difficult for local authorities to find a home for people in the same area, but councils must do everything they can to avoid moving people away from their communities and support networks – in any situation."

Meanwhile, Shut Out, a briefing paper published by the national homelessness charity Shelter this week outlined some of the barriers low-income people face when it comes to accessing a home they can afford.

These barriers to accessing the private rental market include changes to the market touched upon above, but they also involve changes to the benefits system, cuts to the provision of Local Housing Allowance (LHA) and a shift in attitude towards low-income renters, as well as rising rents. Upfront costs, such as fees and deposits, don’t help either.

“Housing market shifts, such as the inability of first-time buyers to purchase a home and the shortage of social rented housing, have led to an increasingly competitive private rental market,” the document says. “This competition has seen rents rise and allowed landlords to be choosier about who they let to. Consequently, rents that were once affordable have risen year-on-year, and housing benefit claimants are overlooked in favour of professional tenants.”

Writing on the charity’s blog, report author Heather Spurr said: “Since 2011, as benefits have been cut back, a black hole has started to appear in our welfare system for private renters. This black hole is the widening gap between housing benefit and rents at the very cheapest end of the private rental market.

“The black hole means rents become completely out of reach for anyone on low earnings. It means more people are made homeless, more children are stuck in temporary accommodation for years and more families are pushed into the clutches of bad landlords. And if the Government doesn’t address it, this black hole will soon become supermassive.”

Clearly, there’s no long-term sense in underwriting ever-rising private rents, even at the lower end of the market, by increasing housing benefit accordingly. On the other hand, it makes no sense – not to mention it’s just plain cruel – to simply slash support for those who need help to meet those rents. A more rational approach to housing and welfare policies would be to find a way to reduce the costs of housing. Sadly, reason and foresight has long been lacking in these areas.

Back to the CIH research; while the organisation found that in other regions in England rents went up in line with earnings or slower than earnings, a follow-up survey it commissioned revealed this was doing nothing to alleviate renters’ anxiety about their continuing ability to meet their housing costs.

The survey of 2,195 people, conducted by Ipsos MORI, found that 52 per cent of private renters across the UK are concerned they will not be able to afford their housing. This compares with 27% across the wider public who feel the same way. Furthermore, 56 per cent of private renters reported a great deal or fair amount of stress being caused by housing costs compared to 33 per cent of people across all types of housing. And 44 per cent think they might have to move from their area in the future because the cost of housing is too high, compared to just 23 per cent.

"Though in other regions wages have risen in line with, or faster than rents, our national polling shows that even in those areas people are concerned about their ability to pay their rent and their housing costs are causing them stress,” Alafat added.

“If this is the picture for working people then our concern is that for the many families who are out of work the situation is likely to be even more severe. Taken together, our analysis and the results of our polling highlight the desperate and urgent need for more investment in genuinely affordable housing options. Without this we will never solve the housing crisis.”

The clearest, simplest form of genuinely affordable housing is, of course, the social kind. We need more of this tenure type, rather than the ‘halfway house’ fudges we’ve seen too much of in recent years; the evidence says as much. We did it once. We can deliver social housing again – if we really want to.



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