Is the tide turning for social housing?

Is the tide turning for social housing?

Theresa May has often said fixing the housing crisis is her top domestic priority – no small feat for a government also tasked with delivering Brexit on a razor-thin majority. Some governments might have been tempted to leave housing in the ‘too difficult’ box, where it has been gathering dust for years.

But while we have yet to see the fundamental reforms and significant uptick in investment needed to get the country building genuinely affordable homes at scale again, May’s governments have taken small steps to enable the delivery of more social housing. Last week, the prime minister used her speech at the National Housing Federation’s annual summit to announce an additional £2 billion for housing associations. Is the tide turning for social housing?

Light at the end of the tunnel

First, we must be clear about where we’ve come from. The situation following the last financial crash was as dire as it was extraordinary. The Cameron-Osborne governments slashed the overall amount of grant for sub-market housing and scrapped grant for social rent housing entirely. The definition of ‘affordable housing’ has been weakened to the point of incoherence. Councils have been unable to build because of the arbitrary cap on their ability to borrow to build housing. The Section 106 system – designed to get at least some affordable homes on private schemes – was undermined by exemptions and the viability loophole.

At points, the very existence of social housing was on the line. Not so long ago, we were fighting the forced sale of remaining council homes to fund even more sales of social homes through the extension of Right to Buy to housing associations.

May’s governments have taken a different approach: extending borrowing caps for some councils, taking steps to close the viability loophole and confirming in their recent social housing green paper that forced sales of council homes will not go ahead. Perhaps most significant of all, the prime minister used her conference speech last year to announce an additional £2 billion of grant funding over the course of this parliament. For the first time since 2010, some funding was made available for social rent homes.

Social homes to be proud of

Is it enough? Obviously not. Last year, England eked out fewer than 6,000 social homes, the lowest rate of social housebuilding since the second world war. Meanwhile, there are 1.2 million people on social housing waiting lists, with millions more stuck in unaffordable, insecure, poor quality private rented housing. We need a revolution in social housebuilding, not timid steps in the right direction.

But we now clearly have a government that can see the virtues of social housing. And there are plenty of virtues to see. Social housing doesn’t mean tower blocks, lifelong unemployment or ‘anti-social behaviour’. It means simply this: genuinely affordable, decent housing with secure tenancies so that people on ordinary incomes can live and raise their families in dignity.

Social rent is the only tenure affordable to those who are currently homeless or at risk of homelessness, the only tenure affordable to minimum wage earners across much of the country, and the only tenure where rents are low and stable enough to give households on modest incomes the breathing room to save money each month – whether for a deposit to own their own home or any other aspiration. And because tenancies are secure, social housing residents can’t be turfed out on a landlord’s whim.

In her speech, the prime minister worried that some people aren’t proud to live in social housing. But what’s not to be proud of? The biggest problem with social housing is that there isn’t enough of it. When we change that, social homes will be the foundations of strong communities, replacing a failed generation of revolving-door private tenancies.

In the process, we’ll also build our way out of the nation’s housing crisis. Developers can only build homes for market sale as fast as people come forward to buy them at current prices – which are completely unaffordable for most people. A government which built social homes at scale would tap into an entirely different source of housing demand, driving up overall supply above the current 300,000 target. Under the existing system focused on homes for market sale, 86% of housebuilders believe this target is completely unachievable. Clearly, we need to try something new.

Shelter’s Big Conversation – our commission looking into the future of social housing – will report in January, paving the way for a bigger, better social housing offer.

Turning money into homes

So what does the prime minister’s announcement of another £2 billion for housing associations mean for this vision? In financial terms, not much. The money will be spread across 2022 to 2028-29, and – unlike the £2 billion announced last year at the Conservative Party conference – there is no guarantee it’ll be used to build the social rent homes we really need. Housing associations will have flexibility to choose which types of homes they’ll build. As communities up and down the country know all too well, so-called ‘affordable housing’ often isn’t affordable to local people. It could be used to build less affordable tenures like shared ownership or Starter Homes.

Worse still, the money may end up lining the pockets of landowners who’ve been making a killing out of the housing crisis. Though funding and being able to plan further in advance help, they aren’t the biggest barriers to housing associations building more. The biggest barrier is land. Housing associations buy cheap land to build affordable homes under the Section 106 system. But as this source of land is reaching its limits, more and more associations are competing in the extremely expensive private market for land.

At the moment, it’s not going well. One association, Stafford and Rural Homes (SARH), has placed bids on 10 sites so far this year, but has been outbid on all but one. On one site, SARH planned a development made up entirely of affordable homes on public land but was outbid by a private developer – who sold the site for a profit shortly after without building any homes whatsoever. The National Housing Federation has uncovered similar stories across the country.

Because today’s money comes with so few strings attached, the danger is that housing associations will use it to ensure they win land bids against private volume developers. If that happens, they are likely to pay so much for land that they’re then forced to build less affordable kinds of homes to make their money back. This would be a tragic missed opportunity, with public money for social homes diverted into an already bloated land market.

Getting the most for our money

The government clearly wants to see social homes built. The fact that it’s stumping up cash now, ahead of next year’s Spending Review, suggests we’re moving in the right direction – albeit painfully slowly. But the government must take action to control the price of land to make sure the homes we build are really, truly affordable. The millions stuck in private renting and temporary accommodation won’t accept any more fake affordable housing. That means committing the money, but it also means reforming the broken land laws which are forcing housing associations, private developers and councils into a never-ending bidding war.

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