In England, we currently build about half the number of new homes every year that we need. It’s absolutely essential that we increase house building so that we keep up with the growing number of households.
But increasing house building it isn’t only a question of numbers and volumes. We will not unpick the multiple negative effects of our housing shortage without also focussing on what we build.
So today we’re launching a report which sets out why we need to increase the number of homes that we build across the housing tenures, including substantially more market, intermediate and social rented homes.
These different types of home all do different jobs within our housing system. By building too few of them all we worsen the problems throughout the system.
By building too few market homes we’ve created a shortage that’s pushed up house prices and private rents, shutting people out of home ownership and leaving private renters struggling to pay the bills.
Building sufficient numbers of intermediate homes might have softened the impact of rising prices and rents, by giving people shut out of ownership or struggling in the private rented sector an alternative option. But there have been nowhere near enough intermediate homes built for this sector to perform this function.
And by building too few social rented homes we have forced people who should be offered a long-term home on a low rent back into the only option left: the worst end of the private rented sector. This has left families on low incomes in insecure accommodation, which has driven up homelessness. It’s left people with limited options living in terrible conditions, suffering from overcrowding and reliant on housing benefit to pay rents that they can’t afford.
Debates around the housing shortage can too often come down to arguments about which tenure is needed most. But just increasing levels of building of one type of home won’t reverse all of the problems created by our housing shortage. We need to build more of all types of housing to do it.
We ought to be building at least 250,000 new homes in England each year: we’re currently building less than half that number. Based on the level of housing need and demand across the country, 50% of these 250,000 should be market homes, 20% should be intermediate and 30% should be social rented homes. This means a dramatic expansion in each tenure – and particularly in the social sector.
Levels of market house building have now thankfully begun to grow again after slumping by over half in the wake of the economic crisis, but they still have a long way left to go before they’re at the 125,000 we need.
While we still need more, the number of intermediate homes that we’ve built every year has grown in recent years as well. But this growth in intermediate house building has come as a result of the cannibalisation of funding for new social rented homes, by switching government grant from social rented homes to the new Affordable Rent homes. At up to 80% of market rents, Shelter believes that Affordable Rent should be considered a form of intermediate tenure – it’s certainly not affordable to many people who need a social home.
As a result of this switch in funding, levels of social rented house building have fallen year-on-year for the last three years and are currently at the lowest they have been since the Second World War, with over a third of the country not building any new social rented homes last year. They stand to fall even further this year.
To unpick all of the negative impacts of the housing shortage we need to halt this fall in social rented house building. We need more than a sevenfold increase, to bring it up to 75,000 new social rented homes a year.
To meet the country’s needs, the next government must commit to balanced housing growth. The next government must commit to increasing house building to 250,000 homes a year, but it should also make delivering a 50/20/30 balance of new housing growth a specific duty of a new cabinet level housing minister.
It must implement the policy changes needed to bring about a balanced mix and respond to imbalances. The 50/20/30 balance will not happen by accident. Shelter has already set out the policy changes that are needed to double overall supply. The next government must implement them.
And it must empower councils to deliver the homes that are needed across the local area, not in a way that forces centralised targets on them or allows them to ignore nearby need. The best way to plan for new homes is at a local level. A national commitment to a 50/20/30 balance should not mean that 50% of homes in every area should be market, no matter what the local need is. It means that across the country, broadly 50% of new homes should be market. In practice, different areas will need different mixes at different times. Empowering councils to meet need and demand locally – and ensuring that they do – will mean that total national supply should add up to the levels needed.
Recent increases in market and intermediate house building are welcome. But the housing shortage will not be ended until we boost house building of all types – and recognise the role that all tenures have to play.