We are facing the worst economic crisis in living memory. A crisis that is set to be characterised by potentially unprecedented levels of unemployment. Without government intervention, the housebuilding industry and wider supply chain is set to be badly hit by around 170,000 job losses, and a loss of 300,000 homes.
The chancellor’s speech this week was an opportunity for the government to take decisive action to get Britain building, and deliver the social homes we desperately need. But was it ambitious enough? To know that, we need to look at the scale of the problem we all face.
A worrying outlook
In the last month, through our helpline alone, we’ve seen an increase of 18% in people coming to Shelter for help with housing and homelessness compared to the previous month. 60% of calls and messages were directly related to the impacts of coronavirus (COVID-19), with 37% of callers currently homeless, and 33% at risk of homelessness.
Looking further ahead, our recent polling suggested 1.7 million renters expect to lose their jobs over the next three months. Equally worrying, the Department for Work and Pensions’ own published data shows that more than three million people have applied for Universal Credit (UC) since 16 March 2020, many of whom will have never previously claimed benefits. For those who pay anything over the thirtieth percentile of their local market rent and have been forced to apply for UC, they face the reality of rising rent arrears and growing fears of eviction, once the possession suspension is lifted on 23 August, 2020.
To understand how well prepared we are as a country, it’s important to consider that this housing emergency has not developed overnight. It is the result of four decades of failure to invest properly in the social homes that our country desperately needs. Even before the COVID-19 pandemic, we have lived with the reality that:
- Just over 280,000 people in England were homeless on any given night in 2019, including over 236,000 people living in temporary accommodation.
- Homeownership is in decline, with the English Housing Survey showing that 64% of households owned their own homes in 2018/19, down from 68% a decade ago. The average cost of a home in England has increased to eight times the annual pay packet, with the average share of income that a young family spends on housing trebling over the past 50 years.
- Private renters now spend an average of 40% of their household income on rent. With such high costs, saving for homeownership is unrealistic for many renters. In fact, almost two-thirds (63%) of private renters have no savings at all.
The pandemic has served to exacerbate many of these issues and forced them to the forefront of the political agenda, as so many people have found it hard to stay safe at home. However, while the need to increase protections for renters and invest in social housing has only become clearer, the government still does not yet have a plan that will resolve this crisis.
‘Build, Build, Build’?
Meanwhile, the English housebuilding industry faces significant losses, as we move into potentially the biggest economic downturn in living memory. Research from Savills, commissioned by Shelter, shows the potential losses unless the government acts quickly:
- As many as 318,000 homes that would have been built over the course of this period will not materialise, as major developers reduce their output in the face of uncertainty.
- £29.6 billion could be lost from the UK economy.
- As many as 244,000 jobs could be lost in the construction sector and the extended supply chain.
- We are set for as few as 4,500 social rented homes to be built this year – the lowest number since the tenure’s creation – at a time when at least 90,000 a year are needed.
For the bricklayers, plasterers and electricians, who build our homes, this is all extremely bad news. Their livelihoods are at risk. Moreover, having learned from the experiences of 2008, we know that when skilled construction workers leave the sector, they don’t rush back when the outlook improves. A loss of capacity in the construction sector will only entrench the challenges we face now in building the homes we need, and risk extending the time before the sector can recover.
Housing delivered, not stamp duty
To help combat the impending economic crisis, the Chancellor of the Exchequer, Rishi Sunak, announced his plans this week to retain jobs and boost the economy after lockdown in the UK.
For the housing sector, the chancellor’s flagship announcement is a temporary holiday on stamp duty for homes sold under £500,000 in England and Northern Ireland. This means that, for home buyers, the level at which the tax is charged has been temporarily raised to £500,000 until March 2021, in an attempt to encourage people to buy and sell their homes.
In normal times, these tools might be sufficient to provide a short-term boost. But, in truth, the Chancellor has rolled out ordinary measures in extraordinary times. As outlined by Savills’ research, the country stands to lose too many jobs and homes for a tax cut to be an effective measure. A stamp duty cut won’t make eviction and homelessness any less likely if you’re unemployed, nor will it get our small business builders building.
If the government wants to rescue housebuilding jobs and businesses, while alleviating homelessness in the long-term, it has missed a key part of the puzzle – bringing forward investment in social housing.
By accelerating the timeline of the existing £12.2 billion Affordable Homes Programme (AHP) to cover the next two years, it would provide a rescue and recovery package for the housing sector. By fast-tracking the AHP and building social homes, the government could plug the hole left by private developers and save hundreds of thousands of jobs, by getting Britain building.
Voices from across the sector are increasingly recognising the importance of social rent homes. Earlier this week, Shaun Bailey, Member of Parliament for West Bromwich West, wrote in ConservativeHome about how ‘social housing is a bedrock‘ for the communities he represents. Likewise, Sir John Armitt, Chair of the National Infrastructure Commission, wrote an article in The Times that outlined that the government could only achieve its housebuilding target of 300,000 homes per year by increasing the delivery of social housing. They understand that we need investment in housebuilding that makes economic and social sense. Social housing is that.
It’s clear what the government must do, if it’s serious about saving the housebuilding industry from collapse and fixing the housing emergency – we need a building rescue package that focuses on delivering social housing.
Please sign our petition urging politicians to prioritise social housing and build the homes we so urgently need.