Build back better with this social housing revolution – Joe Elliott

NEWLY-appointed Housing Minister Michael Gove acknowledged at the Conservative Party conference that social housing supply has “not kept pace with demand”. Research published this week by the Joseph Rowntree Foundation (JRF) lays bare the consequences of this failure.

The York-based Joseph Rowntree Foundation is challenging the Government to build a new generation of social housing to alleviate poverty.

We estimate that almost a million families in England – a quarter of whom are in the North – are paying rents they cannot afford in the private rented sector.

Nine in 10 of these families are living in poverty, with some family budgets more than £100 a week below the poverty line. Almost half of these families have children in them, and being employed is not enough to stop families from struggling: four in five of the families we looked at have at least one adult in work.

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We considered what would be affordable to families based on their incomes and the cost of their rent. Being in housing that you cannot afford has huge consequences for families: money that could be spent on nutritious food, after-school activities or saving towards a deposit for your own home is instead sucked into high private rents.

The York-based Joseph Rowntree Foundation is challenging the Government to build a new generation of social housing to alleviate poverty.

The housing crisis is not a new concern for families across the UK, nor is it news to Ministers. Much of the Government’s response to the challenge in recent years has been to focus on the suite of homeownership products it has introduced to, in its own words, ‘turn Generation Rent into Generation Buy’.

But our analysis shows that these policies are either not working for families currently facing unaffordable private rents, or only working for a small proportion of them.

Homes bought through Help to Buy are only affordable to two per cent of this group, and most current products such as the mortgage guarantee scheme and First Homes scheme are only affordable to 10 per cent of this group.

While these products may work for people who are already on the cusp of homeownership, they are almost completely out of reach for renters on low incomes.

The York-based Joseph Rowntree Foundation is challenging the Government to build a new generation of social housing to alleviate poverty.

Policy solutions to make renting more affordable aren’t working either. The Government’s ‘Affordable Rent’ scheme, which sets rents at up to 80 per cent of the market rate, is only affordable to a quarter of the 956,000 families we know are struggling.

And while housing benefit continues to play a vital role in helping families meet the cost of expensive private rents, years of cuts and freezes have undermined its effectiveness. It is currently frozen at the lowest 30 per cent of local rents as of September 2019, when average private rents have risen by 2.8 per cent in England on average since then. Around half of the families we know are struggling receive housing benefit but are still trapped in poverty because it does not cover the real cost of renting.

While the impact of the housing crisis is being felt up and down the country, it’s clear that low-income renters are facing a policy black hole. They simply cannot afford to buy their own home or secure a rent they can afford through existing schemes. This is totally wrong when these are the families that most need support. As families on low incomes are left reeling by the £20 a week cut to Universal Credit, rising energy bills and inflation, the prospect of remaining trapped in the expensive private rented sector with little chance of being able to buy your own home is a very daunting one indeed.

But there is a tried and tested solution that we know could transform the lives of families grappling with unaffordable private rents: more homes for social rent, and lots of them.

Homes for social rent are the only tenure that is actually designed to be affordable to people on low incomes. While the Government does have an annual target for this type of home, its ambition to deliver 6,000 per year will not come close to delivering the number of homes needed to meet the scale of the problem.

Stepping this up to deliver 100,000 homes for social rent per year for the next 15 years would turn the tide on the housing crisis and ease the pressure on families on low incomes, with the potential to lift 600,000 private renters out of poverty across the country.

We calculate that investment on this level would leave families on average £50 per week better off. For families on low incomes this would make a significant, tangible difference to their living standards. It is money that can be used on heating, groceries, transport, or to put money aside for the unexpected costs like a broken fridge that can otherwise be the trigger for real hardship for many people on low incomes.

Investment in homes for social rent is the proven pathway to freeing families from poverty and boosting living standards. With an ambitious Minister at the helm, now is the time for the bold action that is needed to get a grip on the housing crisis and deliver for private renters on low incomes across the country.

Joe Elliott is a senior housing analyst at the York-based Joseph Rowntree Foundation.

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