Over a century ago, the Addison Act introduced the notion of housing as a national responsibility and launched the first major wave of social housing in this country. By 1981, the number of social homes peaked at almost 5 and a half million. Today England has just over 4 million social homes, despite demand for affordable housing increasing. The statistics are stark: around half a million households are homeless or living in unsatisfactory housing conditions; one in every 200 people are without a home; and one in nine children live in overcrowded homes. More and more households have no option but to rent privately, as it becomes harder for first-time buyers to join the housing ladder and social housing is often unavailable, but private renters spend the most on household costs.
We investigated the long-term delivery of social housing, including how much was needed, the adequacy of current funding levels, and the effectiveness of the Government’s approach. We concluded the following:
Last year, less than 7,000 social rent homes were built, despite evidence that England needs around 90,000 more social rent homes a year for the next fifteen years. Increased central government grant is necessary because the current funding model is not delivering what is needed. The best estimate suggests an extra £10 billion in grant is required.
Evidence shows that in the long-term, such a programme will pay itself back in full to the Exchequer. Such a programme will also be counter-cyclical—especially useful during economic uncertainty caused by COVID-19—helping to both protect and create jobs during a predicted wider housing downturn. Without grant funding, the current reliance on the cross-subsidy model will be vulnerable and likely unsustainable.
The crisis has exposed our broken housing system. Families in overcrowded homes have faced worse health outcomes. Private renters have struggled to meet housing costs. A large social housebuilding programme will provide jobs, boost the economy, and help the Government meet its 300,000 homes a year target. It would also help to significantly reduce the number of people suffering from homelessness, reduce the number of families in overcrowded homes, help families reduce their housing costs, as well as reduce pressures elsewhere in the housing system.
We reiterate the recommendations of our predecessor Committee that the Government should amend the Land Compensation Act 1961 so that local authorities and development corporations can compulsorily purchase land at a fairer price, which could reduce the cost of a social housebuilding programme by up to 40 per cent.
We agree with the Public Accounts Committee that the Government missed a crucial opportunity to help with social housing need by prioritising selling public land to the highest bidder. We recommend Homes England takes a central role in co-ordinating public land to be used for social housing, by identifying sites and purchasing private land. With our suggested reforms to the Land Compensation Act 1961, this land would be easier to purchase and more affordable.
Some of the money could also be redistributed from existing budgets within MHCLG’s existing budgets, and the rest borrowing while interest rates are historically low. Finally, it is clear that over time the Government could use savings in the housing benefit bill to subsidise the programme.
We support the Government’s plans to improve the private rented sector, including on security of tenure, quality of housing, and affordability, but believe the time for reform is now. The Government also needs to ensure it provides more resources to councils to ensure they the capacity to enforce the law.
We therefore recommend that local authorities should receive 100 per cent of Right to Buy receipts and have longer to spend them. in line with the five year period for discount repayment, the Government prevents Right to Buy homes from being privately let within five years of purchase.
Published: 20 July 2020