Government to spend over £46bn more subsidising private landlords than on its programme to build affordable homes

The government is set to spend five times more (£58.2bn) on subsidising private landlords via housing support than on its entire affordable housebuilding programme (£11.5bn for the Affordable Homes Programme) over the next four years, according to research from the New Economics Foundation (NEF), published today. The report also finds that local authorities have been unable to take advantage of reforms introduced in 2018 to make it easier for them to borrow to build new social homes, with just 7.4% of the social homes needed to meet demand having been built.

The report argues that, since the introduction of right to buy in the 1980s, England’s housing system has become increasingly unbalanced, leading to the housing crisis seen today. According to the report, in the decade preceding the introduction of the right to buy policy in 1980, 40% of new homes built were social housing – over 1m new social homes in total. But in the 42 years after the introduction of right to buy, only 360,000 new social homes have been built – making up just 6% of total new homes.

As a result, socially rented homes now make up just 17% of England’s housing, compared to 31% in 1980, according to the English Housing Survey. At the same time, the private rented sector has more than doubled from 9% of housing in 1988 to 19% today. The report argues that increasing numbers of people who would be eligible for social housing are stuck privately renting unaffordable, poor quality, energy inefficient and dangerous homes, often riddled with damp and mould.

The report argues that the root of the England’s housing crisis lies in this shift, in which affordable and secure social homes have been replaced by unaffordable, insecure and poor quality private sector accommodation. The report recommends supplementing social housebuilding by enabling local authorities to acquire, upgrade and repurpose private rented housing on a transformative scale to create a new generation of social homes.

Alex Diner, senior researcher at the New Economics Foundation, said:

“Since the 1980s, we’ve swapped secure and affordable social housing for a private rented sector which leaves households paying through the nose for their homes, living in fear of evictions and rent hikes. Far from providing stable foundations on which to build our lives, our housing system has instead become a source of insecurity, hardship, anxiety and poor health for millions. Current efforts to fix this are not working, and we are not building enough social homes to meet demand. This government is spending much more subsidising rising private sector rents than it is addressing its root cause: the lack of social homes. Alongside building desperately needed social homes, upgrading and repurposing private rented housing into a new generation of social homes provides a clear path out of the housing crisis.”

Notes

The New Economics Foundation is a charitable think tank who are wholly independent of political parties and committed to being transparent about how it is funded.

Homes For Us is a coalition of grassroots organisations, charities and tenants unions who have come together to fight for more and better social housing, set up by NEF.

The report, Beyond new build, is available at https://​newe​co​nom​ics​.org/​2023/… 

Options for encouraging private landlords to upgrade their homes and sell to social landlords, which NEF will explore in further detail, include: incentivising private landlords to upgrade and sell properties to social landlords and local authorities via capital gains tax and national insurance; reform to compulsory purchase orders to encourage private landlords to upgrade their homes; introducing equity stakes for social landlords on private rented sector homes to fund retrofit work, as well as discounts and first time buyer rights; reforming right to buy receipts to encourage landlords to acquire private rented properties; introducing rent controls linked to energy efficiency performance; and improving enforcement and local authority skills to undertake this work.

Proportion of English households by tenure: English Housing Survey 2021 – 22, Figure 1.1

Housing support cost forecasts: Department for Work and Pensions, Benefit expenditure and caseload tables 2022, ​‘Outturn and Forecast tables: Spring Statement 2022’ (24 May 2022)

Social homes built relative to need: DLUHC, Live tables on affordable housing supply (1 December 2022), Table 1000, and Glen Bramley (Crisis), Housing supply requirements across Great Britain: for low-income households and homeless people (November 2018)

Housing supply since 1970: Department for Levelling Up, Housing and Communities, Live tables on housing supply: indicators of new supply, Table 213