Upgrading and repurposing private rented homes to create a new generation of social homes offers a clear path out of the housing crisis

England’s housing crisis has reached boiling point. Far from providing stable foundations on which we can build our lives, our housing system is a source of insecurity and hardship for millions. Soaring private rents and the government’s failure to abolish ​‘no fault’ evictions mean that around a million tenants have been evicted or are at risk of homelessness this winter. 2.25m homes in England are unsafe, and 900,000 have damp or mould. House prices are falling, negative equity is rising, and construction rates are diminishing. 3m households face sharply rising monthly mortgage bills, and social tenants will be hit with a 7% rent rise. And homeownership is slipping further out of reach for thousands more, placing yet more demand on the private rented sector (PRS).

Even prior to the current crisis, there were 8.5m people with unmet housing needs — living in homes that are overcrowded, unsuitable, unaffordable or in poor condition — 4.2m of whom would be more suitably housed in a social home. For decades our system has treated homes primarily as financial assets. Other places, like Vienna, have prioritised high quality, secure and affordable housing; there is no reason why we can’t do the same. That is why the Homes For Us Alliance — a new vehicle for groups and organisations across the housing movement — has formed to develop policy and campaign for solutions to the housing crisis.

At the heart of our broken housing model has been a rapid shift in the makeup of our homes over recent decades. Firstly, Right to Buy and the restrictions it imposes on councils has meant the loss of 1.4m socially rented homes since 1980. Secondly, there has been a corresponding rise in the number of households privately renting, which has more than doubled over the same period. Thirdly, soaring house prices have reduced the proportion of homeowners, locking millions of young people out of home ownership, trapping them in the PRS, and accelerating the transfer of wealth to London and the south east.

Figure 1: Since the introduction of Right to Buy, the proportion of socially rented homes in England has almost halved, and since the early-2000s the proportion of PRS properties has almost doubled

This flow of transactions — with huge numbers of homes switching from the social sector to the PRS — lies at the heart of the present crisis. It prevents those on council waiting lists, languishing in often horrendous temporary accommodation, from accessing a safe and secure home of their own. This produces more demand in the PRS, leading to rising rents and lower quality. In turn, the overheated PRS — propped up by a tax and regulatory system designed above all to encourage landlordism — has squeezed the savings of would-be homeowners while house prices have soared.

In short, the lack of social housing skews the entire system. All the while, taxpayers spend vast amounts of money propping it up. New figures compiled by NEF show that the state is forecast to spend five times as much on housing support to subsidise PRS landlords between 2021 – 22 and 2025 – 26 as it will on building affordable and social homes over the same period.

Instead of addressing the root cause of this broken housing model, recent governments have doubled down. Focusing on further stimulating market demand by pumping billions into Help to Buy and cutting stamp duty has turbo-charged house price rises. What limited supply side reforms have been introduced, have not yet had the impact needed. NEF analysis shows that, since councils were freed to borrow to build in 2018, only 7% of the required amount of social housing has been built. While increasing supply is vital, studies have shown that this will, on its own, have limited progress in making housing more affordable. And, even if (now non-mandatory) house building targets are met the UK would blow its entire carbon budget.

Figure 2: Social housing supply in England has barely improved nor come close to meeting need since local authority reforms in 2018

With the dysfunctionality of our housing model reaching breaking point, this government must develop a new generation of social homes, while driving up energy efficiency standards in a better regulated private rented sector. To further this, the Homes For Us Alliance is developing a number of innovative proposals to orientate policy around a central objective: enabling social landlords to retrofit, upgrade and acquire private rented homes — repurposing them on a transformative scale to deliver a new generation of social homes. Doing so would have multiple benefits, not least increasing supply in the social housing sector while simultaneously driving demand down in the PRS, and providing landlords wishing to sell their properties with an exit strategy.

NEF and the Homes for Us Alliance will now develop a series of ​‘carrots’ and ​‘sticks’ that would encourage this transformation. Of course we must build new homes, particularly green social homes. But alongside this, upgrading and repurposing private rented accommodation to create a new generation of social housing offers a clear path to help fix our broken housing system.

Image: iStock/​DGLimages