The UK is grappling with an unprecedented housing crisis. In England alone, 1.2 million households wait patiently on growing social housing waiting lists, and 113,000 households are forced into temporary accommodation. Soaring house prices and rents, coupled with stagnant wages, have rendered cities like London increasingly unaffordable for middle and low-income families, threatening the capital’s vibrancy and long-term viability.
Recent attempts to address housing unaffordability have proven insufficient. Demand-side policies like Help-to-Buy, 5% mortgages, and First Homes have merely served as temporary fixes, propping up an inflated housing market. Significantly no government in modern times has met its target for overall housebuilding or delivered anything close to what is needed to match demand.
What we need is a dramatic increase in the supply of homes across all tenures, but especially social housing. We need to restore local government’s ability to be a major housebuilder and do it at pace.
Rising housing costs are making it increasingly difficult to raise a family in London. As a result social housing waiting lists continue to grow and families are forced to live in overcrowded, unsafe homes or seek emergency temporary accommodation (often entirely unsuitable for their needs). Meanwhile, hundreds of thousands of council homes remain empty.
In Southwark, where I am a councillor and leader of the opposition, we have the unfortunate accolade of having England’s highest numbers of empty council homes, more than the entire north-west combined.
Maydew House, a 26 storey tower block in Bermondsey of 144 family sized flats, stands as a monument to this farce: for ten years it has been empty, and millions of pounds have been spent on it before the council finally decided to knock it down and start again.
The reasons for so many council homes to sit empty whilst waiting lists soar vary. In Southwark, many are on estates earmarked for redevelopment, some are so dilapidated so as to be unfit for habitation, and are uneconomical to invest to bring back in to use. The same is true in many other local authorities.
It’s also important to acknowledge that a proportion of stock being vacant at any one time is not always a bad thing: a healthy, efficient market will always have a degree of surplus supply in order to match demand, this is true of both the private and social housing sectors. Indeed, Britain has a much lower overall vacancy rate than many of its comparators which aren’t facing the crisis we are facing.
Nonetheless, when I’m contacted for help by desperate people living in unacceptable conditions and who have been told to wait years to get a home, it’s galling to see so many homes sat empty.
One of the reasons council homes remain empty for so long is that councils lack the tools and resources to turn them around.
The economy in recent years has squeezed everyone’s budgets, but especially local councils’ Housing Revenue Accounts (HRA) which are responsible for managing local authority housing stock and services. HRAs are facing the double-whammy of being much more exposed to interest rate rises, and high inflation in the housing and construction sectors. The number of voids that become unviable to refurbish therefore only gets larger.
A decade of central government-imposed austerity, means housing teams are also increasingly stretched to match increased and competing demands with fewer resources, meaning that usually routine tasks that can help ensure as many homes are available to rent as possible take longer to do so.
All the while, the shortage of council homes puts pressure on councils’ general fund revenue accounts, with councils across England spending billions on temporary accommodation.
Fundamentally then, this comes down to an issue of local government funding. We need the next government to give councils the resources and tools they need to ensure everyone has a secure, affordable, and high-quality home.
The LGA has previously estimated that councils in England face a funding gap of almost £4 billion. Council leaders will also tell you that more than just the headline amount of cash needed, it’s also about long-term funding settlements.
With longer term settlements comes the ability to be more confident in delivering on an ambitious house building agenda. We need to see five-year local housing deals to roll together existing progammes into a single pot.
Global supply chain problems in the aftermath of Brexit, Covid and international wars have hit the construction sector hard. This has meant that a much higher proportion of council house building needs to be funded from grants. The Affordable Homes Programme therefore needs to urgently be reviewed and, where necessary, increase the amount of funding per home.
Long term settlements that provide adequate resources will go some of the way, but councils will still need to borrow to build. The Spring Budget introduced preferential rates for Housing Revenue Account borrowing from the Public Works and Loan Board, and it’s vital that this continues to give councils the confidence to borrow to build houses.
The Thatcher government in the 1980s introduced provided council tenants the ‘Right to Buy’. Th subsequent decades have shown this policy has decimated our social housing stock because councils have simply been unable to replace lost housing stock. The strings attached by central government to the retained receipts mean that the money couldn’t be combined with other grants to build replacement homes. This is a significant barrier to stopping the net loss in council homes that we currently see under right to buy rules, especially in London.
We need to see substantial reform around right to buy. At a minimum, councils need to be able to retain 100% of receipts on a permanent basis, without the burdensome red tape that prevents councils from using the proceeds to pay off debt and build more houses. Councils need to be able to set their own discounts (or even to end right to buy in their area), so that the right balance between enabling home ownership and getting value for money can be struck locally, rather than dictated to by Whitehall.
But this is a national problem that needs national coordination too. A new national council housebuilding delivery taskforce could bring together a team of experts to provide additional capacity and support to housing delivery teams, both within councils and partners like housing associations.
This combination of measures is what we need to empower councils to build the genuinely affordable homes we need to tackle this crisis. It’s about trusting local authorities that are best able to meet local needs and giving them the tools and resources to do so.
These are just some of the ideas that could go some way to take pressure off local authority budgets, but also give dignity and security to people who just want a decent, affordable roof over their head.
The election has been an opportunity to reflect on these things. Some parties have included some of these asks in their manifestos, but the UK’s housing crisis has sadly not received the attention it rightly deserves. Regardless of the election outcome, it is imperative that we unite to tackle what is arguably the most pressing challenge facing our nation today: the housing crisis.
But (i) there are strong grounds for challenging the interpretation that supply shortages account for the price hike and that massive expansion of output is THE answer. (ii) building our way out of the crisis – even if it were accepted as a solution – would be environmentally unsustainable.
A good paper on both issues is by zu Ermgassen and others https://bit.ly/3AGgapU