Social Housing Sector in the UK

Posted on 2 Nov

For decades, the social housing sector has faced many challenges. Underfunding, land shortages, nimby-ism and stigma have all blighted the industry. In monetary terms, the last eight years have seen the Government's capital commitment to building homes fall from £11.4billion in 2009 to £5.3billion in 2015.

Fortunately, it’s not all doom and gloom. Recent signs point to a change in the Government’s attitude towards social housing. Theresa May’s speech at the start of October promised a £2billion injection for the social housing sector. May said “we will encourage councils as well as housing associations to bid for this money and provide certainty over future rent levels.”

Whilst her pledge of £2billion is a fraction of what’s needed, it’s at least a clear step in the right direction with hopefully more to come as part of the government’s long-term investment plans.

As Government’s attitude towards social housing appears to be changing, it seems people’s attitudes are too. A recent study by YouGov revealed that the development of social housing is a more appealing prospect when compared to new build developments generally.

The results revealed that 38% of Brits surveyed would be happy for a social housing development to be built within half a mile of their home, compared to just 17% who were asked about housing developments generally. Home Group chief executive Mark Henderson believes this survey shows that so-called nimby-ism (‘not in my back yard’) is on the decline thanks to a changing attitude towards social housing.

So, how many homes are actually being built?

Well, recent figures from The National Housing Federation’s survey of developing providers showed that housing associations started 47,709 homes in 2016/17, an increase from 42,104 in the previous year. This increase is partly driven by the additional funding announced in the Autumn Statement, providing a boost to housing association’s confidence in development.

However, there are also other factors at work on the peripheries that might have a positive impact on homebuilding. A new study, published by the Smith Institute, has identified what it describes as a ‘quiet revolution’ in council home building. It projected that collectively, Local Housing Companies (LHCs) could deliver up to 15,000 extra homes per year by 2022. Whilst, a lot of these will be private homes for rent and sale, many of the LHCs studied by the Smith Institute use the profits to cross-subsidise new affordable and social rented homes.

Paul Hackett, director of the institute and the report’s author said “local housing companies are spreading like wildfire. At this rate, the majority of councils – of all types and all political colours - will soon have a housing company. It’s not a silver bullet to solving the housing crisis, but it will make a difference locally. Surely, it makes sense to support these companies, many of whom are providing affordable homes”.

To tackle the housing crisis, Government will need to adopt a varied approach. Terrie Alafat, chief executive of the Chartered Institute of Housing said that “it’s actually recognising that if you can get the right mix of housing, at the right levels of affordability, then it makes economic sense to invest in social housing.” A 2014 study by the Centre for Economics and Business Research shows that for every pound invested in affordable house building, a further £1.42 is generated in the wider economy.  In addition, Adam Morton, a policy leader at the National Housing Federation has demonstrated how social housing can also bring direct benefits to the Treasury. He said “the higher the government’s capital subsidy to support social housing, the lower the annual housing benefit bill, which currently hovers around the £25bn mark. If more people are able to rent social housing at lower rents, fewer people have to move into the private sector, where rents are higher.

With such evidence for the benefits of social housing piling up, and a noticeable sea change in attitudes, surely the future is looking more positive for housing associations, and for homebuilding as a whole. For now, only time will tell … but here’s hoping.

At Viewber we bring the power of the sharing economy to property professionals across the UK – including housing associations and local authorities. If you’d like to find out how we can help, please get in touch

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