How we got from there to here

Originally written as a column for Inside Housing.

Where next for affordable housing funding? That’s one of the key questions posed in this year’s edition of the UK Housing Review.

The essential guide to the key issues and statistics in housing is celebrating its 30th anniversary and complements its usual analysis of contemporary trends with a long view of how we’ve got from 1992 to here.

One of the strengths of the review has always been the way it considers policy on housing in the round, not just in terms of all tenures but also in the way that the housing system relates to broader policy.

If only that were true of how governments think about housing. A point made powerfully by Mark Stephens in his opening chapter on 30 years of housing policy in the UK is that this has only really happened twice in the last five decades and not at all since 2005.

As usual, readers will find plenty of food for thought in chapters on social housing, private renting, home ownership, homelessness and support for housing costs plus the usual comprehensive array of housing statistics.

But my eye was drawn to the chapter on affordable housing supply and the challenges ahead by John Perry and Peter Williams.

Another strength of the Review is the way that it draws together ever more divergent policy in the four nations of the UK.

On affordable housing as a whole England lags well behind Scotland and Northern Ireland and has competed with Wales for last place in terms of delivery by population size.

Current plans in Scotland and Wales (delivery remains to be seen) suggest that they are on target to meet projected requirements for social rent, shared ownership and intermediate rent based on the most comprehensive recent assessment of housing need. England is only building about half of the requirement.

It will come as no great surprise that the shortfall is greatest on social rent. Here’s the breakdown of affordable housing supply in England over the last 20 years:

Output of social rent has fallen to less than 7,000 homes a year against a need for 90,000 and even that overstates the true position since the stock has actually fallen by 208,000 (5 per cent) since 2012 thanks to the Right to Buy and conversions to affordable rent.

Housing associations now own more than 280,000 affordable rent homes (11 per cent of their stock) and councils more than 30,000. Yet, as the chapter points out, any hopes that they would somehow cater for ‘a more diverse section of the population’ have long been dashed and ‘there is no self-sufficient group of households who can pay the higher affordable rents without government help’.

Social rent output could increase in the next few years (Savills forecasts 11-12,000 by 2026) thanks to greater output in London and by local authorities, but even that could be dented by the government’s plans to divert developer contributions into First Homes instead.

And the chapter covers in some detail the competing demands on social landlord finances of building safety work and decarbonisation of the existing stock and pressure from rising inflation.

A final section considers affordable home ownership and emerging evidence that the private sector could take a greater role even as Help to Buy is phased out.

Whether this will be remotely enough to meet the government’s target of bringing another two million households into home ownership by May 2024 very much remains to be seen but the chapter makes a point about shared ownership that I hadn’t fully appreciated up to now.

It seems clear that shared ownership provided via Section 106 will come under severe threat from First Homes but there is also growing evidence of for-profit providers and others moving into what has traditionally been a housing association monopoly. The chapter argues there is potential for ‘a radically transformed SO market’.

At the same time housebuilders are developing an alternative Help to Buy scheme called Deposit Unlock that will support 95 per cent mortgages on selected new builds underwritten by a mortgage guarantee and there are also private top-up and equity loans becoming available.

All of which begs the question of whether the government can focus more on affordable homes to rent as the market delivers more to support home ownership.

It would be about time, given that the Review’s analysis of current state support via grant, loans and guarantees reveals that 56 per cent (£23 billion) goes towards the private market compared to 44 per cent (£18 billion) for social rent, affordable rent and low-cost home ownership.

A return to investment in affordable (let alone social) homes for rent may sound like a long shot but the chapter points out the consequences of failing to do so. More low-income households will be obliged to turn the high-rent, low-quality end of the private rented sector and homelessness will rise with higher costs.

But, just in case the government is not listening, it will struggle to level up a country in which the greatest loss of homes at affordable rents over the last three decades has been in Northern England.

That is part of the long-term legacy of Help to Buy, the subject of another chapter by Alan Murie that tells a story that is not always obvious about a policy that has had impacts well beyond its original aims.

That’s just a flavour of what to expect in the UK Housing Review 2022. Find more details about how to get a copy here


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