Tackling the housing crisis

By David Ayre, Property Networks Manager

David lays out a frightening array of statistics which pinpoint the extent and breadth of the housing crisis. He concludes that there is a positive role that local authorities can play in providing much needed housing choice.

Right to Buy fallout

All political parties set out policies to tackle the housing crisis in their manifestos, but with a clear majority, it is the new Conservative government’s manifesto commitments that have to be delivered. We need to look back to see what has contributed to the current housing crisis, in order to provide the insight into the policies that will work, and those that make the situation worse. 

Successive governments have been committed to increasing housing supply, with a particular emphasis on expanding home ownership. The 1979 the Thatcher government was the first to make it mandatory for council tenants to have the Right to Buy at a discount, although some Labour councils such as South Tyneside had already introduced a similar policy. The narrative at the time was clear – people should become less reliant on the state. It was thought that the sale of council houses at a discount would create a home-owning democracy which was more likely to vote conservative.

At the time there were warnings that this move could see the demise of affordable homes to rent for those who could not afford to buy. Indeed, few could have predicted that this, along with a number of other measures, would not only contribute to the housing crisis of today, but would result in fewer people owning their own homes in the future.

Housing trends

If we study MHCLG’s Annual English Housing Surveys, we can see that the proportion of households in the social rented sector fell from 31% in 1980 to 19% in 2000 as council houses were sold and not replaced. It was standing at 17% in 2013/14, where it remains. Initially, the proportion of all households in owner occupation increased steadily from the 1980s to 2003, when it reached a peak of 71%. Since then, there has been a gradual decline in owner occupation to 63% in 2013/14, where it has plateaued. Throughout the 1980s and 1990s the proportion of private renters was steady at around 10%. However, the sector has more than doubled in size since then, and there are now 2.5m more households in the private renting sector than there were in 2000. By 2015/16, 4.5m households were renting in the private sector, representing 20% of all households in England.

These changing trends have been driven by a number of factors. In the late 1990s, rent controls were removed and assured short tenancies became standard. Lenders also introduced the buy-to-let mortgage at around the same time. Paradoxically, the right to buy has also been a major driver. Over 40% of homes bought under the right to buy are now in the private rented sector and based on current trends, this is set to increase to more than 50% by 2026. It is even higher in some parts of the country. In Milton Keynes, over 70% of former right to buy homes are now in the private rented sector. There are now only around 2m council homes left in Britain, down from 6.5m in 1980 when the right to buy was first made mandatory, although some of this reduction is through the transfer of homes to housing associations and arm’s length management organisations, which have been incentivised by successive governments.

Implications

What are the implications for households and the wider community from these changes in housing trends? The first and most obvious consequences are the overall costs of housing. On average, private renters are paying around double the rent of social housing tenants and some private renters will be living alongside social housing tenants, paying twice as much rent for a property that is less well maintained than their neighbours’. Furthermore, selling off social housing and not replacing it has contributed in part to inflated house prices generally, and created the conditions in which home ownership has become unaffordable for a growing proportion of the population.

The historic decline of social housing, the shifts from home ownership, and the growth of the private rented sector also impact on health. The Social Determinants of Health Rainbow Model developed by Dahlgren and Whitehead, and widely adopted by the UN, sets out a hierarchy of determinants with the general socioeconomic, cultural and environmental conditions at the top and living and working conditions, including housing, at the next level. One way of measuring the propensity of housing to determine health risks and outcomes is to use the Housing Health and Safety Rating System (HHSRS). The HHSRS lets an assessor judge whether housing conditions are so poor that there is a risk to health and safety. It can be applied to all tenure groups and is one of the main tools local authorities can use to act against poor housing conditions in the private rented sector. Problems identified by HHSRS that are likely to have a serious impact on the tenant’s health are termed ‘Category 1 hazards’.

In 2015, 17% of private rented homes had a Category 1 hazard. This compared with 13% of owner-occupied homes, and 6% of the social rented sector. Of the 2 most common Category 1 hazards, (excess cold and falls) 6% of private rented homes were found to have excess cold, compared to just 1% for social rented; 10% of private rented homes were a fall hazard, compared to 4% for social rented.

Energy efficiency and quality of the private rented sector have improved to an extent, but standards lag behind the social rented sector. Over a quarter (28%) of private rented homes failed to meet the Decent Homes standard in 2015. The comparative figure for the social rented sector was 13%. Although the private rented sector has always performed less well than other tenures, using this measure of housing quality, there was a marked improvement in the proportion of non-decent private rented homes over the 2006–2013 period, from 47% to 30%. Since then, the proportion of non-decent homes in the sector has remained virtually unchanged.

Within the private rented sector, households on low incomes and those supported by housing benefit are more likely to have a Category 1 hazard in their home. The same is true of households with a disabled or long-term ill person, or households with someone over 60 living in them.

Homelessness

Rough sleeping is one of the greatest determinants to health and one of the most visible consequences of the housing crisis. An estimated 726 people died while homeless in England and Wales in 2018. This was up 22% on the previous year – the highest year-to-year rise since this data began being collected. The average life expectancy was 45 years for men and 43 years for homeless women; compared to 76 years and 81 years for the wider population.

Between 4,000 and 5,000 people bed down on the streets on any given night, a figure that has almost doubled since 2010. Rough sleeping is the most visible tip of the homelessness crisis. An estimated 320,000 people are homeless in the UK, according to the latest research by Shelter. This was an increase of over 40% since the low point in 2009.

As a result of the lack of social housing, 84,740 households are in temporary accommodation as of March 2019, up more than 75% since December 2010. Shelter estimate that there were 135,000 children living in temporary accommodation over Christmas 2019. Councils spent £1.1bn on temporary accommodation for homeless households in the year to March 2019, a 78% increase over the previous 5 years.

In addition to the official homeless figures are concealed households – younger adults staying in the parental home longer and ‘sofa surfers’. There are an estimated 3.74m adults in concealed households who would prefer to live separately. Over the last decade, there has been an increase of nearly 700,000 in the number (or 28% in the share) of 20–34 year-olds living with their parents, with no less than a 48% increase in London and the South East.

Causes of the crisis

Housing and welfare policy over the last 40 years have contributed to the housing crisis, and there have thus been consequences for vulnerable people and hard-pressed health and local government services already suffering from the pressures of austerity. We have already seen the impact of the Right to Buy on the changing trends in tenure, but this in isolation cannot account for the rapid rises in homelessness and rough sleeping over the last 10 years. Sector experts lay the blame for this on welfare changes and in particular, the housing benefit cuts through reduced local housing allowance rates, the benefit cap, the freeze in benefits, and the delays in payments with the introduction of Universal Credit.

Solving the crisis

In more recent years, the rapid changes in tenure trends have slowed and some of the worst increases in rough sleeping and homelessness have been stemmed. This is a result of Help to Buy, and additional duties, powers and some funding for local authorities through the Homeless Reduction Act 2017. The previous Conservative government of Theresa May also accepted that the shortage of affordable homes could not be solved by the market alone, and recognised the role that councils can play by lifting the borrowing cap on Housing Revenue Accounts; signalling the need for councils to start building homes for social rent once again. 

The new Johnson-led Conservative government has unfortunately given mixed messages, by increasing the costs of borrowing through the Public Works Loan Board and making scant reference to tackling the housing crisis in the Queen's Speech. The Conservative manifesto did include policies on housing:

• maintaining the Right to Buy for all council tenants and extending it further in the housing association sector
• extending the Help to Buy and requiring councils to use developers’ contributions to create cheaper homes for local people
• a Social Housing White Paper to provide better regulation and improve the quality of social housing
• renewal of the Affordable Homes Programme
• expansion of Rough Sleeping Initiative and Housing First pilots to tackle homelessness
• banning of ‘no fault’ evictions and introduction of a ‘lifetime’ deposit which moves with the tenant
• confirming the target of 300,000 new homes built per year by the mid-2020s.

As we have seen, these policies will produce mixed results. Extension of the Right to Buy will continue to reduce the numbers of social homes for rent, or at best will neutralise any investment by councils to build more homes. Although the benefit freeze for in and out of work families will be lifted during 2020, this will not apply to housing benefit. Yet, the government announced just before Christmas a £260m allocation to tackle rough sleeping and homelessness.

Council capacity

The government seems set to spend money on tackling some of the worse symptoms of the crisis, but does not fully understand the underlying causes. How can councils, therefore, gear up to make the best of the positive elements of government policy to build more homes?

• Councils which have retained a Housing Revenue Account will need to revise their 30-year business plans and to change from simply managing their existing estate to ambitious investment plans to deliver more social homes for rent at a rapid pace.
• Councils without a Housing Revenue Account will have to give some serious thought to re-establishing a HRA and setting up a housing service with all of the skills and capacity that will have been lost for some years previous.
• Housing services will need to become more corporate in their outlook as councils include the provision of more homes in their corporate strategies.
• The government has committed to spend £100bn on improved infrastructure and the regeneration of town centres. Councils will need to look more creatively on the use of their property assets to deliver regeneration projects which include more homes.
• All of this will require more skills, capacity and the use of innovative modern methods of construction.
• Many councils have declared climate emergencies which requires the integration of sustainable technologies in the construction of new homes, retrofitting existing homes and the need to win over the hearts and minds of residents and communities for the changes necessary.

I have not touched on the changing needs of an ageing population, requiring the construction of new and specialist housing developments that are more dementia-friendly.

This article first appeared in The Terrier 

Explore more

• For more ongoing updates, best practice and successful case studies on social housing find out about how CIPFA's Housing Advisory Network can you help you. 
• Are looking at your authority's HRA or housing requirements, seeking to compare against peer groups or at examining the past, present and future of your housing proposition? Then take a look at how CIPFA's new Housing 360 data and analytics tools can help you improve housing strategy and decision-making.
• CIPFA's Tackling the Housing Crisis campaign page includes the above solutions plus insight, analysis and other help on one of the long-standing leading issues - even before COVID-19 - that affect the UK and it's communities.