In a speech made last week, Michael Gove outlined plans to deliver 1 million new homes nationally, focusing on towns and cities and starting with Cambridge.
The government is right to recognise the need to build more homes in urban areas like London, which has a significant level of unmet housing need. Reforms and investments in the planning system are welcome, and the Planning Skills Delivery Fund is a step in the right direction.
The package of plans come at a time when private rents are soaring, benefits are frozen and the number of people in temporary housing has reached record heights.
The latest statistics reveal there are now over 130,000 children living in temporary accommodation: enough to fill the O2 arena seven times over. In London alone, around one in 23 children are homeless because of the severe shortage of affordable homes.
Far from being a new phenomenon, the rise in temporary housing and homelessness can be traced back to policy decisions from decades past. But the latest figures serve as a stark reminder of the consequences of supply shortage – and the people this is hurting the most.
What are the practical implications of these latest proposals, and where could policymakers go even further?
Social housing
At the top of the agenda should be social housing. The current output of 7,500 social homes a year fails to match the 21,600 a year lost to the Right to Buy and demolition, let alone the 90,0000 a year that is needed.
We must reconsider the role social housing can play, not only as a lifeline to low-income families, but also in reducing public spending.
At the end of June 2022, nearly 95,000 households were in temporary accommodation across the UK, with councils spending £1.6 billion. High private rents mean the UK spends around £23.4bn a year on housing benefit, a figure that would be brought down by social housing.
If the government were to commit to making social housing a national priority, the opportunity to shape a building boom that will benefit everyone will emerge.
And these benefits will extend to job creation too. In our report, Homes Londoners Can Afford; Jobs They Can Be Proud Of, the G15 demonstrated how funding for affordable housebuilding in London would provide a major boost to the economy by creating jobs and supporting existing ones.
The report highlighted the Greater London Authority’s previous estimate that the capital requires £4.9bn a year in grant which, if allocated at the same grant per unit as the Affordable Housing Programme 2021-26, would create around 166,279 jobs each year.
Financing
The demand for affordable homes is not going away any time soon. Meanwhile, the housebuilding industry has scaled back its output in the wake of the housing market downturn, even if fears of a full-blown crash weren’t realised.
We need to maintain a diversity in the type of organisations building homes. The UK cannot become over-reliant on one part of the industry – we need public, private and third sectors to each play their part. Housing associations bring a lot to the table.
Often adopting patient capital models, we can take a long-term view and invest over a longer period of time: we don’t have the same short-term challenges that some private builders do.
Housing associations are natural engines of growth, but as we weather the current economic storm, we are having to do more with less.
We’re faced with the challenge of finding the balance between competing priorities, of continuing to deliver new homes at the same time as fixing unsafe buildings, regenerating ageing estates and decarbonising existing stock.
In a climate of financial constraints, more and longer-term grant funding will only go so far. We need innovative financing models, such as rolling loans recycled and paid back at the end of a project, amongst other fresh ideas.
Another key step would be the reintroduction of the rent convergence mechanism. Its absence leads to an annual shortfall in rental income of £67m to G15 members. Reintroducing this alongside a long-term rent settlement would offset some of the impact of the rent cap and provide more resource for providers to build more affordable housing.
Planning
Proposals to streamline and modernise the planning system are welcome, but the barriers to housing delivery are not simply the result of weaknesses in the system. A key concern is the under-resourcing of local authority planning teams.
This is a trend that has grown in the past few years, with planning authorities becoming under-resourced and losing expertise.
A planning system that favours housebuilding will require a step change in the skills available in local authorities, which will require additional resource and funding.
The time has come to get building, and we need a coalition of the willing and capable to do so.
With long-term political commitment and collaboration across national and local government, housing providers, residents, and the private sector, we can begin to imagine a future where everyone has a decent place to call home.