G15: UK misses out on £7.7bn annually due to social housing shortfall

G15: UK misses out on £7.7bn annually due to social housing shortfall

The organisation has calculated the economic and social contributions made by social housing

The UK’s housing crisis has seen building starts rapidly decline while waiting lists for social housing soar. In London alone, over 320,000 households are awaiting social tenancies.

New research has calculated that providing social housing for households on London’s waiting list would inject at least an additional £7.7 billion a year into the UK’s economy.

The G15, which represents London’s largest not-for-profit housing associations, has conducted research focusing on the whole of London which quantifies the economic and social contributions made by social housing using Hyde and Sonnet Impact’s Value of a Social Tenancy (VoST) model. These contributions range from rent savings to the value of increased job and education opportunities, crime reduction and savings to the NHS.

In London, housing associations currently provide 289,000 social rent homes. The findings reveal that each of these homes contributes an average of at least £23,777 in value annually, totalling over £6.86 billion every year.

Providing new social tenancies for the 323,800 households on the capital’s social housing waiting list would inject at least an additional £7.7 billion a year into London and the UK’s economy.

The G15 says the housing crisis has left not-for-profit housing associations unable to invest in the new homes so desperately needed while also investing in existing stock to ensure standards meet the needs of residents and Government.

With the construction of new homes grinding to a halt, the real value of London’s social homes is being missed.

“We’re a nation obsessed by house prices but few people and even fewer politicians appreciate the real value created by London’s social homes’, says G15 Chair Fiona Fletcher-Smith.

“Political parties would do well to remember, as they write their manifestos, that London is built on a vibrant mix of people from all walks of life. Providing homes for those that need them most is an asset, not a cost, creating all kinds of social and economic benefits.”

There are 655,000 social rent homes in London, almost half of which (44%) are provided by housing associations.

The study looks at the social value of providing social housing, including higher employment, crime reduction, education and benefits to the NHS.

Building across the country is in a steep decline, with housing associations starting work on just 6,990 homes in the second half of 2023, compared with 16,270 the previous year. And in London, G15 data shows their members are expected to start work on 1,769 affordable homes in London this year, down from 7,363 last year.

Role of Housing Associations

Housing associations are not-for-profit organisations set up to support people in housing need with homes at below-market rent. All the money they make is reinvested into building more affordable homes and delivering services for their residents.

The services provided are increasingly relied upon by residents, and range from domestic violence refuges, homeless hostels through to community centres and training and apprenticeships programmes.

All areas have seen dramatic cuts from local authorities in recent years, putting even greater pressure on the housing associations.

Three-quarters of the £400,000 cost of a new home is covered by housing associations, with borrowing against current and future rental income making up a large slice.

However, the G15 says decisions by Housing Ministers on how rental income is calculated have made it increasingly difficult for associations to secure the long-term investment they need to build and also undertake refurbishment programmes on existing homes to ensure building safety and achieving net zero requirements by 2050.

It also states, the Government’s 7% rent cap coupled with inflation and interest rates is the final nail in the coffin, forcing housing associations to drastically cut back on building despite the housing crisis.

“Time has run out for the current government to get its own house in order when it comes to social housing,” said Fletcher-Smith.

“Whoever forms the next Government could immediately begin to address the housing crisis by applying consistency to areas like the rent settlement. This simple act would give housing associations the financial certainty we need to keep borrowing and investing in Londoners and the UK.

“Despite the valuable contributions that social homes make, successive Conservative Governments’ indecision means there is little room to grow for housing associations, their residents and London.

“Housing associations provide almost half of London’s existing affordable homes and are the engine of potential new homes. A few tweaks by the next Government, at no cost to them, will help us get on with the job of maintaining existing and building new homes, all while helping revitalise and regenerate communities, address stigma and providing a springboard for people into education and employment.”