Event Report: What is the future of social housing?
by Caroline Hartnell
Most commentators now agree that the shortage of housing in the UK is reaching crisis proportions, with rental costs rising sharply and those on low incomes particularly seriously affected. Fifty years after the broadcasting of the seminal BBC television play Cathy Come Home, against the backdrop of a Crisis-hosted mass lobby in Westminster in support of the Homelessness Reduction Bill (which could stop homeless people getting turned away when they ask their councils for help), the All Party Parliamentary Group on Poverty and the All Party Parliamentary Group on Housing & Planning co-hosted a meeting on the future of social housing. Held in Portcullis House, Palace of Westminster, on Wednesday 19 October, the aim of the event was to explore how the housing situation got to this crisis point and what the government, housing providers and the planning system can do to address the problem. In particular, the event aimed to examine the future role of ‘social housing’.
Why this jointly hosted meeting? A key factor in poverty is housing costs, said Kevin Hollinrake MP, Chair of the APPG on Poverty. If you could reduce housing costs, perhaps 3 million people could be removed from poverty. But this can’t be left to private house-builders, he said. SMEs, private renters and housing associations can all help. ‘The solution is going to be multifaceted; much innovation will be needed.’
There are short-term and long-term aspects of the problem, said James Cartlidge MP, Chair of the APPG on Housing & Planning. The immediate crisis is people whose short-term tenancies are coming to an end: what do they do? The long-term problem is people who can’t get on the housing ladder. Again he emphasized the need for suppliers of all types to be involved, including the development of small sites by local builders and greater numbers of build-to-rent properties, as on the continent
Housing is the biggest issue in her Dulwich & West Norwood constituency, said Helen Hayes MP, who chaired the meeting. Homelessness is the physical tip of the housing crisis iceberg, which will have a huge impact both on the day-to-day lives of millions throughout the country today and on future generations. While there is cross-party agreement on the scale of the problem, there is no consensus on effective policies for delivering new homes of the types we need. Party political debate is needed on how best to deliver homes quickly. Panellists went on to explore a number of innovative solutions to the crisis.
How did we get here? Toby Lloyd, Head of Housing Development at Shelter, opened the discussion with a history of social housing. Social housing began in the 19th century as a response to poverty and environmental problems such as cholera outbreaks. Only after WWI was housing seen as an issue in itself: people were living in appalling conditions, with rents going up regardless. The building of council housing was a structural intervention in response to this. At the same time, home ownership based on mortgages increased. Given the choice of decent housing through both social housing and affordable mortgages, people jumped for both. Building of both housing for sale and council housing increased massively after WWII, taking people from the private rented sector, which housed 90 per cent of people at the beginning of the 20th century.
Jump to the 1960s, said Lloyd, and the founding of Shelter. We were building houses but not necessarily getting them to the people who needed them most. Homeless people needed legal rights and new legislation was brought in requiring councils to house homeless people. While demand grew, from the 1980s council houses began to be sold off and the stock diminished. For decades all parties had campaigned for more social housing; now the argument was lost. Where council housing had previously met the needs of a broad range of people, it is now inevitably targeted on those most in need; it is no longer a universal offer. People don’t have access. The existing market alone will not provide the housing we need. Several approaches are open to us, said Lloyd. We can subsidise people to pay private rents; we can subsidise people to buy on the private market; or we can try to provide housing that is permanently secure and affordable – i.e. social housing. This is the obvious answer – it works and it’s cost-effective – but it’s politically difficult to go there at the moment.
Next to speak were James Gregory of the University of Birmingham and housing expert Peter Redman, who are currently writing a report on the future of social housing for the Webb Memorial Trust. In the late 1970s, said Gregory, about a third of the population was living in social housing. Since 1977, however, there has been increasing concentration on those in greatest need, depletion of the social housing stock and a failure to replace council houses that were sold.
Their key message was that we need a ‘hybrid’ approach to the provision of social housing, with inputs from state, market and community, combining social and commercial objectives. There is scope for private providers to contribute to social housing provision and for social intervention in the low/no-income part of the private rented market. Gregory and Redman see housing associations as key players. While local councils are struggling with debts, housing associations have huge assets and are in rude financial health.
It is estimated that a million households in social housing enjoy sub-market rents without needing them that support or all of it. This equates to 10-15 per cent of social housing tenants who could pay more in rent, while the rest are reliant on housing benefit – which is seen by many as a poor use of social housing resources. Gregory advocated better redistribution through a flexible approach to rent and tenure: as household incomes rise, people should be able to stay in social housing but pay more. If income falls they should be able to revert to lower rents –people shouldn’t have to move if incomes fall. If the crisis in housing is to be addressed, argued Gregory, greater social intervention must be directed towards the low and no-income households in the private rented sector.
Lucy Pedrick, Policy Officer at the National Housing Federation, spoke about the changing environment facing housing associations and the house-building proposals the National Housing Federation has put to the government. The good news, she said, is that we still have a social housing sector, despite the recent focus on home ownership . But with £7 billion committed to starter homes, shared ownership and build-to-rent, there are few options open to a housing association in an area of the country where incomes are too low to qualify for a mortgage.
There is a perception that housing associations are becoming more commercial, said Pedrick, but they have done so to cross-subsidise social homes. Last year, housing associations built around 5,000 homes for social rent, with 3,500 of those built without any grant whatsoever. The National Housing Federation has been developing a new approach for a middle group between those able to buy and those qualifying for social housing, such as those in paid work who can’t get a mortgage. They call this ‘buy as you go,’ with a chunk of rent going into purchase: if a tenant pays rent over 20 years or so, ownership transfers to them. Given the right conditions, housing associations could build hundreds of thousands of homes in the life of this parliament. Although it remains unclear when right-to-buy will commence in this sector, housing associations have committed to (at least) one-to-one replacement.
Robert Grundy, Head of Housing at Savills, asked how the private sector could help. How can we use the power of real estate to produce better and more affordable housing? With a government where housing is high up the agenda and a pragmatic and flexible London mayor in Sadiq Khan, Grundy was upbeat about the possibilities and eagerly anticipating the government’s Autumn Statement on 21 November. We need over 200,000 new homes per year (unless Brexit is extremely isolationist); the big gap is for low-income people.
Grundy sees housing associations as an important new real estate sector. They have the ability to manage different types of tenure: they can do market sale and rent, discounted rent, shared ownership, starter homes, retirement housing. Housing associations are ethical developers, place-makers, investors and managers. They need to carry on renting out houses, but they can also build. Commercial builders will build only what they can sell, so housing associations can fill the gap between house-builders and social landlords. Challenges are shortages of skills, the need for upfront investment, and the need to invest in community infrastructure such as schools. Housing associations need to find the right partners with the right skills and common objectives – which is where ethical investors, patient investors, could play a valuable part.
Betsy Dillner, Director of Generation Rent, outlined Generation Rent’s advocacy work on security and quality of tenancy and housing options for low-income households in the private rented sector. Local authorities are desperate to push people into the private rented sector, she said. Many individuals and families are ill-suited to private rentals and would otherwise have been well-served by social housing. In the short term we need to start looking at making this sector fit for purpose. Safeguards are needed as long as social housing is so restricted. Security of tenure is a key issue. Often tenure is only for six months, and then the local authority has to start the whole process again. Many landlords won’t take housing benefit or need to effectively be bribed to do so. If private rentals are the at least the short term future of social housing, the government must reflect on the responsibility of private landlords. For example, whose responsibility is it to make properties accessible? Who is answering these questions? In the longer term, said Dillner, the government needs to invest heavily in the sector and build more social housing
Hugh Ellis, Interim Chief Executive & Head of Policy at the Town and Country Planning Association, discussed the TCPA’s ongoing work on ‘Planning for the Future – Learning from the Past’. Planning is not the problem but the solution in the delivery of social housing, he said. Planning is not about building ‘units’, but about place-making, creating good places for people to live, where people can get to work easily, have better mental health and lower carbon footprints.
The real problem is the development model, said Ellis. Putting viability at the centre of planning has stripped out the quality in house-building with ever smaller properties with undersized rooms being built, particularly in low-demand areas. Only 7 per cent of homes built today are accessible. The private sector has never built more than around 150,000 homes a year. In Ellis’s view, new towns could play a big role in meeting housing needs. The new towns model, neglected for 50 years, needs reviving. The creation of Milton Keynes was locally led and built 4,000 homes in a year, 97 per cent of which were social, he pointed out. Although there is current interest in the new towns agenda, Ellis noted push-back from the private sector. What we need is an empowered planning system, able to capture the uplift in land values, both to build homes and provide a stewardship fund for the future.
Helen Hayes then opened up the discussion to the audience, outlining some key questions: how much of a solution can each of the sectors provide? What scale can they offer? If housing is a good investment for the private sector, why not for government? What is the right balance between long-term provision of new housing and short-term fixes? What are the difficulties with the notion of fluctuating rents for individuals?
First to speak was a housing association tenant, who complained that the housing association sector had lost its ethical base. Over 40 years she has paid two and a half times more in rent than paid by people who bought their homes in the 1970s. No housing association tenant can afford to buy because housing costs are too high. Can’t we develop lateral ways of developing social housing – social philanthropists, social crowdfunding, giving over housing to tenants to run as co-ops?
Another speaker from the floor talked about how the housing market functions now compared to the past. In Nye Bevan’s day council housing was designed for people in the middle while the poorest lived in privately rented rooms because they couldn’t afford social housing rents. But controlled rents regulated the private market in a way that made it more useful. Social housing is not subsidised, she said: subsidies go to developers who receive grants. Housing development costs are higher in the UK than anywhere else in Europe. What lessons can we learn from the development model in other countries? Panellist Toby Lloyd agreed that social housing is not subsidised: the cost of construction pays for itself through rental income. The housing market is completely dysfunctional and always has been, he said. Market solutions should not be what we aspire to for social housing – the housing market is extremely dysfunctional.
Another audience member emphasised that families are in crisis now, facing debt, homelessness and poverty – what can be done to help them now? Housing is a moral issue, he said. Homeless working class people are not drunk and feckless, as so often caricatured. And building more housing is not the same as responding to families in crisis. We need to ensure local authorities have the resources to respond to crises on the day.
How will Brexit affect housing, someone else asked. In terms of delivery of new homes, shortages of construction skills will be an issue, said Lucy Pedrick, and the lack of funding from Europe. Another big risk is shortage of care staff for supported housing – one in nine care workers in London is from the EU and without British citizenship. Betsy Dillner also stressed the knock on economic effects noting that the nighttime sector in London’s Soho is collapsing because you cannot house people on low wages.
Responding to speakers from the floor, panellists reiterated key points made earlier: housing associations could deliver huge volumes of housing, largely through internally generated surpluses. Redistribution from higher earners in social housing could help provide housing for low-income people who are left out. The government has to take responsibility and build houses. The premise of right-to-buy was that money from sales would be ploughed back into building social houses. This hasn’t happened, said Betsy Dillner; councils need to carry it out. Hugh Ellis reminded us that we have a broken development model: there are solutions which we should learn from European cities, such as Berlin and Hamburg. Finally, James Cartlidge noted that dysfunction in the housing sector is not exclusively about land and supply; it is also about the behaviour of banks, huge buy to let portfolios and cheap money driving up prices.
Report by Caroline Hartnell, freelance writer and editor. Editor of Alliance magazine from 1998 to 2015. firstname.lastname@example.org