Potential benefit
Reduction in housing costs for the 14 million private renters across the UK, including Scotland where rent controls are currently in place, representing around a fifth of the population.
Building 90,000 social homes a year would generate £51.2B in total economic benefits over 30 years, paying for itself in just over a decade.
Pegging LHA to the 30th percentile of median rents and keeping it there would raise 75,000 children and 125,000 adults out of poverty across the UK, according to the Resolution Foundation.
Housing affordability leads to economic growth: the Mayor of London found that a 1% increase in housing affordability would lead to a £7b boost to London’s economy alone.
Potential cost
To match the rates of social-housebuilding seen between 1956 and 1979, to which we are seeking to return, the Affordable Homes Programme would have to grow to £16.6 billion every year, according to Centre for Cities. The government has committed only £39 billion over 10 years, the equivalent to £3.9 billion per year.
Shelter estimates that two-thirds of the 90,000 social homes needed each year would be grant-funded (60,000). Cebr estimated that constructing 60,000 social rent homes would require £11.8 billion in grant funding.
The proposed LHA uplift would cost £638M annually.
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Housing costs are one of the biggest drivers of the cost of living crisis, with rents spiralling, home ownership out of reach for so many, and a scarcity of social housing undermining any efforts to make homes more affordable. Over half of the families with children living in private rented accommodation are below the poverty line. The total amount of rent paid by renters has continued to rise to increasingly unaffordable levels. ONS data shows that from 2013 to 2021 this rose by roughly £17 billion.
The market cannot regulate itself; it is the government’s responsibility to make sure everyone can access an affordable home. Rents must come down to an affordable cost (often defined as below 30% of incomes), achieved through rent controls across privately rented housing. These controls must be introduced incrementally and in a sensitive manner, to mitigate the risk of negative consequences for current tenants, and must account for both between and during tenancies.
This must be paired with a significant housebuilding programme to be effective, with a strong focus on council homes, which is the only viable route to the government’s 1.5m new homes target, as private developers won't be able to get there alone. Shelter’s target of 90,000 new homes for social rent per year must be met to put a dent in this crisis, which may require sufficient support to bridge the skills, materials and land gaps we face that are fuelling this crisis.
There must be a reversal of the privatisation of council homes, meaning the abolition of right-to-buy, and a commitment to giving local authorities and community-led housing schemes first refusal on private rented properties entering the market, to put them back into public ownership. Within this, property tax reform must be considered to level the playing field to ensure purchasing and owning homes is more affordable for prospective first time buyers and local authorities than landlords and corporations. All public housing must be accountable, with tenants democratically represented in the governance of council and housing association homes.
New homes should be built to be warm and energy efficient, and funding and upskilling should be provided for the retrofit of substandard accommodation across tenure types. This would help address the affordability and climate crises simultaneously, but must be paired with protections for renters if the improvement money goes directly to their landlord.
The multiplier effects from construction activity, reduced housing benefit costs, improved productivity from stable housing, and increased tax revenues from employment creation would facilitate significant economic benefit for the treasury and mean that the public housebuilding programme would pay for itself after just over a decade and continue to benefit the public purse beyond this time frame.
