May 2nd, 08:24
Blog 2nd May 2019
In this week’s blog, I write about the housing crisis in England and refer to: Housing Affordability & Supply; Local Government Association; Ministry for Housing & Local Government; National Housing Federation; G15; Homes for the North; Brexit; Homes England; Greater London Authority; Public Accounts Committee; Social Housing Green Paper; St Mungo’s; Homeless Link; Homelessness; Seminars and Training.
Housing in England is becoming less affordable. Data published by the Local Government Association shows that the ratio of lower quartile house price to lower quartile gross annual (workplace-based) earnings in England has increased from 6.57 in 2013 to 7.29 in 2018.
The lower quartile housing affordability ratio is calculated by dividing house prices by gross annual earnings, based on the lower quartile of both house prices and earnings. It is a measure of the affordability of housing for the quartile of the population with the lowest incomes.
One of the drivers of unaffordability is the fact that insufficient new homes are constructed each year. It is generally accepted that 300,000 new homes are required each year, and this has been accepted as a target by the Ministry for Housing, Communities & Local Government; but this level of house building hasn’t been achieved since the 1970s when there was a substantial council house building programme.
Graph showing the number of new homes built since 1950
The National Housing Federation, the G15 (the fifteen largest housing associations) and Homes for the North have commissioned research that shows that completions of new homes in England will reach 260,000 in 2021, more than the 222,000 built in 2017/18 but still fewer than required. The research also concludes that it is far from certain that this level of house building will continue after 2021 because of a slowing private market and the effects of Brexit.
Affordable housing is part-funded by government grant (provided through Homes England and the Greater London Authority). However, the proportion of funding that is met by grant has declined from about 50% before 2008 to about 12% now. The research concludes that, if 300,000 homes are to be built each year there is a need for this grant rate to be increased. Grant rates are already higher in Scotland and Wales than they are in England.
However, Melanie Dawes, Permanent Secretary at the Ministry for Housing, Communities & Local Government, told the Public Accounts Committee that:
“We have got a pretty comprehensive strategy but wouldn’t say at this stage that we have all the ingredients we need to get the 300,000 on the table. In particular, we don’t have information yet on our capital budgets beyond this Spending Review period.”
I argued for increased grants for affordable housing in my response to the government’s social housing green paper in 2018. I also argued that the self-financing settlement should be re-visited to release resources so that local authorities could take full advantage of the raising of the borrowing cap to build new council houses, as was envisaged when self-financing was first proposed.
One of the most serious consequences of the shortage of housing is the increase in homelessness.
Homelessness has increased, is increasing and should become a thing of the past
Some disturbing statistics about local authority homelessness services were released recently in a report commissioned by St Mungo’s and Homeless Link. between 2008/09 and 2017/18, spending by English local authorities on homelessness-related activity fell by 27% from £2.8billion to just over £2billion. But within these figures, spending on family homelessness increased by more than 20%, while spending on single homelessness fell by more than 50%. It appears that with reduced budgets, councils have been forced to prioritise emergency accommodation for homeless families at the expense of support for single homeless people.
The Local Government Association has published the results of a survey that it conducted in November 2018 into the implementation of the Homelessness Reduction Act. They found that homelessness presentations and the use of temporary accommodation have both increased since the Act was implemented. The Act has seen an increase in the number of presentations from people who weren’t previously covered by statutory provisions – current or recent rough sleepers, and people without local connections. However, presentations from people in priority need have also increased. For most councils, the number of people in both temporary and emergency accommodation has increased as a result of the Act: 61% of respondents have seen increases in the number of people in temporary accommodation, including 21% for whom these increases were significant.
The Homelessness Reduction Act that was intended to increase help for people not in priority need may be having the unintended consequence of focusing resources on crisis management rather than early intervention because when councils are faced with the choice of where to spend reduced resources, taking money out of preventive or early intervention services is less likely to put them in breach of their statutory duties.
Between 2008/09 and 2017/18, the number of rough sleepers more than doubled and the number of households accepted as eligible for homelessness support rose by more than a third. Crisis estimates that there were 160,000 homeless people in Britain in 2017 and that their numbers increased by 33% between 2011 and 2016. In 2017, 600 rough sleepers died in England & Wales at an average age of 47.
There is clearly a need for a more robust and better resourced approach to tackling and eliminating homelessness.
However, there are things that local authorities and housing associations can do to tackle the housing crisis including:
We are holding seminars on ‘Developments in Local Authority Housing Finance’ in June 2019. This seminar looks in depth at current developments in local authority housing finance in England – especially the implications of government policies, public finances, rent policy, welfare reform including universal credit, the reinvigorated ‘right to buy’, the homelessness reduction act, the flexible homelessness reduction grant, the affordable housing programme (including the new funding for social housing), the abolition of the borrowing cap, local housing companies (what they can offer, how to establish them and how to set one up) and new development.
It also looks at potential future developments including those that may be caused by Britain leaving the European Union, whether the self-financing settlement should be revisited and the future of ‘right to buy’. There are sessions in London and Leeds.