20 COMMENT Patrick Mooney
Social housing needs a new approach
Our regular social housing correspondent Patrick Mooney argues that, with homelessness at record levels and councils pushed to the brink, only a bold new approach can deliver the aff ordable homes Britain urgently needs.
W
ith record levels of homelessness being experienced, the demand for social housing has never been higher, but collectively we are struggling to deliver new homes in the volumes required and a new approach is badly needed.
A possible solution, which could see up to 90,000 new social homes a year being built, was recently oated by a group of public and private sector bodies. In a timely move it was published just a month before the Budget, and borrows from a model already being used successfully to deliver affordable housebuilding in the United States. The proposed model would use a tax credit system to raise billions of pounds in corporation tax each year, while at the same time creating huge numbers of construction and service jobs, as well as cutting the use of temporary accommodation, lowering housing benefi t costs and generating better health outcomes for residents.
Companies would pay 10 years of corporation tax to HRC early and get a discount, enabling the Government to raise capital upfront without impacting public borrowing.
The tax receipts would be ring-fenced and given to Homes England for allocation to social landlords to build social homes. uch of this will be attractive to Chancellor Rachel Reeves, who is closely associated with the Government’s ambitious house building targets and contentious reforms to speed up and relax the planning system. Despite the changes already made, these have yet to feed through into signifi cantly more planning approvals, or property starts and completions. The paper, titled ‘aking Social Rent Homes
Viable,’ has been backed by businesses and individuals from across the housing sector, including , economist Dame Kate Barker, property agency Savills, housebuilder Vistry, investor ong Harbour, the Association for
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Rental iving, law fi rm Capsticks and the olicy iaison Group for Housing Delivery Growth.
AN ESSENTIAL INVESTMENT
Building social rent homes is “essential” and “an investment in the UK’s future prosperity and social stability, the paper says. It justifi es the model on the basis that the low rental income generated by social rent housing cannot support the capital investment required for development and ownership, even over very long timescales. Therefore, the only way to build social rent homes at the scale needed is with “substantial public subsidy to bridge the viability gap.”
The involvement of housing association is particularly signifi cant as they are the largest developer of homes in the social sector, but they are being forced to cut back on new build programmes while they focus much of their investment into improving property standards to their existing housing stock. The 2,316 new homes completed by last year were its lowest level of development for a decade and well down on its 2022 peak of 4,157. The number of homes it started also fell from 813 to 519. This is a situation which is being replicated among social landlords all across the sector.
Addressing this point, the paper makes a series of other recommendations, including that Section 106 agreements should fi x affordable housing land values at the planning stage to stop social landlords competing for homes against each other and driving up prices. It also calls for further reform of Right to Buy to preserve affordable housing stock, exible social rents that are linked to household income and measures to recapitalise the housing association sector, in addition to the Government’s 10-year rent settlement.
This collective body of policies is consistent with measures being demanded
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