90,000 more social homes per year will be needed to meet the country’s housing needs and hit the government’s annual target of 300,000 new homes, a committee of MPs has said.
The Housing, Communities and Local Government (HCLG) Committee’s latest report found that local authorities and social housing providers are ‘at the limits’ of what they can achieve with existing funding, while COVID-19’s consequences are likely to further burden the housing system.
It said that the government will need to invest £10 billion more than it is currently spending on grant funding to meet increasing demand for social homes, to the tune of £12.8 billion a year.
However, the committee says that wider reforms, such as reforming land value capture and better use of public land, could help ‘significantly reduce’ that figure.
Clive Betters, chair of the HCLG Committee, said that the target is ‘challenging but… achievable’, adding that the UK must show a ‘long-term commitment to creating a social housing system that meets long-term demand’.
Betts said: “We need at least 90,000 new homes a year to get to the level of social housing we need, but this is achievable.
“We believe this target can be reached in five years, but only if the government gives providers sufficient financial backing and reforms the wider landscape that social housing providers operate in.”
The HCLG Committee’s report found that over a million homes have been lost from social housing stock since 1981, while 83,700 households are currently in temporary accommodation, an 82% increase since 2010. Despite this, only 6,827 new homes were built in 2019.
The committee has warned that the government’s current ‘cross-subsidy’ funding model will fail to allow for an expansion in homebuilding, while the economic impact of COVID-19 is likely to place further pressure on housing providers.
While the committee estimated that only £10 billion more of grant funding would allow social homes to be built at the speed required, it added that land value and public land reforms could help reduce the cost by up to 40%.
Recommendations made by the committee included handing local authorities 100% of Right to Buy receipts and reforming the Land Compensation Act to allow local authorities and development corporations to purchase land at a fairer price.
Betts added: “[The government] must ensure that the money is there to build, that land is available to build on and allow flexibility to buy surplus housing where it is not needed in the private sector.
“The system must ensure that any housing sold via Right to Buy is replaced like-for-like, and that local authorities are allowed to retain all the receipts produced to enable them to achieve this.”
A Ministry of Housing, Communities and Local Government spokesperson said that building new homes is central to the government’s mission and an important part of its action to help the UK recover from the impacts of COVID-19.
They said the government’s planned reforms to the planning system will ‘kickstart’ the construction industry and make it easier to build better homes where people want to live.
“We are ensuring more much-needed social housing is delivered by removing the borrowing cap for councils and spending more than £12 billion on affordable housing from 2021 – the biggest cash investment in a decade,” they added.