Building more social rent homes over last 20 years could have saved £1.8bn

The shortage of social rent properties has added £7bn to the housing benefit bill in the last decade, says the Local Government Association, in call to return to Seventies boom

Failure to build 100,000 social rent homes every year for the last two decades has cost tenants a combined £1.8bn, claims new research from the Local Government Association (LGA).

The local authority body is calling for the government to scale up house building after the number of social rent properties built each year fell from 40,000 to just 6,000 in 2017.

This has been a big contributing factor of Britain’s housing crisis, leading to rising waiting lists and more families forced into temporary accommodation and the more expensive and less secure private sector.

But the LGA has found that investing in the sector over the last 20 years to build 100,000 social rent homes annually would have found space for all housing benefit claimants by 2016. By halting the number of families heading into the private sector, the research estimate that claimants would have had an additional £1.8m disposable income to spend.

The government would have had to borrow an additional £152bn to foot the bill for building homes over the period – but each pound spent would have generated £2.84 in value.

But the study concludes that failure to make this investment has cost an extra £7bn in real terms over the last decade due to the rising housing benefit caseload.

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As well as building the necessary homes, the LGA is now urging for the government to follow up its housing borrowing limits axe by allowing councils to keep 100 per cent of their Right to Buy receipts to boost their budgets to build homes.

“Every penny spent on building new social housing is an investment that has the potential to bring significant economic and social returns,” said Cllr Martin Tett, LGA Housing spokesman.

“The last time this country built homes at the scale that we need now was in the 1970s when councils built more than 40 per cent of them [out of the total housing stock]. With millions of people on social housing waiting lists, councils want to get on with the job of building the new homes that people in their areas desperately need.”

Polly Neate, chief executive at Shelter, added: “As well as cutting the benefit bill and driving down homelessness, a stable supply of social housing would be a national asset.”

The government has long-since pledged to build more than 300,000 homes every year in the mid-2020s with the latest commitment coming this week.

Communities Secretary James Brokenshire announced £250m worth of housing deals had been struck to build 25,000 homes, some of which is to be on Ministry of Defence land.

Today, MHCLG also unveiled £6m funding to be invested into community led housing to work towards their target.

Brokenshire said: “We delivered 222,000 homes last year which is the highest number in a decade, but we must keep upping our game.”

And the LGA’s research suggest that “upping their game” means building the type of homes Britain needs the most is as important as the volume.