Housing

Government will pay landlords 5 times more than it will spend on affordable housing in next 4 years

The £58bn housing benefit bill dwarfs the £11.5bn Affordable Homes Programme, think tank New Economics Foundation has found

affordable housing

A lack of social housing is pushing people into private renting. With rents at record highs, the bill for housing benefit to help tenant cover rent is enormous. Image: Image: Ethan Wilkinson / Unsplash

The government will pay landlords five times more in housing support than they will spend on building affordable housing over the next four years, a think tank has warned.

New Economics Foundation (NEF) analysis of government forecasts found ministers expect to spend £58.2 billion subsidising private renters in England through housing benefit by 2028.

That’s more than five times the £11.5bn ministers have promised to spend on the Affordable Homes Programme to deliver 180,000 new homes.

Alex Diner, senior researcher at the New Economics Foundation, said the shortage of social housing has seen people forced into the pricier private rented sector and that has sent the housing benefit bill skyrocketing as rents have hit record highs.

“We are not building enough social homes to meet demand,” said Diner. “This government is spending much more subsidising rising private sector rents than it is addressing its root cause: the lack of social homes. Alongside building desperately needed social homes, upgrading and repurposing private rented housing into a new generation of social homes provides a clear path out of the housing crisis.”

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The proportion of households privately renting has now overtaken those in social housing, according to the English Housing Survey. Around 19 per cent of households rent privately – a figure which has doubled since the 1980s – compared to 17 per cent in socially rented homes, down from 30 per cent 40 years ago.

Part of the reason for that decline has been the significant fall in social housing stock.

NEF researchers found just 7.4 per cent of social homes needed to meet demand were built between 2018 and 2022.

That has been a long-running issue since Margaret Thatcher’s government introduced right to buy in the 1980s.

In the decade preceding the introduction of the right to buy policy in 1980, 40 per cent of new homes built were social housing – over 1m new social homes in total.

In the 43 years since, 360,000 new social homes have been built – making up just 6 per cent of total new homes. 

That has seen increasing numbers of people who would be eligible for social housing stuck in the private rented sector instead. NEF researchers said this means tenants are left with no option but to live in unaffordable housing that is more likely to be poor quality, energy inefficient or suffer from issues like damp and mould. 

The think tank called for efforts to build new social homes alongside a policy focused on acquiring, upgrading and repurposing private rented housing to transform the property into more affordable social rent.

The NEF is exploring whether changes to landlord tax loopholes, revised compulsory purchase order laws, right to buy reform or the introduction of rent controls could allow properties to shift from private rented to social rented homes.

“Since the 1980s, we’ve swapped secure and affordable social housing for a private rented sector which leaves households paying through the nose for their homes, living in fear of evictions and rent hikes,” added NEF’s Diner.

“Far from providing stable foundations on which to build our lives, our housing system has instead become a source of insecurity, hardship, anxiety and poor health for millions. Current efforts to fix this are not working.”

Crisis has called for 90,000 homes for social rent to be built every year – far in excess of current levels.

“As rents in the private rental sector continue to rise at their fastest rate in 16 years, we need a step change,”  said Kiran Ramchandani, the charity’s director for policy and external affairs.

“The government must commit to building 90,000 homes for social rent every year – without this more and more people are facing the very real threat of losing their homes and being forced into homelessness because they cannot afford their rent.”

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Polly Neate, chief executive of Shelter, agreed that social homes are the answer to record rents.

“People need help to pay their rents right now – which are at their highest level since records began,” said Neate. “But long term it doesn’t make sense to keep lining the pockets of landlords when we should be tackling the root of the problem: our country needs more genuinely affordable and secure housing. Social homes are the only type of homes that are affordable by design, as rents are pegged to local incomes, and we desperately need more of them.”

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A Department for Levelling Up Housing and Communities spokesperson told The Big Issue the government is bringing in the Renters Reform Bill in the current parliament to support renters facing eviction and rent increases.

“Increasing the number of genuinely affordable homes is central to our levelling up mission,” said the government spokesperson.

“Since 2010 we have delivered over 630,000 affordable homes in England, including over 160,000 for social rent. But there much more to do and that is why we’re investing £11.5 billion to build more of the affordable, quality homes this country needs.”

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