Private developers should be let off building social housing under Burnham: think tank
Key Points
- The Resolution Foundation says Andy Burnham should allow private developers to build fewer social rent homes while demand for private sales remains weak.
- In exchange, developers would deliver more affordable rent units, which need less subsidy and could add 2,000 affordable homes a year.
- The think tank also wants the £39 billion Social and Affordable Homes Programme ringfenced for social rent, and the National Housing Bank's £2.5 billion loan facility put to work.
- The full package would deliver 66,000 affordable homes a year within the current budget.
- 134,000 families in England live in temporary accommodation and 1.3 million households sit on the housing waiting list.
Private developers in England could build fewer social rent homes under Andy Burnham’s government in exchange for delivering more affordable rent units, according to new research from the Resolution Foundation.
The think tank’s latest Housing Outlook argues that the new Prime Minister will need a new approach, and eventually new money, to deliver on his pledge to increase the supply of council housing.
Burnham’s promise centres on homes for social rent, which offer tenants rents at around 50% of the market rate whether a local authority or a housing association owns the property.
Social rent homes carry a higher upfront cost per unit than other affordable tenures, so building more of them reduces the total number of affordable homes the government can fund.
The Foundation argues that Burnham can square this circle with a three-part package that stays within the current funding envelope.
A shift for developers
The first move directly affects private housebuilders. The Foundation proposes allowing developers to build fewer social rent homes during a period of weak demand for private sales, in exchange for delivering more affordable rent units instead.
Affordable rent homes, offered at around 80% of the market rate, need less subsidy to build in the first place. The Foundation estimates the swap could boost supply by an additional 2,000 affordable homes a year.
The second move ringfences the £39 billion Social and Affordable Homes Programme exclusively for social rent homes over its ten-year lifespan. That would increase social rent supply but leave a shortfall of 5,000 homes a year against the programme’s overall target of 300,000 affordable homes by 2036.
The third move taps the £2.5 billion low-cost loan facility sitting unused in the National Housing Bank. The Foundation says lending it to housing associations could add another 4,000 to 6,000 affordable homes a year.
Taken together, the package would deliver more social housing than currently planned while increasing total affordable housing supply by between 1,000 and 3,000 homes a year. In total, England would build 66,000 affordable homes annually, matching recent highs.
That figure remains far below the post-war era, when local authorities alone built 100,000 homes a year. The Foundation says a genuine gear change in affordable housing supply will require more money.
Renters cannot wait
A near-record 134,000 families in England live in temporary accommodation, and 1.3 million households sit on the housing waiting list.
Hannah Aldridge, Senior Research and Policy Analyst at the Resolution Foundation, said the government must balance affordability for tenants against building at scale, and that careful use of the programme, developer contributions and the National Housing Bank can boost both.
Aldridge warned that building takes time, and that close to one million low-income private renters who receive housing support through the benefit system already face an average 20% gap between local rents and the support they receive.
That shortfall will hit a record high this autumn, and with housing support frozen for the rest of the decade, the gap will deepen without swift action.
The Foundation wants Burnham to relink housing support in Universal Credit to the 30th percentile of local rents at the upcoming Budget, a move that will also require real money.
