Key workers are being priced out of renting in London, placing huge human and economic costs on the capital. By recognising the value of social housing to people and to the economy, we can make the case to build more much-needed social housing in London and create a more affordable, more inclusive city for all of us, says Andy Hulme
In the pursuit of boosting economic growth, we mustn’t forget the foundation which enables people to contribute to the economy in the first place: having a home.
Social housing is particularly important. There are 655,000 social rent homes in London, and almost half of these (44 per cent) are provided by not-for-profit housing associations, like The Hyde Group. Social housing enables people on lower incomes to live in an affordable home of decent quality in London.
Each of these homes generates at least £23,777 in economic value each year, as outlined in new research developed by Hyde along with other social housing providers and experts at Sheffield Hallam University. That means that in London alone, housing association homes are providing more than £6.8bn of economic value per year.
The value that social housing provides comes from various important social and financial benefits, including helping people stay in work thanks to the stability provided by a secure and affordable home. Unsurprisingly, decent housing supports better health, resulting in fewer GP appointments, which saves the NHS money. It also saves cash-strapped local councils money due to the expense of insecure temporary accommodation.
Earlier this year Generation Rent revealed a startling piece of research about the impact of London’s housing crisis. In not a single one of Greater London’s 32 boroughs is it affordable for key workers earning the average salary in an array of jobs to afford the average cost of renting a one-bedroom home.
The research highlighted how key workers are all priced out of renting a one-bed home in London as the average rent accounts for more than 50 per cent of the average salary. Social housing plays a key role in London’s ability to retain key workers by offering homes people can afford.
The housing crisis is costing local councils £1.7bn by forcing them to put people in insecure temporary accommodation due to a shortage of available homes. But there’s a huge human cost too, with one in 23 children in London currently homeless, according to London Councils.
We’ve also seen social housing starts and completions decimated in recent years. Over the past decade, there’s been an average drop of more than 80 per cent in the supply of new social housing every year. It’s crucial that the government works with social housing providers, councils, the Mayor and developers to create a long-term plan for much-needed homes.
This starts with the government providing greater certainty on the resources social housing providers have to invest by providing a 10-year, inflation-linked settlement for social rents.
At the moment, around half of all social homes provided by London’s leading housing associations are at risk of being financially unsustainable because they are no longer on a sustainable rent pathway. This is due to a series of short-term interventions by the last government.
Not only would a clear rent plan help us to maintain the homes we provide, it would also attract private sector funding to build more social and affordable housing. Private firms need greater certainty and stability to justify their investments.
Leading London housing associations have recently warned of a need for an additional 2,600 skilled workers in the next five years to meet the maintenance and repairs workload. By delivering a long-term plan for housing that helps fund investment programmes, the government can help both improve homes and help people into well-paid and sustainable careers.
The new government has a clear mission to boost growth. By recognising the value of social housing to people and to the economy, we can make the case to build more much-needed social housing in London and create a more affordable, more inclusive city for all of us. Investing in a sector that is inherently good for society is morally right, but it’s also economically sensible too.
Andy Hulme is CEO of the Hyde Group