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18/02/2019

Building social housing could have saved £1.8bn in rent

Words: Laura Edgar
Housing / iStock_000074406885

New analysis suggests that £1.8 billion would have been cut from the housing benefit bill had the government built 100,000 social rent homes in each of the past 20 years.

Tenants would have had more disposable income, too.

The Local Government Association (LGA), which commissioned Cambridge Economics to conduct the research, said this is why the government should use the Spending Review to ensure that a “genuine renaissance” in council housebuilding, which is “needed to increase housing supply” and boost affordability, is a success.

The representative body for councils in England and Wales highlighted that the level of social rent is at a “historic low”, with the number of people living in council housing down from just over a third of households in 1997 to one in 10 today. The number of social rent homes has fallen from over 40,000 in 1997 to 6,000 in 2017, it added.

The decline has seen more people moving into the private rented sector – and the benefit bill paid to private landlords double since the early 2000s.

Cambridge Economics considered what the implications would have been had 100,000 government-funded social rent homes been built each year since 1997. It found that all housing benefit claimants living in the private rented sector would have been able to move to social rent homes by 2016 and they would have had £1.8 billion in extra disposable income over the period.

Also, the rising proportion of housing benefit caseloads in the private rented sector has cost an extra £7 billion in real terms over the past decade.

Martin Tett, housing spokesperson for the LGA, said the only way to help families struggling to meet housing costs is to reverse the decline in council housebuilding.

“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.

“By scrapping the housing borrowing cap, the government showed it had heard our argument that councils must be part of the solution to our chronic housing shortage. Allowing councils to keep 100 per cent of their Right to Buy receipts is the next step to deliver the renaissance in council housebuilding we need as a nation.”

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. It would give a step up to families struggling in expensive and unstable rented accommodation, enabling them to put down roots and plan for the future. Children could stay in the same school, support networks and communities could flourish and society as a whole would be better off.”

Image credit | iStock

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