"The budget is a clear opportunity for the government to invest to tackle the housing crisis and hit their targets. This should include a top-up to the final year of the government’s grant programme to build the social homes we need. Investing in social homes now would lay the foundations for our country’s economic renewal for decades to come"
- Alex Diner - New Economics Foundation
The government needs to increase the number of social homes it builds each year in England tenfold by 2027/28 to meet its own overall target to build 1.5 million homes by the end of this parliament, according to a new analysis from the New Economics Foundation.
The analysis shows at least 365,000 new social homes will have to be built over this parliament to reach this goal.
The government has pledged to build 1.5 million homes but, according to previous research, private developers are unlikely to build more than 170,000 a year by the end of the decade. The only way the government will hit their housing targets is with significant investment in a new generation of social homes that can be built out more quickly.
NEF analysis argues the government would need to build at least 90,000 social homes a year by 2027/28, which is earlier than previously assumed. However, in 2022/2023 just 9,500 social homes were built, meaning a ten-fold annual increase is needed within three years to hit government targets.
The research also argues that the Treasury is underestimating the economic benefits a programme of social housebuilding on this scale would bring. It calculates that, if the government were to carry out this programme of housebuilding, it would generate £225bn in net social and economic benefits over the next 30 years. Of the gross benefit, £158bn (43%) can be directly attributed to the fact that the home being built is for social rent.
Alex Diner, senior researcher at the New Economics Foundation, said: “The government’s initial steps to tackle the housing crisis have been encouraging. However, to hit their ambitious housebuilding targets, councils and housing associations must be given the tools and funding they need.
“The budget is a clear opportunity for the government to invest to tackle the housing crisis and hit their targets. This should include a top-up to the final year of the government’s grant programme to build the social homes we need. Investing in social homes now would lay the foundations for our country’s economic renewal for decades to come.”
A large proportion of the initial economic boost from housebuilding is a result of growth in construction, however, social homes have a wider range of long-term economic benefits compared to other types of tenure.
The economic benefits of building social homes come from: a reduction in government spending on housing benefit, a reduction in the amount spent by local authorities on temporary accommodation as result of reduced homelessness, increased participation in work enabled by more stable tenancies, and improvements in educational and health outcomes.
Kate Markey, Chief Executive of the Nationwide Foundation said: “This report shows the substantial social and economic benefits that can be achieved over the next three decades by building high levels of social housing across the next five years.
“By investing in new social homes, the Chancellor can reduce public spending on subsiding high private rents through housing benefits, and on temporary accommodation for homeless households – an issue which is pushing councils to the brink of bankruptcy.
"Decent, affordable homes are the foundations of healthy, thriving lives. Funding the construction of stable, affordable social homes, will mean the government can provide significant benefits to our economy, society and health, through a boost to the construction industry, an increase in jobs, improved housing stability for families, increased taxes, and better quality homes.”
