Forty councils in England built no social housing for five years due to cuts

Forty councils in England saw no social rent housing built in five years in the wake of government funding cuts, according to official figures analysed by the Observer.

Chaminda Jayanetti 

In 2010 the Conservative-led coalition slashed funding for subsidised housing by 60% and redirected the remaining money away from social rent and towards more expensive “affordable rent” housing.

The cuts took a few years to feed through, as councils and not-for-profit housing associations completed developments that used money provided under the previous Labour government.

But data published by the Department for Levelling Up, Housing and Communities (DLUHC) shows that 40 local authority areas neither built nor acquired (either via councils or housing associations) any new social rent housing units between 2016-17 and 2020-21, the most recent year for which figures are available.

These areas are scattered across England and include Peterborough, Luton, the Isle of Wight, Spelthorne in Surrey, and parts of Greater Manchester, as well as rural districts.

The coalition government also limited councils’ ability to borrow to build housing, further hitting supply. The figures do not account for the impact of policies such as right to buy in reducing the social rent stock.

Kate Henderson, chief executive of the National Housing Federation, which represents housing associations, said: “There is a chronic shortage of social homes in England. We know there are 4.2 million people in need of a social home across the country, and this is likely to increase rapidly as a result of the cost of living crisis we are facing.

“Housing associations are ambitious to build much-needed social rent homes at scale and pace. However, over the past decade, government grants have prioritised affordable home ownership and affordable rent. Social rented homes are much more expensive to deliver due to the lower rents charged, therefore most housing associations cannot afford to build these homes without access to specific funding.”

The DLUHC figures show that 122 local authority areas – more than a third of all councils in England – each saw under 20 social rent properties built or acquired over the five years. Many areas saw much more construction of housing at “affordable rent” levels – which can be set at up to 80% of market rents. Across England, affordable rented housing costs nearly 40% more than social rents, but this masks wide variations.

London has managed to build more social rent housing after negotiating a separate deal with the government recognising its higher housing costs. But even in the capital, Richmond added just 16 social rent units and 137 affordable rent units in five years; homes in Richmond let under the national affordable rent programme cost on average more than £200 a week, over 50% higher than local social rents. The council’s social housing waiting list has risen markedly in the last five years.

“Eighty per cent of an arbitrary market rent can be extremely high in many different places, so people who are in desperate need end up being insecure because they can’t afford it,” said Charlie Trew, head of policy at homelessness charity Shelter.

The government has now changed its funding programme to encourage more social rent housebuilding, and there are signs the rate of development is increasing – but funding is concentrated in areas where the difference between average social rents and private rents is at least £50 a week.

“The £50 rule flies in the face of ‘levelling up’,” said Trew. “Areas affected will be locked out of social rent funding until at least 2026. Prices will rise, low-income local people will be priced out, homelessness will grow.”

The DLUHC said: “We understand how important social housing is and the secretary of state has been very clear that we must build more social homes across the country.

“Our £11.5bn Affordable Homes Programme will help to deliver more of the genuinely affordable, quality homes this country needs and since 2010 we have built nearly 600,000 affordable homes in England, including 157,000 for social rent.”

Peterborough council said the low number of new social rented homes was due to government policy. Richmond, Dorset and Luton councils said they were developing new social rent homes. Spelthorne council said housing associations had failed to deliver enough social housing, and that the council had set up its own affordable housing firm in response.