More than 300,000 planned new homes may remain on the drawing board over the next five years, deepening the UK’s housing crisis, as a result of the coronavirus pandemic, new research predicts.
Stalled construction and the recession will slash the number of new homes being built, with 85,000 predicted to be lost this financial year, according to a study by the property agency Savills with the housing charity Shelter.
Construction of the cheapest social housing could fall to a “catastrophic” low of 4,300 units annually – the smallest number since the second world war. Shelter said this would not even be enough to clear the waiting list for a social home in Wakefield, never mind the rest of the country.
The warning comes as polling for the Institute for Public Policy Research (IPPR) thinktank shows that since the pandemic, a fifth of England’s 8.6m renting households are now worried that they will not be able to afford their rent or a mortgage in the future.
Boris Johnson is on Tuesday due to unveil plans to “build, build, build”, with state funds ploughed into infrastructure projects including hospitals, schools and housing to avert massive unemployment.
The IPPR is urging him to spend £15bn alone on housing to construct 120,000 social homes a year. Councils are separately calling for reforms to allow them to build more social housing including cheaper loans, access to low-priced public land and the right to keep 100% of the sale price of council homes sold off under right-to-buy laws.
Polly Neate, the chief executive of Shelter, said: “[The government] has a perilously short window to avert a lengthy housebuilding crash that will wipe out tens of thousands of new homes and jobs.
“There are over a million households on social housing waiting lists, and even more likely to join them as the recession bites. The pandemic has shown that a safe home is fundamental, but just not enough people have one.”
Shelter is proposing the government compresses its already announced five-year, £12.2bn affordable homes programme into two years to combat the slump.
Savills suggests an initial dip in housebuilding will be caused by social distancing on building sites. Further decreases will then be triggered by reduced demand for market sale homes. The stalling of housebuilding could also result in the loss of 116,000 construction jobs could by 2020-21, it predicts.
The IPPR is also suggesting a new form of “living rent” for key workers which would be linked to local incomes rather than market rates.
Many workers like nurses, shopworkers and cleaners do not qualify for government housing support and so rely on private rent which makes their tenancies susceptible to increases in market rent or changes in their relatively low earnings.
An attempt to link rents to earnings was piloted at the New Era estate in east London after the residents successfully campaigned against its take-over by a US investor. New rents were set by a social landlord pegged to each tenant’s income.
“For too long the cost of housing has been determined by the market and not by people’s ability to pay,” said Jonathan Webb, IPPR research fellow.
“The current pandemic has shown how this approach leaves people vulnerable to unexpected and unprecedented changes in their income. To build a fairer and more affordable housing system, we need to ensure that ability to pay is the key principle in housing, not profit.”