England’s housing emergency has been long in the making. Successive governments have failed to deliver enough homes, and the situation is worsening.
Back in 2009-10, the last year a Labour government delivered a Budget, nearly 40,000 new social homes were built. Fifteen years later, in 2023-24, just 4,356 new social homes were completed and fewer than 4,000 were started.
More social homes are sold each year through Right to Buy than are built or replaced. Supply is declining annually and will continue to do so without government investment and policy change.
The failure to build enough homes is not for lack of effort. Homes England and the GLA in London work well with housebuilders, not-for-profit housing associations and councils to deliver desperately needed new homes. But we face exceptional challenges.
In London, the epicentre of the housing crisis where one in 23 children lack a settled, permanent home, new home starts by London housing associations declined by a staggering 92% last year.
A major barrier is the sheer scale of funding needed to deliver genuinely affordable homes. Because social housing rents are relatively low – Peabody rents were £721 million lower than market rates last year - it takes around 60 years to pay for the cost of building and maintaining a social home in London.
Not-for-profits like Peabody and London’s biggest developing associations (G15) finance this through a mix of borrowing, government grants, and rental income.
To make this long-term business model work, we need stability and certainty to be able to plan. As public investment in housing declined in the 2010s, we stepped up, contributing significantly to new homes and regeneration through borrowing and our own resources.
Not-for-profit housing associations in England have taken on around £100 billion of debt to keep delivering new social and affordable homes. But an ever-changing public policy environment and economic turbulence over the last decade have eroded our capacity to invest.
This means we need to make difficult decisions. Our first commitment is to our current residents. We will always prioritise investment to ensure residents’ homes are safe, warm and dry.
At Peabody we have many older properties, some dating back to the 1860s, and we’re spending around £2 billion over five years on maintaining residents’ homes. This prioritisation means we cannot continue to do everything, and, despite the emergency, as an industry we are pulling back on new development commitments.
This paints a bleak picture ahead of a Budget where we know there won’t be a transformative increase in public funding for social housing. But there are reasons to be optimistic.
Tweaks to fiscal rules and increased borrowing for investment are encouraging. It’s time for social housing to be considered vital national infrastructure: a national investment for the future rather than a cost.
Accordingly, it appears there may be some additional budget funding to support government grants for new social housing, indicating a step in the right direction.
I believe the government understands the scale of the challenge and that it doesn’t initially have to cost a lot. Three simple changes would create a more stable and certain policy environment to lay the foundations in this Budget for a decade of recovery and renewal.
First, by establishing long-term rent certainty for local councils and not-for-profit housing associations, the Government can create conditions for new private investment and partnerships. This is essential and doesn’t cost the Government anything.
Second, due to various historical policy changes and caps, the current rent situation is complex and unfair for many. Residents should expect to pay similar rent for similar homes in similar areas, but that’s not always the case.
Allowing social landlords flexibility to gradually adjust historically low rents over time would move towards rent fairness, provide more resources for repairs and maintenance, and help us build new social homes.
Third, a significant unfairness affecting social housing is access to the underutilised Building Safety Fund, set up to support cladding remediation works after Grenfell.
Peabody has spent £290m so far on remediation, but the Government only offers financial support for buildings where leaseholders live. Leaving blocks with social housing tenants ineligible. Correcting this policy anomaly would free up our capacity to support new investment.
These measures don’t require new public money and would help lay the foundations for tackling the housing emergency, creating conditions for growth and renewal. A more stable and certain policy environment will attract new private investment that could reverse the decline in social and supported housing and support economic growth that benefits us all.
Ian McDermott is the Chief Executive of Peabody and Vice-Chair of the G15
