NHF calls for social housing development funding overhaul

The National Housing Federation has said the government needs to reform funding rules to stimulate public investment in social housing and build the 90,000 social homes per year needed to tackle the housing crisis.

Government funding and fiscal rules currently act against investment in longer-term initiatives such as social housing by “distorting financial incentives”, according to the NHF document, Let’s fix the housing crisis, delivering a long-term plan for housing.

The NHF highlighted that the goverment’s fiscal rules do not separate out capital spending and day-to-day spending. As a result, the value of assets obtained through capital funding may be overlooked, which can lead to a lack of incentives for strategic capital spending on investments such as social housing.

The document adds that the wider fiscal, societal and economic benefits of social housing are poorly captured in the current cost-benefit analysis of social housing and the government’s Green Book.

The NHF states that the government needs to build 90,000 social homes per year, “in the right location, with the right support for those who need it” to keep up with housing demand and tackle the housing crisis. 

The plan devised by the NHF, which outlines how the government could tackle the housing crisis by 2035, states that every £1 of government investment in building new homes generates up to £6 in private capital.

It suggests that to continue to unlock private investment, the government needs to increase grant funding and adopt a longer-term strategy for housing, rather than “piecemeal approaches”. 

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The NHF also highlights that there has been a lack of analysis into the long-term impact of underinvestment in social housing on the public purse.

For example, it states that the long-term cost of housing benefit as a result of the increase in the number of retired people living in the private rented sector is underexplored.

Kate Henderson Chief Executive of the National Housing Federation said: “We are in the midst of a housing emergency that has been decades in the making. This crisis is worsening at a rapid rate and affecting those at the sharp end in devastating ways. We’ve seen a 70% increase in older people living in insecure and expensive private rented homes in a decade, with two in five struggling to pay for food or bills. Meanwhile, we have record numbers of overcrowded and homeless children who are growing up with no security or privacy.

“This dire and shameful situation is the result of decades of underinvestment by successive governments who have repeatedly failed to plan for affordable homes for local people over the long term. Instead, continuous short term, piecemeal decisions on housing and planning policy, and a focus on increasing homeownership often at the expense of social housing, have made the housing crisis worse at all levels.

“To fix the housing crisis, short-term thinking on housing must end. As we approach the next general election, we urge political parties on all sides to learn from history and commit to investing in homes and communities over the long term. Today we launch our campaign setting out what a long-term plan for housing should look like and the outcomes needed to provide safe, secure and affordable homes for the millions of people in need.”