The affordability crisis has been brewing “for decades”, say experts at the Resolution Foundation thinktank.
The situation has worsened in recent years due to the after-effects of the Covid pandemic and the current economic crisis. Today, more than one million households in England alone are waiting for low-cost rented housing, known as a social home, according to homeless charity Shelter.
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What is the impact of the housing crisis?
Social housing is at its lowest availability in decades, after the government has failed to ensure supply keeps up with demand, according to charity chiefs.
Data shows there has been an average loss annually of 24,000 social homes since 1991. Last year alone, less than 7,000 new social homes were built – in stark contrast with the 29,000 older homes that were demolished.
In England alone, there are 1.4 million fewer people living in social housing than in 1980 due to a lack of available homes, but there has been an increase in homelessness and people living in temporary accommodation. More than 40,000 households are currently homeless and an additional 95,000 households are living in temporary accommodation, according to Shelter.
Housebuilding in all sectors has reduced by more than half in the past 60 years. In the 1960s, three million new homes were built. Since 2010, only 1.3 million new homes have been constructed.
People looking to buy their first home are also facing financial issues – saving for a deposit and paying a mortgage is out of a lot of people’s reach.
In 1997, a home cost 3.5 times the average wage. By 2000, the earnings-to-house-price ratio had increased, with a home costing four times the average salary. Today, a home costs a staggering NINE TIMES the average salary.
Charities say the situation is pushing thousands of low-income people into the private rental sector. Those who can’t afford higher rents are suffering overcrowding, or living in bed and breakfast and hostel accommodation.
How could the UK’s housing crisis be solved?
Experts say the issue could be addressed by taking several steps, including building more affordable housing. They recommend constructing a minimum of 145,000 affordable homes annually, including 90,000 in the social housing sector. They feel this is feasible because modern methods of building houses are cheaper and faster than old-fashioned traditional methods.
The National Housing Federation suggests building homes in a factory with materials such as timber frames, before assembling them on site over just a few days, can cut costs, while still constructing high quality dwellings.
Replacing traditional bricks and mortar with this type of home could enable constructors to build four times as many homes using the same amount of labour on site, according to research from the National Audit Office.
Stop people from buying second homes
In addition, local people should be protected from being priced out of the market by second homeowners buying a holiday home, according to the experts.
Unaffordable housing, holiday homes and second homes are driving locals out of the most picturesque areas of the UK. This has become a particular problem in Wales, where the Senedd has already declared a housing crisis and is discussing solutions.
A White Paper proposes creating a rent control system comprising the right to have adequate housing and an assurance that private rents are fair and affordable for local people. The legislation would allow councils to limit the amount of holiday and second homes in each district and bring existing empty homes into the ownership of locals.
A statutory licensing scheme would be launched for short-term holiday lets, with local authorities empowered to increase taxes for the owners of second homes. Genuine self-catering accommodation would be differentiated from second homes for tax purposes.
The Homeless Action Group in Wales says homelessness should be a “brief, rare and unrepeated” experience.
There has also been a suggestion that Local Authority Mortgages should be launched in Wales for buyers who can afford the mortgage repayments, but not an initial deposit. Some of these ideas have been introduced successfully in Canada, Switzerland and Italy.
Can improvements in the private rental sector help?
Lindsay Judge, director of research at the Resolution Foundation, says Britain’s private rental sector needs an overhaul. The organisation has suggested “indefinite” tenancies and a tenants’ loans system to help renters deal with the arrears crisis without being evicted.
Campaign group Generation Rent is calling for the large-scale reform of private tenancies to give renters more security. Deputy director Dan Wilson Craw says tenants would feel safe that they could live in their home for the long term, enabling them to better plan their life. Currently, a lot of tenancy agreements last only six months or a year, so tenants feel they can’t put down roots or make future plans in case they have to move unexpectedly.
Craw says an increasing number of renters in their 40s have never been able to save up for a deposit and can’t get a mortgage because it won’t be paid off by the time they retire. This leaves tenants feeling insecure for the rest of their life, with no realistic chance of ever owning their own home. This is why campaigners are calling for greater security for tenants in the long term. This group of people need to feel secure to improve their quality of life.
There are fears that landlords who have been impacted negatively by the housing crisis may sell their rental properties, leaving more people homeless.
Landlords’ organisations also argue the government has made the crisis worse by heaping increasing amounts of legislation on private landlords. In addition, landlords are no longer able to claim interest relief, making renting unprofitable. Consequently, many have no option other than to sell up.