Lack of social rented homes in London costing £7.7bn in lost social value, say housing associations

The UK is missing out on £7.7bn in social and economic value because of a failure to build social rented housing in London, research by the G15 group of housing associations has found.

The study, carried out using Hyde and consultancy Sonnet Impact’s Value of a Social Tenancy (VoST) Model, is the first to attempt to quantify the economic and social contributions of social housing across the whole of the capital.

It found that the 289,000 social rented homes in London provided by housing associations contribute at least £23,777 in value a year, totalling £6.86bn annually. These contributions range from rent savings to the value of increased job and education opportunities, crime reduction, and savings to the NHS.

If social rented homes could be delivered for the 323,800 households on London’s social housing waiting list, this would inject an extra £7.7bn into the London economy, the research found.

“We’re a nation obsessed by house prices, but few people and even fewer politicians appreciate the real value created by London’s social homes” said Fiona Fletcher-Smith, chair of the G15 and chief executive of L&Q.

“Political parties would do well to remember, as they write their manifestos, that London is built on a vibrant mix of people from all walks of life. Providing homes for those that need them most is an asset, not a cost, creating all kinds of social and economic benefits.”

The research comes at a time when many housing associations, facing reduced balance sheet capacity and uncertainty over rental income, are shifting spend away from development, They are also faced with competing demands to improve existing stock, carry out building safety works and carry out decarbonisation programmes.

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The G15 said its members are expected to start work on 1,769 affordable homes in London this year, down from 7,363 last year.

A spokesperson for the group said last year’s 7% rent cap, coupled with inflation and interest rates is “the final nail in the coffin”, forcing associations to drastically cut back on building in the midst of a housing crisis. Associations including Clarion, Southern and L&Q have all announced cuts to development programmes as have shifted refocus on existing stock.

Fletcher-Smith said: “Time has run out for the current government to get its own house in order when it comes to social housing.

“Whoever forms the next Government, could immediately begin to address the housing crisis by applying consistency to areas like the rent settlement. This simple act would give housing associations the financial certainty we need to keep borrowing and investing in Londoners and the UK.” said Fletcher-Smith.