UK: Social Housing Could Save Taxpayers’ Money

Upfront cost of building 90,000 new homes would be returned within 11 years, say Shelter and NHF

Investing billions in social housing would “save the taxpayer money” over the long-term by cutting benefits payments and health costs, according to a research by England’s National Housing Federation and the charity Shelter. The upfront cost of £11.8 billion to the government of building 90,000 new social homes would be paid back within 11 years through savings on public services and extra tax revenue, according to the report.

A big step for the community management and real estate sector of the nation, the findings follow a report on house building by the UK competition watchdog that found an over-reliance on private development had resulted in too few homes being built while the country grappled with a national housing shortage.

“Building more social homes is a win-win solution. It will immediately boost the construction industry, supporting thousands of jobs, and will save the government and taxpayer money over the longer term.”

Kate Henderson, Chief Executive, NHF

The government has set a target of building 300,000 homes a year in England alone, which it failed to meet last year, adding about 230,000 homes to existing UK stock. The Competition and Markets Authority said that historically the 300,000 target had only been met when councils were providing a “significant supply” of new housing.

The NHF, which represents housing associations, and Shelter, called on politicians to commit to building 90,000 social homes, the number they say is needed annually to resolve the housing crisis.  “Our commitment to building more homes and boosting social housing supply remains, and our £11.5 billion Affordable Homes Programme will deliver thousands more affordable homes to rent and buy across the country,” said the Department for Levelling Up, Housing and Communities.

Shadow housing minister Matthew Pennycook said the CMA report rightly drew attention to the “limitations of speculative private development” and made clear “more fundamental interventions are required”. The Labour party has pledged “the biggest boost to affordable, social and council housing for a generation” but will face daunting financial constraints if it wins a general election expected later this year. 

England lost 11,700 social homes last year as sales and demolitions outpaced construction. Meanwhile, investment in new social housing is falling, with 1.3 million households stuck on waiting lists as homelessness has risen sharply. Many local councils have been forced to spend more on temporary accommodation and homelessness services, adding strain to their finances.

Reducing the bill by building more social homes would save taxpayers £4.5 billion over three decades, the report carried out by consultancy CEBR found. A further £4.5 billion would be saved in housing benefits. The research projects £51.2 billion in overall economic benefits, including an employment boost from the extra construction, tax revenue and savings in the NHS due to people living in more healthy environments.

“There’s no doubt that building more affordable housing now would likely save the public sector money in the long run,” said John Tattersall, managing director at Centrus, a financial adviser to housing associations. “People who are housed in quality homes are likely to be healthier, happier and also more likely to be able to work,” he added.