Opinion: A roof over your head should be a basic human right
Published by Max Salsbury for 24dash.com in Housing and also in Central Government
By Jonathan Layzell, assistant director of business development, Raglan Housing
No child should be homeless at Christmas and yet this year, over 80,000 children across the country will spend Christmas in emergency bed and breakfast accommodation. This is because their parents simply cannot afford to put a roof over their heads which, in this day and age, should be a basic human right.
The chancellor’s autumn statement was worryingly silent on investment in new affordable homes. This is disappointing. The effects of rising private rents, benefit changes and an acute shortage of affordable housing are combining to make more and more people homeless. And the situation is likely to get worse if the government fails to increase capital subsidy and make affordable housing a national priority.
Making housing a priority
We need legislators and the public to see investment in housing as being as important to our society as money invested in education and healthcare. Apart from the obvious moral and social reasons, there is a strong and compelling business case for building more affordable housing. Take the fact, for example, that children living in inadequate accommodation are 25% more likely to have severe health problems before they reach middle age. Or that studies show that the absence of a warm, safe, permanent and comfortable place to live also reduces their ability to do well at school. People who are adequately housed are less of a burden on the state than those who don’t have a decent place to live or no home at all.
Housing associations must have the funds available to continue building the affordable homes the country desperately needs. We compete in the market to buy land and build homes but to make these available at sub-market rents it is obvious that subsidy is required. The sector’s ability to increase the stock of affordable housing depends directly on the amount of capital subsidy available from the government, and under this government’s affordable homes programmes that subsidy has been significantly reduced.
The less subsidy the government puts in, the more money housing associations need to borrow from private investors. While borrowing has been relatively cheap in the past, the cost of borrowing is likely to increase, and understandably, lenders are less inclined to get involved when they are being asked to cover up to 90% of the investment.
In the past, 90% of spending on new homes was subsidised funding and 10 per cent private investment. That ratio has now reversed with private investment now footing up to 90 per cent of the cost.
The affordable homes programme is a move from capital subsidy to revenue subsidy, collected through housing benefit and affordable rent. The principle is to charge people in housing need higher rents to fund new developments to make up for the capital subsidy shortfall. With ever higher rents, it’s also a system for making more people homeless in the short term. Under affordable rent, social landlords have been pushed to charge up to 80% of local market prices. This means that in some parts of the country such as London and the South East, affordable rent is simply unaffordable.
If the government wants housing associations to build more homes for less money – we need to find other ways to generate cash. Part of the solution might be a commercial one. Some housing associations are already building homes for sale or for rent at market rates, reinvesting the profits into affordable housing provision.
This tendency towards commercial market activities also changes the whole ethos and purpose of housing associations which are non-profit making organisations that provide low-cost housing for people in housing need. If the sector moves its focus increasingly towards market provision, the positive benefits which housing associations bring to communities, and to wider society will be eroded and diminished.
Let’s also not forget the wider contribution affordable housing providers make in the form of local investment and employment. We are able to deliver these outcomes more quickly than large scale, headline-grabbing infrastructure projects. Our developments support thousands of jobs and apprenticeships, employing people directly and many more indirectly through locally based supply chains. Every affordable home creates around 2.5 construction jobs and up to four times that many in the wider supply chain. Around 80% of Raglan’s total housing investment costs for example, is reinvested back into the local communities where we are building.
The chancellor's autumn statement was disappointing in the way that it ignored the opportunities which the affordable housing sector presents. We must shout louder about the great work which we are doing and do more to ensure that housing moves up the political agenda with a firm commitment to funding from government for the long term.