Affordable Housing Commission report - conclusions in the light of the Covid-19 outbreak
Over the past 18 months the independent Affordable Housing Commission has undertaken a wide-ranging review of housing affordability in England. The final report has more than 50 recommendations and calls for a collective effort, led by government, to rebalance the housing system to make housing affordable again. In his guest blog for CIH, commission chair Lord Best discusses the research's main findings in relation to the current coronavirus pandemic.
The core messages in the Affordable Housing Commission’s report Making housing affordable again: rebalancing the nation’s housing system are given extra emphasis by the Covid-19 national emergency.
Our overarching conclusion is that problems of affordability come principally from the huge growth of the private rented sector (PRS) – which has more than doubled in size in less than twenty years – while both social renting and home ownership have declined. The pandemic now highlights the difficulties of relying on this enlarged PRS. While the social housing sector has the capability and organisation to rise to the challenges that the crisis brings, the position for many private tenants and private landlords is much more fraught.
Where tenants cannot pay the rent, PRS landlords are reacting in different ways. Some are willing and able to allow ‘rent holidays.’ Other landlords have sought to evict tenants ahead of the coronavirus legislation that extends security of tenure. Many landlords are not helped by the offer of a mortgage holiday as they have little or no mortgage: yet they may rely on rents for all or part of their income.
In other words, the pandemic shows up the PRS as a complex, disparate and often fragile sector that is ill-equipped to cope in emergency situations. The case for the Commission’s central recommendation for a National Housing Strategy to rebalance the housing system – away from the PRS and towards a larger social housing sector – gains extra relevance today.
Some of our detailed recommendations are also given increased urgency by the pandemic.
First, of course, there are the proposals for improving the safety nets for buyers and renters who struggle with housing costs. The Commission recommends a series of reforms to universal credit. For PRS tenants, the Commission wants LHA rates restored to cover 30% of local properties. There must be an end to the cruel shortfall for so many tenants between their allowance for rent and the actual rent they must pay – a key factor in forcing families to use local foodbanks.
For homebuyers, our safety net recommendations are highly pertinent in the current crisis. The 39-week delay before payment of Support with Mortgage Interest (SMI) is clearly untenable. The Commission also calls for a return to SMI as a grant not a loan.
Perhaps there will be an understanding that special measures being brought in by the government are going to be needed on a long-term basis: for many the personal crisis of housing affordability will not go away when the emergency ends.
Second, amongst the AHC’s many recommendations for rebalancing the housing system and enlarging the size of the social housing sector, we call for support for councils and housing associations to purchase ex-Right to Buy properties, not least to save wasteful temporary accommodation expenditure.
We also recommend that social landlords and community organisations should be better funded to acquire empty and low-quality property from the PRS, to regenerate neighbourhoods. And we believe there are opportunities to incentivise sales by private landlords to existing tenants.
These recommendations may well gain urgency as the pandemic hits the viability of lettings for some landlords who may need an exit route from the market. In the aftermath of coronavirus, purchase by community organisations and social landlords may present new opportunities.
The Commission hopes we can use the weeks and months ahead to refine and hone our recommendations and sustain some momentum toward a national strategy supported by all key players. Housing affordability is certainly top of mind for so many renters and buyers at this critical time: and it won’t go away for the 40% of those in the lower half of earnings who were already struggling with their housing costs. Government is right to intervene during the current crisis but it also should heed our report and follow through in the aftermath with a long-term strategy that secures affordable housing opportunities for all.
Lord Richard Best, chair, Affordable Housing Commission
The Affordable Housing Commission was established in 2018 by the Smith Institute and funded by the Nationwide Foundation.