Britain is facing an affordability crisis across the housing sector. For millions of people, rents consume an unsustainable share of household income, while the cost of buying a home has moved far beyond many on an ordinary wage.
High house prices and larger deposit requirements are shutting aspiring homeowners out of the market, just as rising rents and a chronic shortage of affordable homes are placing growing pressure on renters.
The result is a housing system that is failing people across tenures, whether they are trying to rent securely, buy their first house, or find a social home.
For decades, Britain’s housing debate has been dominated by build numbers. It is true that the UK urgently needs more homes, particularly homes for social rent.
But increasing supply alone will not be enough to solve the housing crisis. A home can be newly built and remain far beyond the means of the people who need it.
If we judge success only by the number of units delivered, we risk building more while leaving the central problem untouched: too many people cannot afford a decent, secure home in the place where they live and work.
For many lower-income private renters, housing costs consume 40 per cent or more of their income. The IPPR think tank estimates that 2.4m private-renting households now face unaffordable rents and that almost three quarters of those struggling receive no government help with their housing costs.
And research published by the charities Crisis and Citizens Advice found that just two per cent of advertised private rental properties in Britain were affordable within housing benefit levels.
The average shortfall between housing support and the rent on a lower-cost two-bedroom home has reached £403 a month. Homes are the foundations of our lives: they shape our health, security, family life and ability to take up opportunities.
The home affordability crisis is a cost-of-living problem, a health and wellbeing problem, an economic problem and a barrier to growth.
When people cannot afford to live near jobs and when families spend so much on housing that little remains for the wider economy, the consequences are far-reaching.
The scale of the challenge demands a full range of options: designed carefully and anticipating possible effects on investment, supply and housing quality.
IPPR, for example, has proposed a “double lock”, limiting private rent increases to whichever is lower out of inflation or wage growth. The Joseph Rowntree Foundation has examined how a carefully designed form of private rent control could be combined with tax reform.
The charity’s modelling suggests that this could reduce average rents by as much as £1,200 a year, while leaving fewer landlords making negative returns by 2030-31 than under the current tax system without rent controls.
An emerging “social private rented sector” shows how homes can be provided commercially for affordable rent while retaining a clear social purpose. Homes for Good, Scotland’s first social-enterprise letting agency, combines responsible management and support for tenants with long-term social investment.
And Crisis is also developing a not-for-profit landlord model, alongside its Good Place Lettings agency, with plans to purchase homes that can provide people experiencing homelessness with a secure route into the private rented sector.
These initiatives will not replace the need for more social housing. They do, however, show that the private rented sector does not have to operate according to a single model.
Different forms of ownership, finance and management can deliver greater security and affordability while still attracting investment at scale.
At the same time, the current model for delivering affordable housing is under strain. Section 106 agreements have become one of England’s most important sources of affordable homes. Yet the model relies heavily on the health of the wider housing market and on housing associations being able to purchase the homes developers produce.
Higher borrowing and construction costs, weak private demand, and financial pressures on housing associations are exposing its limitations.
London’s response demonstrates the uncomfortable trade-offs. The threshold for the fast-track planning route on private land has been temporarily reduced from 35 per cent affordable housing to 20 per cent, to unlock stalled development.
It raises a fundamental question: what (and who) gains by increasing the overall number of homes if too few are affordable to the people facing the greatest need?
Perhaps part of the answer lies in diversifying who gets to build and where. Small sites can be complicated. They are well suited to smaller, mission-led developers rooted in their communities.
They can unlock overlooked brownfield land, create homes that respond to local needs and spread development across towns and neighbourhoods rather than concentrating it in a small number of major schemes.
At Nationwide Foundation, we are investing in social-purpose builders through our Built with Social Purpose programme.Seven mission-led organisations are being supported to navigate barriers involving land, finance and capacity, to unlock difficult sites and to deliver more than 150 genuinely affordable homes.
Importantly, the programme is generating evidence about how a more diverse and resilient housebuilding system could work.
Britain needs more homes. But it also needs the right homes, at prices people can genuinely afford, delivered by a wider range of organisations and supported by a housing system that values long-term social benefit.
Join the Nationwide Foundation and the New Statesman on Monday 28 September at the ACC to explore the practical reforms available and share your thoughts on what it will take to make decent, affordable homes a reality.
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