Where are the homes this winter?

By Robert Pollock | 21 October 2020

Bringing more than 15,000 people in from the streets and into emergency accommodation is a huge task. Authorities, their charity partners, and local volunteers should be extremely proud of that amazing achievement. It demonstrated that we can tackle homelessness if we choose to do so and many more people than expected live in very precarious situations.

But rough sleeping is just the tip of iceberg. Essex had an ‘official count’ of 47 rough sleepers at the beginning of the pandemic but needed to find emergency accommodation for more than 167. For every two rough sleepers there are around 100 hidden homeless. Since the pandemic hit more than 300,000 private renters have fallen behind on their rent. Winter is coming, and transmission rates and unemployment are rising. Many more families and single adults will struggle to pay their rent. New six-month eviction notices will only offer a short reprieve for many at risk of homelessness. The National Audit Office has now launched an investigation into the Government’s response.

While it is extremely welcome that the Ministry of Housing Communities and Local Government (MHCLG) wants to provide 6,000 homes to end rough sleeping by the end of this Parliament, this won’t address the underlying issues that cause homelessness. We have known for a long time we just do not build enough affordable homes. Shelter’s Commission made a convincing economic case for a 20-year investment programme to deliver 3.1 million more social homes, which would provide a long-term return on investment for the taxpayer.

Buying property to rent affordably is an option too. Enfield LBC is probably the most successful example with more than 500 units for families at risk of homelessness purchased using £120m from the Public Works Loan Board (PWLB). Many other councils have preferred to invest in commercial property to generate much- needed revenue rather than buy homes to rent affordably and reduce homelessness costs. The Treasury is likely to tighten up on that type of activity, but has encouraged PWLB borrowing for housing by offering reduced rates.

With £130m of capital grants for a long-term move on accommodation, the Next Steps Accommodation Programme is a step forward – and awards to authorities are expected shortly or as this article goes to press. The Government has listened to arguments that buying, developing and converting property for rough sleepers at affordable rents is the better solution than annual grants. It is also better value as those mostly end up in the private sector. But it could have gone further.

Modelling shared with the MHCLG illustrates that low-cost capital borrowing can fund home purchases and repay loans, even in central London, at local housing benefit rates – though the benefit cap can be an issue for some tenants. This would provide stable council-owned accommodation at affordable rents and increase stock available over the long-term. It can also generate a small annual yield of 1-2% for authorities to fund support services and reduce reliance on annual Government handouts for rough sleepers.

There is scope to adapt the model to others in need of affordable housing, such as key workers. During the pandemic they have been invaluable to the country. But many cannot find affordable accommodation.

Blending stable long-term investment yields of the type required by pension funds, with council nomination rights and PWLB finance could provide genuinely affordable rents for our key workers and the rising numbers of low-income households.

The Prime Minister’s recent announcement to subsidise high loan to value mortgages will be welcomed by some, particularly younger professional renters, but does not take account of the bigger picture. Stoking demand like this is likely to provide windfalls to homeowners and developers and exacerbate the affordable housing crisis.

We desperately need a joined-up homelessness and housing strategy that puts prevention and affordable supply at its heart. Tenants need longer leases or greater security of tenure as in many other European countries and local authorities should have greater influence over local housing allowance.

For example, Blackpool would like to lower rates to reduce the proliferation of low-quality houses in multiple occupation.

These were all suggestions made by the LGiU’s Homelessness Commission in 2019. The context has clearly changed, but many of the points remain valid. COVID has demonstrated that we need even more affordable housing and further Government initiatives to address rising levels of homelessness exacerbated by the economic impact of the pandemic.

I would like to see more bold authorities like Enfield investing in affordable property to rent to their residents, rather than buying shopping malls. Of course, that would be much easier to do if councils were appropriately funded and local action was part of a joined-up national strategy.

Robert Pollock is a member of the LGiU Homelessness Commission, and director of Social Finance


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