Why social housing is key to reducing homelessness in London

When we talk about policy issues to end homelessness, we often repeat a similar line: that while the government can take lots of meaningful, immediate steps that will improve things (from reform of the private rental market to changes to the benefits system), most of this will not address the root of the housing crisis. Getting to the root of the problem would require tackling the problem of housing affordability, and expanding the social housing is one key way that this can be done. 

The current state of social housing in London 

There are more than 1.3 million households on the waiting list for social housing in England, and 336 thousand of these households (just over one quarter) are in London. Getting into social housing, even for those who have the greatest need, is now incredibly difficult, leaving private renting as the only option for many of those who are struggling or at risk of homelessness. 

The private rented sector is not only increasingly unaffordable, but also gives tenants much less security and, according to some studies, is often of worse quality than social housing. 

One of the most disturbing consequences of the lack of social housing is the number of people who are in temporary accommodation due to homelessness.

The capital city is where this issue is most concentrated, with more than 183,000 people, or one out of every 50 Londoners, in temporary accommodation, according to London Councils. In temporary accommodation, people often lack basic necessities and are regularly moved around, causing a great deal of disruption to their lives. It also has an astonishing financial cost, with London boroughs spending £4 million each day to pay for it. 

A very large proportion of those in temporary accommodation were previously private renters, but lost their homes due to being evicted or not being able to afford the rent. As long as social housing remains out of reach for people in situations like this, homelessness in the UK will likely continue to be a serious issue. To understand how we got to where we are and get some ideas on how we can fix things, we can look at the history of social housing. 

Social housing up to the 1980s 

Over the last three decades, housing associations have played an important role in providing social housing, but before that it was overwhelmingly provided directly by local authorities (ie council housing). 

Council housing in London can be traced at least as far back as the 1890s, with projects at the Boundary Estate in East London and Manor Grove in West London.

At the time, London was notorious for its unsafe and unsuitable housing, with people living in poverty. 

The aftermath of both the First and Second World Wars mark the major points of growth for social housing in the UK. After the First World War, there was a push to build homes that were, in Prime Minister Lloyd George’s famous phrase, “fit for the heroes who have won the war”. This attitude led to acts of parliament under various governments which, combined, led to the building of more than 1 million council houses in the inter-war period. Between 1911 and 1938, social housing went from making up 1% of homes in the country to 10%. 

After the Second World War, the huge problem (especially in London) of houses that had been destroyed by bombing during the war was added to the already-existing problem of poor-quality housing. Governments in the post-war period addressed these problems by significantly increasing the pace of housebuilding, with a particular focus on council housing. In the 1950s, Government investment in council housing hit its peak, and between 1946 and 1956, an average of 140,000 social homes per year were built in England. 

In London, the proportion of households in social housing had reached 18.2% by 1961, and continued to rise over the next two decades, to 24.9% in 1971 and 34.8% by 1981.

Country-wide, 4.4 million social homes had been built between 1946 and 1980. 

The decline of social housing after 1980 

The Right to Buy policy, introduced in 1980, allowed people to buy their council houses at a discount. Right to Buy led to a huge number of people becoming homeowners for the first time, but it also coincided with the rate of social house-building being reduced significantly (from more than 600,000 in the five years preceding 1980 to just over 200,000 in the five years after). 

Because many of the homes that were sold under Right to Buy were not replaced with new social housing, the policy’s impact has been dramatic. Since it was introduced, 2.2 million social homes were sold off while just 1.3 million were built to replace them. The graph below from the Resolution Foundation shows changes in the social housing supply since the late 1960s, and the shift around 1980 is very clearly visible: 

Some of the effects of policy changes from the 1980s took time to develop, but the trends since then have been clear. One notable result has been the growth of the private rented sector, which more than doubled in size across the UK between 1996 and 2017. In London, the proportion of households renting privately increased from 13.9% in 1991 to 30.1% in 2021, while over the same period, the proportion living in social housing went down from 28.9% to 23.1%.

Of the social homes that were sold under Right to Buy, approximately 40% are now being privately rented. 

As the size of the private rented sector doubled, so did the rate of poverty among low-income private renters. Problems like this are most severe in London, where low-income households pay the largest share of their incomes on rent. 

By the early 1990s, it was already clear that the policies of the previous decade were leading to higher rents. Sir George Young, who was the Minister for Housing at the time, responded to concerns about rising rents by saying that “housing benefit will take the strain”. 

With social housing incredibly difficult to access, and private rents sky-high, the “strain” that George Young described has grown and grown. As the Resolution Foundation notes, “the cost of housing support” has risen “from £4.5 billion in real terms in 1980-81, up by nearly seven-and-a-half times, to £33 billion today.” 

Essentially, when adjusting for inflation, the change over the last fifty years has not been that the government spends less on housing, but that instead of spending money on buildings where people can live securely, it is spent on subsidising people’s rents through benefits (which, in many cases, means subsidising the incomes of private landlords). This can be seen in the following graph from the Chartered Institute of Housing’s 2024 UK Housing Review Autumn Briefing Paper: 

Last year, the New Economics Foundation pointed out that “private landlords will receive more than six times what the government is expected to spend on affordable housing in the five-year period from 2021 and 2026 (£11.5bn)”. 

Looking to the future 

Numerous sources show that homelessness is at record levels, and without an increase in the social housing supply, there are signs of things getting worse. The most obvious reason why more social housing is not being built is that building costs money.

However, it is important to look at the long-term implications, and to see money spent on social housing as an investment rather than a loss. 

A 2024 report by the Centre for Economics and Business Research (Cebr), to take one example, found that building 90,000 new social homes (which is the number that various housing experts and organisations have agreed need to be built each year) would pay for itself within three years. This is because making sure that people have a safe and affordable home leads to social benefits across the board, including for the healthcare and criminal justice services, and in less money needing to be spent on temporary accommodation and housing benefits. 

Reducing homelessness is not just inherently desirable, but also has a variety of social and economic benefits. And if we really want to bring down the number of people experiencing homelessness, it is absolutely clear that boosting investment in social housing needs to be a top priority. 

More about homelessness in London

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