Supply and Demand

UK Affordable Housing Supply and Demand

Visiting Speaker - Paul Hodgson

Paul Hodgson is an Independent Management Consultant

Brief notes from his presentation below:

UK house building does not supply enough for demand

Affordable housing used to be the chosen form of housing, now it is the safety net for the poorest in society.

Government spending on affordable housing has been fairly static for the past 20years
Government money now subsidises people’s rent rather than building housing - feeding the demand side rather than supply
Money is given to subsidise rents in the private sector
Net supply of housing has declined since 1979
Most of the current housing stock is old and so much capital investment is spent on bringing this up to ‘decent homes standards’
Local Authority spending on maintenance and management has risen, taking up all of their income from rents

Social tenants enjoy less space per person and are more dissatisfied
Far fewer social tenants are employed compared to previous decades
They are often on low incomes, more than 80% in social housing today were within the sector 10 years ago, this gives the feeling of being ‘stuck’ in social housing
The ‘bedroom standard’ shows social housing to be overcrowded

Usually when value of housing goes up more houses are supplied
This did not happen in the UK
Factors for this include planning constraints and land supply declining as a result of this
Restricted supply has driven house prices up, and so land values
However mortgages were more affordable feeding the demand
First time buyers are worse off because the price of deposits has increased

The volume of households is increasing due to changes in society and population demographic - Older longer living population, single parents, later marriage

The number of people in social housing has massively increased but the number of new social houses has not

Planning S106 does not give enough affordable housing
S106 house building still needs public money and developers get a good deal
Local authorities lack the commercial skills to make S106 effective
30% of social housing is provided by developers through S106

Housing targets define how much land local authorities allow to be developed
Land is often unsuitable - In areas of low demand or lacks required infrastructure
Brownfield land has high development costs

Council waiting lists in 2007 were up 53% since 2002

HCA is now the primary investor in social housing focusing on:

  • Regeneration or development of land or infrastructure in England
  • Supporting regeneration and development of communities
  • Supporting sustainable development and
  • Good design that meets people’s needs

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