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Investing in social housing could add over £50bn to the economy

Posted 27 Feb 2024

Investing in social housing could add over £50bn to the economy

The next government could add £51.2bn to the economy, including £12bn profit to the taxpayer, by building 90,000 social homes, according to new research carried out by CEBR on behalf of Shelter and the National Housing Federation (NHF).

The new report, The economic impact of building social housing, is the first to show the massive economic and social benefits of building 90,000 new social rented homes – the figure that needs to be built each year to fix the housing crisis and help end homelessness. Social rented housing is the only genuinely affordable housing by design, as rents are tied to local incomes. On average, social rents are around 50% cheaper than private rents.

The report demonstrates that building 90,000 social homes provides both immediate and long-term value for money for the government and the economy. It would directly support nearly 140,000 jobs in the first year alone. Within three years, the wider economic benefits of building the homes would break even and return an impressive £37.8bn back to the economy, largely by boosting the construction industry.

Alongside this, the new social homes would generate huge savings for the taxpayer across multiple departments. These breakdown as follows:

  • £4.5bn savings on housing benefit

  • £2.5bn income from construction taxes

  • £3.8bn income from employment taxes

  • £5.2bn savings to the NHS

  • £4.5bn savings from reduction in homelessness

  • £3.3bn savings to Universal Credit

The savings and additional tax revenue mean the initial government funding required to build the homes (£11.8bn) would be fully paid back in 11 years. Over the 30-year period, building these homes will add £12bn net (£24bn gross) in benefits to the taxpayer.

Social homes are more stable than private renting, aedus tenancies are secure, giving social tenants stronger rights and greater protection from eviction. As a result, the socioeconomic benefits of building 90,000 social homes, outlined in this new research report are significant, and include better education outcomes, savings to the NHS, increasing rates of employment and reduced crime. The total economic and social benefits of building the homes would generate £51.2bn net over 30 years (£86.5bn gross).

For decades, successive governments have failed to build enough social homes and every year we lose more than we build through right-to-buy sales and demolitions. Last year alone, there was a net loss of nearly 11,700 social homes, while 1.3 million households are stuck on social housing waiting lists in England. One in six children are living in an overcrowded home and a record 140,000 children are homeless and living in damaging temporary accommodation, such as one-room hostels and B&Bs, often miles away from their schools. Thousands more people are forced to sleep on the street.

Ahead of the general election, Shelter and the NHF are calling for political parties to commit to end the housing crisis. This can only be done with a long-term plan which prioritises social housing, including urgent action to ramp up delivery of 90,000 new social homes a year to meet demand. `

Polly Neate, Chief Executive of Shelter, said: “Homelessness is a political choice, with a simple solution. Building 90,000 social homes a year will not only end the housing emergency, but due to the wider economic benefits it brings, it will pay for itself within just three years.

“Day after day our frontline services are inundated with calls from people who are being tipped into homelessness because there are no genuinely affordable homes available and private renting is just too expensive. Communities are being torn apart as people are priced out of their local areas - leaving behind their jobs, children’s schools and support networks.

“It doesn’t have to be this way. A safe and secure social home will give people a place to thrive – improving their health and access to work and education. All political parties must make the choice to end the housing emergency - they must fully commit to building 90,000 new genuinely affordable social rent homes a year for ten years.”

Kate Henderson, Chief Executive of the National Housing Federation said:“This research shows not only that the housing crisis can be solved, but that this can be done in a way that will save the taxpayer money, boost jobs and bring huge benefits to the wider economy.

“Right now, we are in the midst of a housing emergency. Millions of children are being pushed into homelessness, families are being forced into impossible choices to keep a roof over their heads and people in every community in the country are seeing life chances harmed by inadequate housing.

“Building more social homes is a win-win solution. It will immediately boost the construction industry, supporting thousands of jobs, and will save the government and taxpayer money over the longer term. It also brings huge benefits to people affected by the housing crisis through reducing homelessness, increasing employment and boosting children’s life chances. We urge all political parties commit to a long-term plan for housing with funding to build plan for a generation of new social homes.”

Benefits bill and homelessness budget – £4.5bn

The dire shortage of social homes has led to significant increases in spending on housing benefit. The benefit bill has doubled since the early 2000s, as low-income families have been trapped in privately rented homes where rents are at a record high. Meanwhile, spending on temporary accommodation has increased by a staggering 62% over the last five years.

However, this new research shows building 90,000 social homes would save councils £245m/year on homelessness services – 10% of total spending last year – and result in £4.5 bn in savings over the next 30 years. It would also save nearly £250m/year on the benefits budget, and result in £4.5bn in housing benefit savings over the long term.

Health and savings to the NHS - £5.2bn

Decades of failure to build good quality social homes has trapped people in insecure private renting where poor conditions are rife. According to the government’s own data, social housing has the lowest proportion of non-decent homes, damp and health hazards of any other housing tenures, including owner-occupied and private rented homes. A stable home is also linked to better wellbeing. This research shows that building 90,000 new social homes could save the NHS £5.2 billion and would lead to a substantial reduction in annual health services usage of £1,914 per household.

Children’s life chances and education – £2.7bn

Recent research by Shelter has exposed the devastating impact poor housing has on school age children, causing huge disruption to their education. Half of teachers (49%) report working with children who are homeless or who have become homeless in the last year. A shocking 91% of teachers say children are coming to school tired as a result, while 86% say it’s caused children to miss school.

In the longer term, poor housing leads to lower economic contributions, increased crime, and greater use of public services. Building 90,000 new social homes would reduce disruptions to education and lead to overall savings of £2.7 billion.

Higher employment – £8.9bn

A stable, affordable home helps people to get and keep work, and can reduce the long-term scarring effect that being homeless or in insecure housing has on people’s employment prospects. These benefits generate £8.9bn for the wider economy, in addition to £3.8bn generated through increased tax revenue.

Lower benefit costs – £3.3bn

Due to higher employment, yearly benefit claims would be cut by £1,218 per household, generating £3.3bn in savings over the long term.

Reduced crime – £3.1bn

People in inadequate housing are more likely to experience crime. This means that more social homes means that fewer people would suffer the health and financial costs of crime, and lead to savings to the police and criminal justice systems. Combined, this would generate savings of £3.1bn.


Notes to editors:

Notes to editor:

Shelter and NHF commissioned the Centre for Economics and Business Research (Cebr) to carry out a comprehensive long-term assessment of how building social housing benefits the economy, the government, the people who will live in social homes and society at large. The analysis relies on a range of sources, from official government statistics to industry reports and internal data shared by Shelter and NHF.

Cebr are an independent economics and business research consultancy established in 1992.

Cebr’s calculations assume that the upfront cost of building 90,000 homes in a given year would be £35.4 billion, with one-third (£11.8 billion) funded by the government and the remaining portion covered by providers of social housing such as housing associations or local authorities. This is an estimate that Cebr have inputted into their calculations rather than a finding from this report. They have not modelled any reduction in costs that could be realised through land or planning reform, or changes in cost over time.

Building 90,000 social rent homes would pay for itself in under three years. After three years the benefits to the exchequer and the wider system (£37.8bn), would be greater than the upfront building costs (£35.4 bn). From the Exchequer's perspective, the project is anticipated to reach a break-even point in 11 years following construction, thereafter yielding a positive net present value.

The total benefit to the Exchequer would be £23.7bn over 30 years. The net benefit to the Exchequer would be almost £12bn when we consider the government grant required to build 90,000 social rent homes (£11.8bn).

In England average weekly social rents are £89 whilst average weekly private rents are £196 – this shows that on average social rent is 46% cheaper than private rents. Data is available from: DLUHC, Social housing lettings in England, April 2021 to March 2022, Table 2dii and ONS, Private rental market summary statistics in England: October 2022 to September 2023, Table 1.7

In 2022/23 there was a net loss of 11,684 social rent homes in England. Shelter calculates the net loss of social housing by comparing the number of social rent homes delivered and converted from other tenures with the number of social rent homes lost – primarily through sales and demolitions. Data is available from: DLUHC, Live tables on affordable housing supply, Table 1006C, DLUHC, Local authority housing statistics, Section K, RSH, Private registered provider social housing stock and rents in England 2022 to 2023, Private registered providers data release and DLUHC, Live tables on social housing sales, Table 678 and 684.

In 2023 there were 1,287,180 households on the waiting list for social housing in England. This is available from: DLUHC, Live tables on rents, lettings and tenancies, Table 600

NHF analysis of the English Housing Survey found a total of 1.89m children living in overcrowded conditions in Enlgand, out of a total of 11.36m children overall.

At the end of June 2023 there were 138,930 children living in temporary accommodation in England. This is available from: DLUHC, Statutory homelessness live tables, Table TA1

In 2022 there was an estimated 3,069 people sleeping rough on a given night in England. This is available from: DLUHC, Rough sleeping snapshot in England: autumn 2022, Table 1

Data on the housing benefits bill is available from: DWP, Benefit expenditure and caseload tables 2023, Housing benefits

Private rents are at a record high with record increases of 6% in the last year. This is available from: ONS, Index of Index of Private Housing Rental Prices, UK: December 2023, Table 1

In 2022/23 councils in England spend £2.43bn on homelessness services, including £1.75bn on providing temporary accommodation. This is available from: DLUHC, Local authority revenue expenditure and financing England: 2022 to 2023 individual local authority data – outturn, RO4

YouGov survey of 1,017 state schoolteachers at primary and secondary schools in the United Kingdom (7 – 21 November 2023). The results have been weighted and are representative of all state schoolteachers in the United Kingdom. The results in this release have been filtered to only those in England comprising a sample of 902 state schoolteachers.

91% of teachers who work with children who have experienced homelessness in the last year, say children’s housing issues are resulting in them coming to school tired. 86% of these teachers say that children have missed school as a result of homelessness and housing problems.

10% of social homes fail the Decent Homes Standard. This compares to 14% of owner occupied homes and 21% of private rented homes. This is available from: DLUHC, Annex tables for English Housing Survey headline report 2022 to 2023, Annex Table 4.3

Benefit StreamNet impact (£m)
Economic impact from construction and management Direct GVA from construction 10,387 
Indirect and induced GVA from construction 16,969 
Aggregate GVA from managing housing stock 20,823 
Subtotal: economic impact from construction and management 48,179 
Direct benefits to the Exchequer Savings on Housing Benefits 4,485 
Tax revenue from construction 2,473 
Subtotal: direct benefits to the Exchequer 6,958 
Indirect benefits to the Exchequer and wider society Direct GVA from increased employment 8,882 
Healthcare - savings to the NHS 5,170 
Savings on Homelessness services 4,512 
Income tax and NI from increased employment 3,793 
Savings on Universal credit 3,289 
Fewer disruptions to education 2,709 
Benefits from lower crime 3,058 
Subtotal: indirect benefits to the Exchequer and wider society 31,413 
Cost Cost of construction -35,367 
Net present value 51,183 

Table 2: Economic impacts of construction and management

Impact ConstructionManagement
Jobs directly created 139,212 4,792
Jobs indirectly created 353,029 10,158

About Shelter: Shelter exists to defend the right to a safe home and fight the devastating impact the housing emergency has on people and society. Shelter believes that home is everything. Shelters expert advisers offer vital support and advice to millions of families who are enduring the immense harm caused by housing emergency. Learn more at

About NHF: The National Housing Federation is the voice of affordable housing in England. We believe that everyone should have the home they need at a price they can afford. That’s why we represent the work of housing associations and campaign for better housing. Our members provide over two and a half million homes for six million people. And each year they invest in a diverse range of neighbourhood projects that help create strong, vibrant communities.