A needed win for social rent homes

You might remember my last post on ‘hope value’, racing and F1...well since then, a lot has changed! For one, a general election was called. The country now has a new government - a Labour one under the leadership of Sir Keir Starmer, with Rachel Reeves as the first woman Chancellor and Angela Rayner as Deputy Prime Minister and Secretary of State. Shelter also published its new report Brick by Brick: A Plan to Deliver the Social Homes We Need, which sets out a comprehensive plan to ramp up to 90,000 social homes a year for ten years.

Oh yeah… and Sir Lewis Hamilton won his first race in nearly three years! I said it before and I will say it again, I still have faith in an eighth championship.

But back to housing…

We know building social homes, with rents tied to local income, would make a huge dent in the housing emergency by tackling social housing waitlists and ending homelessness. The country needs at least 900,000 social homes (e.g. 90k a year for ten years), and unfortunately each year, only the bare minimum is getting built.

The new Labour government has promised to deliver ‘1.5 million new homes over the next parliament’ and the ‘biggest increase in social and affordable housebuilding in a generation’. However, few details have been released on how they will get this done beyond simply saying planning reform and changes to national guidelines. For example, they said they would get more homes from private developers in return for planning permission and by changing the National Planning Policy Framework (NPPF).

What is the National Planning Policy Framework and how does planning permission work?

The NPPF is a guide that tells councils some of the rules they must follow when granting permission for development and building projects in the local area. This guide is written by central government and sets out policies on everything, from how local authorities should calculate the quantity of homes needed in the area, to what environmental checks are required when a developer starts building.

This document has changed repeatedly for the past six years...but the policies in it continue to allow developers to build so-called 'affordable' housing instead of social rent homes, in return for planning permission. Yes, this can include some social rent homes, but alarmingly it can also include large proportions of affordable rent housing and shared ownership. However, for most people on the social housing waitlist or families stuck in temporary accommodation, these homes are not affordable. In short, these changes to the NPPF over the last few years have contributed to the massive drop in social homes being built today.

When a developer wants to build, they must submit a planning application to local authorities. Through the planning application process, local authorities negotiate with developers how much 'affordable housing' they will be expected to build as part of the provisional approval. Again, this can be up to 80% market rate. So, the age-old question of, 'affordable for who?' remains on the table.

Granting planning permission for housing can result in a massive increase in the value of the land - a big payday for developers, so a main feature of the planning system should make sure that communities can benefit from this too - e.g. with social housing, GP surgeries and schools.

Yet, far too often, only the minimum amount of social housing is agreed to, leaving communities without the social rent homes they need. Other times viability assessments (which factor in how much profit a developer can make) have loopholes where developers can renege or go back on the number of social homes they originally promised. This can be either because a developer has run out of money or, once again, they won’t make the large profits they want by paying their fair share of social homes. Last year, only 3,454 social rent homes were delivered through the planning system.

You see, something so important as getting social homes built and ending the housing emergency is partly reliant on a single planning document. So, what's the solution?

The first is to conduct a consultation on the NPPF, which the government has said they will launch by the end of July. The second is to review developer contributions and how many genuinely affordable social homes they should build - but we don’t know to what extent the government will make them build more social homes. Thirdly, the government must set local and national social housing targets. While the government is committing to local and national housing targets, with an overall figure of 1.5 million, the public has yet to hear a commitment on a target for social rent homes.

For these reasons, Shelter is campaigning for local authorities to have a 'Duty to Require' social rent homes on-site of large developments

The new government can achieve this through the upcoming changes to the NPPF. A ‘Duty to Require’ on large sites can strengthen councils and communities by getting the social homes they need built. With it, local authorities would place a minimum social rent requirement on developers building more than ten homes. This means that if a developer wants planning permission, they must include social homes with rents that are tied to local incomes. The homes must also be built on the site of the development for which they have received permission.

With a national requirement, developers will know that they will have to deliver in every part of the country, so they can't just move on to another area to escape the requirement. Mega corporations would not be able to pit communities and councils against each other. The minimum would apply everywhere.

The other upside is that a ‘Duty to Require’ can reduce viability loopholes and developers going back on their promises. If the cost and materials to build the social homes on-site are included in development plans and planning applications to begin with, then it will help the project to stay on track and it is less likely that viability concerns - like running out of funding - would be an issue.

It is not a silver bullet, but for every social home that comes online, that is one less family stuck in temporary accommodation. Every social home built would provide security and stability for a child experiencing homelessness.

Shelter commissioned analysis by Arup, which shows that a 20% social rent requirement on large sites would give our communities 25,300 social rent homes. Think about it. That is over seven times more than what was built using the planning system in 2022/23.

The planning system is broken. There is no doubt about that. It is plagued with delays and capacity issues. It causes uncertainty for councils and developers. But most problematic, are the incentives to build the wrong type of homes. Along with other changes, like a national social housing target, a ‘Duty to Require’ can reset the power imbalance between local authorities, developers and communities, and deliver a new generation of social rent homes.

If you believe in the value of social housing, help us campaign to ensure the government delivers the 90,000 social homes per year for ten years that this country desperately needs.

Join the campaign