By Steve Richmond, General Manager, Reapit UK&I
The holidays are a time when many of us reflect on the comforts of home: a safe space shared with loved ones and warmth on a cold night. But for hundreds of thousands across England that dream is nowhere near reality.
Homelessness has reached record levels. Officials from the government put the number at 123,000 households in temporary accommodation, including 78,000 families and 159,000 children. And it’s impacting more people every year. Analysis from Shelter suggests that there has been a 14% increase in 2024.
Why such high numbers? Successive failure by governments from all sides of the political divide to get a grip on increasing housing supply and the factors that impact it.
In the lettings sector, tax increases and tighter regulation have seen landlords voting with their feet. Data from Rightmove reveals that 18% of properties for sale in September 2024 had been rental homes, up from 8% in 2010. This is exactly the opposite of what we want to see, especially when the latest English Housing Survey shows we added 7,000 households to the PRS in the past year.
Housebuilding stats don’t read much better either. The latest report from the government shows work started on just 22,990 new dwellings between April and June, a 65% decrease when compared to the same quarter in 2023.
What we need is a clear, unified strategy across government departments, councils (in whatever form they take), housebuilders, employers, social housing providers and the private rented sector to address systemic issues that contribute to a lack of homes.
Fixing the foundations
With renters on the march across London demanding action on the cost of housing, you would expect these high rents to attract an influx of new landlords looking to meet this high demand. But instead, landlords have been issuing Section 21 evictions to end tenancies and sell up. The government has pinpointed these evictions as a primary driver of homelessness. But focusing solely on Section 21 risks overlooking the deeper issues at play.
Our research shows rent arrears (69.2%) and property sales (69.8%) as the two biggest reasons for issuing Section 21 notices. Addressing these root causes through better tenant support and reforms to keep properties in the private rented sector will be essential if we are serious about tackling homelessness.
More than money
Those in the PRS who need the most help staying out of arrears are tenants claiming the Local Housing Allowance (LHA). Despite a long-overdue increase in 2023, LHA has now fallen behind rents once again. Officials from the Department of Work & Pensions estimate 45% of households receiving LHA face a shortfall between their housing benefit and their actual rent. For these households, the gap between what they receive and what they owe can force impossible choices – like deciding whether to pay rent or afford basic necessities.
An annual uprating to LHA rates in line with the increase in local rents could prevent more families from falling through the cracks. It is something my colleague Neil Cobbold has been recommending for years. But the data on rent prices needs to get better too. At Reapit, our customers manage around 15% of total private rented stock so we can see the trends in the market. We have said many times to MPs, peers, ministers and officials that we’re happy to help ensure they have the right information to provide the right level of support.
While it may look like uprating LHA rates regularly will cost more on paper, failing to do so simply shifts that cost to other government services and local authorities. Without annually uprating LHA, we will simply be compounding the homelessness crisis which has a real human cost to those on the streets and in temporary accommodation.
Confidence is key
Addressing the benefits gap will help with some tenant arrears, but late rent is not the only reason landlords are selling. Agents think some of the upcoming reforms within the Renters’ Rights Bill are also contributing, with over 96% of those we surveyed predicting it’ll cause more landlords to exit the market.
So how do we restore confidence with the Bill predicted to become law in 2025? One area of concern is the removal of Section 21 and moving to an entirely court-based Section 8 eviction process, without enough court capacity to support it.
Almost 50% of agents we surveyed last year reported that the Section 8 process takes more than six months, and over 90% think this is unreasonable. What timeline to recover rental properties would bring confidence back to the market and help convince landlords to stay? Most agents (67%) want to see evictions resolved in less than two months, bringing clarity to tenants and landlords alike who are so often stuck in a holding pattern waiting for court time or bailiff action. Bringing confidence to the Section 8 eviction process will require investment in court and bailiff capacity, something we need to see before the reforms become law.
Without improving both affordability and landlord confidence, there’s a real risk of losing rental properties from the PRS and seeing more evictions from landlords selling up.
Focus on shovels in the ground
Since the election, we’ve heard a lot about building 1.5 million new homes over the next parliament, but to hit that ambitious target things must change. Planning reform has been the government’s favoured topic to build faster, but it’s not the most pressing issue. We already have over 1 million homes planned for that have not been built. Collectively we need to address why.
The first issue is the economy. Interest rates are exerting a double squeeze on the delivery of new homes. In the short term, they’re cooling the housing market as people can’t afford mortgages on new homes, which reduces the returns that housebuilders rely on to move forward with projects. Without a commercial return on investment, housebuilders are also not building the social housing that often forms part of big developments.
High interest rates also make borrowing to fund new homes more expensive which means some projects that could have turned a profit a few years ago have instead become money pits. You only have to look at the government’s own data on construction material costs to see that prices have not recovered from the massive inflation we saw between 2021 to 2023. Lower interest rates will help bring down those borrowing costs and could help gear the economy for growth if inflation is under control.
The second issue is the widely reported skills shortage – and from the data, it’s getting worse. A report by Build UK citing data from the Construction Industry Training Board shows we’re training 5% fewer apprentices than last year. The latest construction statistics for England from the ONS also show no growth in sector employment, which isn’t surprising when it also reports a 16% reduction in new orders, partly caused by a fall in demand for building new private housing.
These headwinds make it increasingly difficult for the sector to build those 1.5 million new homes. To hit those ambitious targets, we need to solve the labour shortage by training more construction workers and restore developer confidence through economic stability,
No vacancies?
Solving the housing crisis doesn’t always mean building from scratch. England has almost 700,000 vacant dwellings. The reason they’re empty could be as simple as owners lacking the funds for necessary repairs.
Ireland’s Repair and Leasing Scheme offers an inspiring model. By funding repairs (up to €80,000) in exchange for guaranteed social housing use, vacant properties are transformed into affordable family homes, not just bringing down temporary accommodation costs but bringing a massive relief to a family who dream of a stable home. England has a similar scheme in Empty Dwelling Management Orders, but it’s complicated and councils are under no obligation to use them.
Instead, local councils regularly charge more council tax for vacant properties, meaning owners have even less money for renovations. Rather than the stick, let’s offer owners a carrot. Simplify the existing Empty Dwelling Management Orders and encourage landlords with properties in disrepair to sign up. This could quickly boost social housing availability for those most in need at a fraction of the cost of new builds.
A coordinated effort
While building more will help in the long term, we need to think bigger to address the issues we’re facing today. The focus must shift to maximising existing stock, ensuring landlord confidence, and addressing affordability gaps for those on the margins of the PRS. Investment in housing isn’t just a social responsibility – it’s also a driver for economic growth.
Solving this crisis requires more than seasonal goodwill; it demands bold, coordinated action to maximise existing housing, restore confidence in the PRS, and address affordability gaps. By investing in long-term solutions, we can turn the housing crisis from a source of despair into an opportunity for transformation – making a warm, safe home not a dream but a reality for all.
