CPD module: addressing the development gap in social housing

Not enough social homes are being built and there is an urgent need to build more. There is rightly optimism that the general election is an opportunity to push political parties of all stripes to prioritise the issue. Changes to funding and planning options will be particularly important.

That said, some areas for action are already within the gift of housing associations and local authorities.

This article considers ways in which social landlords can support and increase further development.

It considers the practical steps organisations might take to increase the number of homes it is possible to build, before the general election and beyond.

It draws on work of housing association L&Q, one of the biggest builders of social housing over the past decade.

The gap between the amount of social housing available in the UK and the number of people who need it is growing. Research from the National Housing Federation (NHF) shows that:

• 8.5 million people in England face some form of unmet housing need.
• For more than 4.2 million of these people, social rent housing would be the most appropriate tenure to address that need.
• Almost two million children live in households that face some form of housing need.
• For every new social home built in England in 2022-23, six households were accepted as homeless by their local council.

As Inside Housing reported in August 2023, official statistics from the four UK nations show that:

• In England, more than 100,000 households live in temporary accommodation, including 131,370 children.
• In Scotland, there are 14,000 households in temporary accommodation, including 9,130 children.
• In Wales, 13,000 people (4,465 households) are in temporary accommodation.
• In Northern Ireland, almost 4,000 households are in temporary accommodation.

Inside Housing estimates there are 35,000 families with children aged under five in temporary accommodation in Britain, based on Freedom of Information requests to councils. In London alone, one in 23 children live in temporary accommodation, at a collective cost to the capital’s boroughs of £90,000 a month. The gap between need and supply not only impacts families, meaning they do not have a safe place in which to thrive, it also affects society as a whole. A coalition of individuals and organisations is pushing any new government to commit to building many more social homes, including through Inside Housing’s Build Social campaign.

That increased government action would support the building of new homes is beyond doubt. L&Q has been the top housing association for development for the past three years and one of the biggest builders of social housing over the past decade. For 2024-25, however, it has only been able to commit to starting 756 new homes.

This is in large part because of the need for increased spending on existing stock. The organisation’s major works programme constitutes an investment of almost £3bn over 15 years to improve the safety, comfort and environmental performance of existing homes – and ensure evolving requirements on fire safety and net zero are met. This leaves limited capacity for new homes.

New funding from government would help to address this. However, L&Q’s work has shown factors within the control of social landlords can make development easier.

Staff at L&Q have found several factors helpful in securing high levels of housebuilding.

• Make a top-level decision that development is a priority. While the main responsibility for development is likely to fall with one director or department, success can only be secured if there is a cross-organisational belief in its importance. Support from chief executive level – and efforts from the finance director – have been crucial. There is value in having an organisation-wide philosophy about development. At L&Q, it is seen as part of the organisation’s central mission: to provide safe and secure homes, in which people can thrive.
• Consider greater use of joint ventures. L&Q has 12 live joint ventures, building on previous projects. Staff say that working with major house builders in this way leads to helpful learning on both sides, as well as helpful sharing of risk between builders and social landlords.
• Recognise that development is a risk, and work to better understand – and mitigate – that risk. A decision to invest in development is not without risk. That is particularly the case given that this is a period in which prices have gone up and many contractors have gone under, or been unable to supply enough resource to meet demand. Where developments include shared ownership properties, there might be concerns about the ability to sell them once construction is complete. This does not mean decisions to invest in development are reckless, but there must be an understanding of the risks involved. At L&Q, every investment decision has an associated risk map. Every risk is assessed and quantified, and then mitigations are identified. A risk ‘buffer’ is filtered into every appraisal. The board and investment committee do not make any decisions without having considered this detailed risk assessment.
• Explore creating construction companies. In part, L&Q has managed to sustain much development through establishing its own construction company. This has given it a high degree of control over development programmes, making it easy to decide whether to bring forward more shared ownership or more social rent at any one point. Having an in-house construction team has also upskilled colleagues in the association’s development division; it means there is cross-learning. A construction company will not be possible or the right fit for every association or local authority, but L&Q’s experience suggests it is worth considering.
• Be as proactive as possible in finding new means of supporting development. If development is to increase, the sector cannot wait for changes in government funding and support. It is necessary for leaders and organisations to seek their own solutions. This could mean exploring different funding models, new partnerships, or a combination.
• Create diverse teams. Having a diversity of people engaged in a challenge leads to a greater diversity of approaches and solutions. L&Q has focused on ensuring gender balance as far as possible. The development team is now 50/50 male/female, which is felt to make a real difference in successfully meeting objectives. By ensuring the work setting is family-friendly, for instance, it can encourage people to stay in roles longer.

The amount of development work L&Q has been able to do is partly down to its size. It houses 250,000 people in more than 105,000 homes in London, the South East and the North West. This scale provides space for projects that only just cover their costs alongside projects with a much larger financial return on investment.

Smaller housing associations do not have the same luxury. These organisations are often keen to build up their financial reserves, to allow for maintenance of existing properties, rather than stretching funds to develop new accommodation. This strategy is likely to have felt particularly prudent in the aftermath of the Grenfell tragedy and the need to urgently bolster safety.

When faced with an investment paper that details a range of risks, many boards of smaller associations would understandably decide not to proceed.

For these organisations, Section 106-led development might be a better first step. These are agreements between a planning authority and a developer which apply certain requirements to a development, which can involve including a set amount of social or affordable housing. This is a way to boost affordable housing supply as part of developments already planned by other organisations. Section 106 agreements are not free of complications, but could enable smaller organisations to build confidence before moving into land-led development.

There may be value in smaller associations working with larger ones that have greater experience. Similar partnerships could be forged between large associations and local authorities. In the past, L&Q has acted as a development agent to smaller social landlords, and recently agreed a joint project with a London council. Nearly 100 new homes will be built across the borough of Merton, all of which will be council homes at social rent. L&Q is taking on all the land assembly works and gaining planning consent, and will also build the homes.

Partnerships such as these might be a helpful way of increasing both the development and confidence of smaller or less experienced organisations.

• Before reading this article, how much did you think individual social landlords could influence development levels? Has your opinion changed? Where should governmental responsibility for development lie, and where should the responsibilities of social landlords lie?
• How do you think your own organisation can contribute to increased development?
• How can the sector influence any future government on the need to invest in affordable housing?
• What one point in this piece do you want to share with colleagues? How will you share it?

The demand for social housing greatly outstrips supply, with consequences for individual families and society. This issue is increasingly part of the political discourse, and with a general election approaching, there are opportunities to encourage leaders to prioritise it.

The sector cannot rely on the government to solve the problem. Housing associations and local councils need to promote the right environment and opportunities for development. This might include considering ways to work more closely in partnership; making conscious board-level decisions on the priority the organisation will give to development; and building appetite for risk.

Development will never be risk free, but in mitigating that, it should be possible to build more homes.

Next, answer the questions below. Get all the questions correct and you will receive a certificate confirming your award of 30 CPD minutes within 10 working days via email. Get any questions wrong and you can retake the test by refreshing your web browser.

• House of Commons Library (2024), Social rented housing in England: Past trends and prospects
• NHF (2021), People in housing need: The scale and shape of housing need in England
• Swindells, K. (2024), How many toddlers and babies are living in temporary accommodation in the UK?, Inside Housing
• London Borough of Merton (2024), Major investment to help Merton build new generation of council homes

Find out more about Inside Housing’s CPD offering by clicking here

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