Social Housing is a huge part of the UK’s housing market, providing affordable and habitable homes for millions of people. It also plays a crucial part in tackling homelessness, supporting the vulnerable, promoting social inclusion and reducing inequality.
In 2020, the UK government introduced the Affordable Homes Programme, investing £12 billion into the affordable housing sector, including social housing. The proposed funding will be used over a five-year period. This further funding will help to address the deficit in affordable homes and offer much-needed support to the social housing sector.
What is Social Housing?
Social housing, also known as council housing or public housing, is backed by the government and provided by non-profit organisations such as housing associations or local authorities. This type of housing is designed to offer affordable, secure, and energy-efficient homes to those who need it most. Social housing serves a diverse range of people, including:
- Low-income adults and families
- Older people
- Individuals with disabilities
- Survivors of domestic abuse
- Those experiencing homelessness
One important subset of social housing is supported housing, which goes beyond supplying just a roof over someone’s head. Supported housing in England offers additional assistance to vulnerable individuals, helping them live independently and comfortably.
Why is Social Housing Important?
In an era of rising house prices and increasing rental costs, social housing often becomes the only viable option for many low-income households and addresses several social issues. Social housing provides a more affordable alternative to private rentals or home ownership, making sure that those with limited financial means have a place to call home.
Social housing is a key tool in tackling the UK’s homelessness crisis. At the end of 2023, an estimated 309,000 people were homeless in the UK, highlighting the urgent need for effective solutions. By offering secure and stable housing, social housing helps prevent homelessness and reduces the reliance on often substandard temporary accommodation.
There are strict regulatory standards that social housing must follow, which ensures that residents have access to secure, warm, and energy-efficient homes. This commitment to quality not only enhances the living conditions of residents but also contributes to their overall well-being.
Another significant aspect of social housing is its supported housing units, which offer additional care and assistance to vulnerable people. This support helps residents live independently while receiving the necessary resources to thrive.
Shortage of Affordable Housing
The UK is grappling with a severe shortage of affordable homes, particularly in the social housing sector. Shelter, a leading UK housing charity, has estimated a staggering deficit of over 1 million social homes in the country, and projections indicate that the lack of supply of supported housing is likely to get worse in the coming years.
Many people and families in need find themselves on wait lists for extended periods, with minimal prospects of securing appropriate and cost-effective accommodation. As of 2024, approximately 1.2 million households are on the social housing waiting list, needing an affordable home. This lack of social housing forces many into unsuitable short-term living conditions simply because other options are unavailable.
At Yield Investing, we are committed to addressing this urgent situation and contributing to bridging the gap in affordable housing. Our efforts are to play a small but significant role in tackling the demand for supported housing and improving living conditions for those in need. The pressing demand for social housing stresses the importance of investment in this sector, as it is essential for ensuring that everyone in the UK has access to safe, affordable housing.
How Much Supported Housing Will the UK Need by 2040?
As it stands, 8.5 million people in the UK can’t access the housing they need, including 2 million children who are living in overcrowded and unaffordable housing.
The UK will need approximately 167,329 more homes by 2040, which is a 33% increase from 509,873 in 2023 to 677,202 in 2040. Most of this demand will come from older people, with 75-77% of new homes needed for this demographic, while the remaining quarter will cater to working-aged adults.
The report also highlights the importance of long-term housing solutions. It suggests that 78-80% of these homes should provide long-term, secure accommodation, including all homes for older people. The remaining 20-22% should be short-term housing to assist people in crises. To meet this growing demand, the estimated development cost for these additional 167,329 supported homes is £33.9 billion by 2040.
What will happen if we don’t fix the housing crisis?
A report commissioned by the National Housing Federation has found a shortage of supported housing for everyone who needs one by 2040 and suggested a long-term plan for 2024 and beyond. Without it, things within the sector will only decline:
- Without a long-term plan, the number of children in temporary accommodation will rise from 131,000 to 310,000 by 2045.
- The social housing waitlist will continue to grow by more than 50% by 2045
- 5.7 million households will be paying a third of their income to housing costs by 2045
- The demand for affordable homes is overtaking the supply, and the cost of building new homes is increasing. This, combined with the fact that household costs are growing, means that homelessness will rise without a plan in place. It is predicted that without this plan, homelessness could double to 620,000 by 2045.
- The plan addresses the shortage of suitable homes; by 2045, around 2.3 million people will be in unsuitable accommodation, and there will be a shortfall of 350,000 homes ideal for retirement and supported housing.
What does the long-term plan look like for 2024 and beyond?
The proposed long-term plan for housing aims to address and solve the crisis to meet demand. It will help deliver real change to the people who need it the most. Government funding is examining the housing system to create lasting solutions that will positively impact people’s health and well-being, the planet and the economy.
The proposed long-term plan could do the following by 2035:
End Child Homelessness
There are a record number of approximately 31,500 children in social housing, with the number expected to increase in 2024. This situation disrupts their lives, affects their life chances, and puts pressure on families and public finances. In collaboration with housing providers, the government can address this issue and reduce these numbers in the coming years.
Halve Overcrowding
A long-term housing plan will help halve overcrowding numbers, improving the life chances of 1.8 million people, including children.
Provide the Security of a Social Home
The government needs to provide 90,000 homes per year to tackle the housing deficit and keep up with the demand. This will enable people to have good-quality homes they can afford, which will deliver security and stability for millions of people, including children.
A Warm and Decent Home
For many, improving the safety, quality, and energy efficiency of existing homes will make a real difference. The plan over the next 10 years involves completing necessary works on existing properties to improve millions of homes to meet the Decent Homes Standard, including energy efficiency measures.
Economic Impact of Increasing Social Housing Supply
Research shows the significant impact of building and renovating social housing:
- Building 90,000 social housing homes in the UK would add £51.2 billion to the economy in one year, with £32.6 billion generated within the first year.
- This initiative would support almost 140,000 jobs.
- The initial government funding to build new homes for the sector would be fully paid back over 11 years, resulting in £12 billion in profit to the taxpayer over 30 years.
What can investors do to help?
There are many reasons to be optimistic about the future of supported living. As an investor, you have a unique opportunity to make a positive impact while benefiting from a stable, long-term investment.
Here’s how you can help as an investor:
- Partner with Yield Investing to access high-yield property investments in the supported living and social housing sector. Our hands-free investment opportunities allow you to contribute to this important cause without the hassle of property management.
- Invest in our carefully selected properties designed to meet the specific needs of vulnerable people, including the elderly and those with disabilities.
- Take advantage of our expertise in securing long-term tenancies with reputable housing providers, offering stable returns and continuous support for those in need.
- Benefit from our maintenance and property management services, which make sure that the properties remain in excellent condition for residents while providing you with a hassle-free investment.
- Contribute to addressing the growing demand for supported housing, helping to ease pressure on public services.
Investing through Yield Investing secures you a potentially lucrative investment whilst also providing much-needed supported housing for those who need it most. Our focus on ethical investment opportunities allows you to make a positive impact on society while earning attractive returns.
Investing in Social Housing with Yield Investing
Investing in social housing means investing in the long term, and if you’re seeking a high-yield investment, it’s perfect for you. This housing sector may be unique to investors but should be in everyone’s portfolio. Not only will you see a high yield on your investment, but you will also be helping those who need it within the UK.
If you’re curious to explore social housing investments and how to invest purposefully to benefit society and your investment portfolio, contact our property advisors today to learn more about working with us.
