Supported living in the UK has faced significant challenges recently due to political and economic issues and the impact of the COVID-19 pandemic. These problems have intensified the already long waitlist for social housing.
As demand continues to outstrip supply, understanding the future trajectory of this sector is important for shaping investment strategies.
The evolution of supported housing is not just a matter of housing policy but an issue that will influence community welfare and investor outcomes across the UK.
How has supported housing changed?
Social rented housing is typically provided by a social landlord, usually a local authority or a housing association. The government subsidises the rent to ensure it remains affordable for tenants. This type of housing was designed to provide supported housing accommodation for a range of people, including older people, people with learning disabilities, people with mental health-related needs, vulnerable young people and families who have experienced homelessness.
This type of housing is the most affordable option available and offers long-term security. Its importance has grown in response to rising homelessness in the UK and the number of households in temporary accommodations. Increasing the availability of social housing can help reduce spending on housing benefits and move private renters into more stable accommodations.
The size of the supported housing sector has declined over the years. In 1979, local authorities and housing associations managed 5.5 million homes. By 2022, this number had fallen to 4.1 million, a reduction of about a quarter over four decades. Although there has been a slight increase in the number of homes in the last decade, the demand continues to outpace supply.
Demand for Affordable Housing
Research by the National Housing Federation has estimated that approximately 1.6 million households in the UK have unmet housing needs that would be best addressed through social housing schemes. There’s a significant need for about 145,000 affordable homes annually, with 90,000 intended for social rent. This need arises from a backlog of required housing.
Several factors influence the supply of supportive housing, such as right-to-buy schemes, demolitions, and a growing gap between supply and demand. The demand for affordable housing has surged significantly, with social housing waitlists at an all-time high. Factors like the pandemic, rising cost of living, and escalating property prices have made it increasingly difficult for many to find affordable housing.
There’s no indication that this trend will slow down anytime soon. In response, the government has allocated additional funding to support social housing. Without such initiatives, millions might find themselves in unaffordable living situations, potentially leading to increased homelessness.
Impact of Demographic Changes
The demographics of social housing tenants are shifting, particularly with the ageing population and migrants. These groups often face the brunt of rising costs and a shortage of affordable housing, making it important to address their specific housing needs.
As life expectancy increases, older members of the community who are past their working years and may lack sufficient financial resources rely more on supported living. This shift indicates a growing need for housing options that are accessible and suitable for older people.
Supported living is also essential for migrants and individuals in dangerous and difficult situations, offering them a chance for affordable and secure living in the UK. This assistance gives them stability and integrates them into the local community.
With the continued increase in life expectancy and potential rises in migration, the demand for affordable homes is expected to escalate. Addressing this demand will require careful planning and dedicated efforts to expand and adapt the housing supply.
Tenant Rights
Giving tenants a voice regarding good quality supported housing is important. The Tenant Satisfaction Measures (TSM) standard, along with other policies, has been implemented to ensure tenants are cared for and heard. These measures also hold housing providers accountable for the quality of their housing and keep with their end of the tenancy agreement.
With the introduction of the TSM, all registered providers of supported housing are required to report annually on their performance. Strengthening tenants’ rights marks a significant advancement for the social housing sector and is expected to continue evolving and improving.
Sustainability and Climate Change
The ongoing impact of climate change is increasingly shaping the future of social housing. The sector is intensifying its efforts to reduce energy consumption, with a growing focus on incorporating renewable energy sources and improving overall sustainability.
Many housing associations will face significant costs as they undertake extensive refitting of homes and upgrade heating systems to make them more energy-efficient. The government is also encouraging the supported living sector to create greener, more sustainable homes.
As these trends continue to evolve, housing associations and providers must stay current and adapt accordingly. This approach aligns with environmental goals and makes supportive housing an ethical investment opportunity, demonstrating a commitment to sustainable development.
The goal now and in the future is to keep pushing forward, delivering innovative and effective housing solutions that guarantee a sufficient supply of affordable homes across the UK. This ongoing progress in supported living supports ethical investments that benefit tenants and contribute to broader societal and environmental well-being.
The Future of Supported Living and Accommodation
In 2018, the UK government removed the borrowing cap for local authorities, which allowed significant investment in building a new generation of council housing. This change was designed to alleviate issues in the housing market by enabling councils to construct and refurbish approximately 10,000 homes annually.
The Affordable Homes Programme, with a budget of £11.4 billion for 2021-2026, aims to deliver 157,000 homes, although the initial target was 180,000. Of these, 33,550 homes are expected to be allocated for social rent.
By February 2023, funding for social housing had become a priority, with grants available across the UK in compliance with the Value for Money assessments.
However, the expansion of social housing faces several challenges:
- Limited government grants and funding
- Inflationary pressures and the need to upgrade housing to meet higher standards
- Requirements for decarbonisation
- Increasing borrowing costs.
Investing in Supported Housing
The need for social housing in the UK is escalating, with more families living in substandard conditions, temporary housing, or privately rented properties they cannot afford. Despite the increasing demand and ongoing supported living challenges, this sector’s prospects remain promising for investors and those in need of affordable housing. Government initiatives and increased funding are making a positive impact.
Access to a warm, habitable home is a fundamental human need. Yet, the UK needs more high-quality, low-cost homes to meet this demand. This is where Yield Investing can help.
Investing in social housing offers long-term benefits. If you’re looking for a high-yield investment, this sector provides a unique opportunity. Not only does it offer potentially strong returns, but it also contributes positively to society by providing homes for those in need.
If you are interested in exploring investments in social housing and how they can benefit society and your portfolio, contact our property advisors today. We’ll guide you through the investment process.
