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Affordable home shortage 'drives up benefits bill'

A long-term shortfall in affordable housing has lead to a “point of no return” in the housing market, forcing millions to claim benefits, a prominent trade body has claimed.

A new analysis by the National Housing Federation found that, with rents and house prices expected to rise sharply from 2015,

The body said that, with an 86 per cent rise in working people claiming housing benefit since 2009 – and an additional 10,000 added each month – the government needed a “long-term joined-up approach”.

It also called for the release of brownfield land to housing associations, saying there were sites equivalent to twice the size of Leicester ripe for development.

NHF chief executive David Orr called for “action now to address the causes of rising housing costs, not just the symptoms”, saying one in 12 English families were on the social housing waiting list.

He continued: “Successive governments have failed to tackle the under-supply of housing and time is now running out. If we don’t urgently fix the housing market we will have a generation who are priced out of renting a home, let alone buying one.”

According to the report:

  • Private rents have risen by 37 per cent in the past five years.
  • Private rents are set to increase a further 35 per cent in the next six years, due to interest rate rises and house price increases.
  • House prices are set to drop modestly into 2013, resuming growth of around 5 per cent a year in England by 2015.
  • In 2011, 390,000 new families were not matched by the 111,250 new homes built.
  • House building is expected to recover from 100,000 homes this year to 140,000 in 2014.

The warning comes as housing minister Mark Prisk hit back at the Public Accounts Committee’s findings that government policy would lead to a £1.4bn increase in the housing benefit bill.

The PAC was criticising the government’s Affordable Homes Programme, which aims to build 80,000 homes by 2015, and contains a grant to social housing providers of £20,000 - one-third of the previous rate.

Mr Prisk said the PAC’s report was flawed in assuming every authority would charge 80 per cent of market rents, when the figure would in fact be closer to 65 per cent.

Talking to the BBC’s Today programme, he added that he wanted to prioritise property growth in the rental market, the use of public land for development, and help for first time buyers who can’t afford deposits.

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