The government's announcements to cut the social housing budget by £4.4bn will hit some of the poorest in society including many low earners. Coupled with already low rates of affordable house building under the previous government, which saw the waiting list rocket to nearly 2 million, these proposals will mean that more and more low-earning families will be forced into unsuitable private rented sector (PRS) accommodation.
Heralded for its choice and flexibility, particularly among the young professional market, low earners’ experiences of the PRS are very different. For families in particular, limited rental options, concerns about having to move out of the property, high rents and poor conditions make renting privately an unenviable option, and the reason why the cheap rents and security of the social sector have been so coveted.
Not for much longer though. The coalition announcements to introduce shorter tenancies with higher rents will create a clear divide between old and new social tenants. It is also pinning huge hopes on the role that private institutional investment could play in supporting the development of new social housing, which seems ambitious in light of the limited progress made to encourage institutions to invest in the private rented sector.
Both of the main political parties signed up to this and yet there is nothing to show for it. Nor does the Treasury's response to its consultation on this subject over the summer bode well – many of the issues raised in order to help encourage investment from institutions – such as a change to Stamp Duty Land Tax – were dismissed out of hand.
However, there are some signs for hope. The appetite from investors is there, with the Homes and Communities Agency receiving over 80 expressions of interest for its initiative. It seems private investors are starting to see investment in the residential market as a safe long-term opportunity. The government just needs to focus on ensuring that this investment follows through.
But it also needs to make sure that money is targeted where it is most needed - on low earners, rather than the young professional market. Too poor to access home ownership or even low-cost home ownership, which has tended to benefit those people on above median incomes, and too rich to access social housing, the 740,000 low earners in the private rented sector often have no other option but to rent.
For them, renting privately provides a long-term home, not a temporary stepping stone to something else. Ensuring that their needs are met in the private rented sector needs to be central to future housing policy. Encouraging more large-scale investment, with the potential this brings to professionalise the PRS, will be an important first step.
Louisa Darian is research & policy analyst at the Resolution Foundation
