Over 80,000 new homes will be lost in one year to Covid chaos: Shelter warns ahead of major government speech

Tuesday, 30 June 2020 00:01

Shocking new analysis predicts the pandemic will see 84,000 fewer homes delivered this year – with overall output dropping from 255,000 last year to just 171,000 homes in 20/21. Without urgent government action, the research carried out by Savills for Shelter, estimates 116,000 construction jobs could be lost by 2020/21 as housebuilding stalls. Under the worst-case scenario, the...Request free trial

Shocking new analysis predicts the pandemic will see 84,000 fewer homes delivered this year – with overall output dropping from 255,000 last year to just 171,000 homes in 20/21.

Without urgent government action, the research carried out by Savills for Shelter, estimates 116,000 construction jobs could be lost by 2020/21 as housebuilding stalls. Under the worst-case scenario, the report also shows the government could fall significantly below its own housebuilding targets, with as many as 318,000 new homes lost over the next five years.

Savills suggests an initial dip in housebuilding will be down to necessary social distancing on building sites reducing capacity. With further decreases then triggered by the reduced demand for market sale homes and a heavy reliance on private instead of social housebuilding, at a time when the country is entering a protracted recession.

With the Prime Minister about to promise he will ‘build, build, build’, Shelter is warning that the housebuilding slump will have dire consequences for the provision of new housing, including much-needed social homes. Unless the government intervenes, a paltry 4,300 social rent homes could be delivered in this financial year, a catastrophic yearly drop of 30%.

This would be the lowest number of social homes built in any year since WW2 – striking a devasting blow for the million plus households stuck on social housing waiting lists across England. Just over 4,000 social homes would not even be enough to house those families currently waiting for a social home in Wakefield, never mind the rest of the country.

Amid fears of rising unemployment and homelessness, Shelter is urging the government to bring forward the £12.2 billion already promised to be spent over the next five years under the Affordable Homes Programme. By fast-tracking the cash and spending it in just two years on building social homes it could plug the gap and save tens of thousands of jobs.

Polly Neate, chief executive of Shelter, said: "As the government prepares a major push on infrastructure and investment, it has a perilously short window to avert a lengthy housebuilding crash that will wipe out tens of thousands of new homes and jobs. By bringing forward planned spending and building social housing the government has the chance to avert disaster.

“There are over a million households on social housing waiting lists, and even more likely to join them as the recession bites – making the case for social homes self-evident. The pandemic has shown that a safe home is fundamental, but just not enough people have one.

"As part of the Prime Minister’s ‘build, build, build’ speech tomorrow, he should bring forward the spending promised under the Affordable Homes Programme. This would stimulate the economy, save jobs, and most importantly provide the social homes we urgently need. We can and we must build this country back better.”

ENDS

Notes to editor:

Savills conducted their independent analysis of the impact of the Covid-19 pandemic on housing supply, using Oxford Economics forecasts as at 31st May. Under the baseline scenario, GDP is expected to fall 8.3% this year with a strong rebound in 2021. On the downside, it assumes the UK economy would suffer a deeper recession in 2020 and the subsequent recovery would be slower, with quarterly economic output only returns to pre-Covid levels by mid-2023. Both assume an orderly Brexit in December.
The analysis compares expected demand for new build homes, with Governments stated target of achieving 300,000 net additional dwellings per annum by the middle of this decade.
Savills estimates housing delivery in England in 2019/20 in 255,000 using new Energy Performance Certificates issued.
A selection of summary results are presented below.

Number of homes lost under each scenario compared to pre-Covid Government target scenario – over five years 2020-21 to 2024-25

	all homes lost		Affordable homes lost		Social rent lost
	Number	Prop.	Number	Prop.	Number	Prop.
baseline	218,000	15%	41,000	13%	4,600	14%
upside	125,000	9%	25,000	8%	2,700	8%
downside	318,000	23%	66,000	21%	7,900	23%

Source, Savills analysis

Number of homes supplied under each scenario in 2020-21 and the overall loss compared with 2019-20 delivery

	All additional homes	Loss vs 2019-20 delivery (255,000)	Affordable Homes	Social homes
2019/20	255,000	N/A
baseline	171,000	-84,000	41,000	4,300
upside	175,000	-80,000	41,000	4,400
downside	130,000	-125,000	35,000	3,500

Source, Savills analysis

Savills estimates the total new build supply for 2019/20 will be 255,000 of which 10% would come from change of use and conversions. In 2018/19 new build properties accounted for 214,000 units in MHCLG’s net additional dwellings statistics (Table 118)
Savills also estimated the loss of Affordable Housing Supply. Over five years Savills downside projection expects Affordable supply to drop by as much as 66,000 of which 7,900 would have been Social Rent.
Full details of their model assumptions are in their report Impact of Covid-19 on social housing supply and residential construction

Shelter’s estimation of Social Homes is based on NHF’s 2019 report “Capital grant required to meet social housing need in England 2021 – 2031”