Here at Lloyds Banking Group, the one thing that never ceases to amaze me is the sheer scale of the difference our colleagues make each and every day in communities across the country. We support millions of customers and provide tens of billions of pounds in lending and support to businesses, charities and other organisations. One of the best examples of this is the social housing sector where our business has provided over £12.4 billion of funding since 2018.
The sum is huge, but difficult to picture – so let’s put it into context. That £12.4 billion means hundreds of thousands of the most financially stretched families across the UK’s nations and regions have access to warm, quality homes. A great example of the difference the sector can make is the case of Mr and Mrs Magee. They have lived in their social home in Northampton for ten years. Just this year, Northampton Partnership Homes, who manage their property on behalf of West Northamptonshire Council, fully renovated the property – installing wall insulation, new windows and solar panels onto the roof. It was a hassle for a few weeks and there was lots of dust and mess, but now the house is warmer and the Magees can see from their smart meter that their overall energy usage is significantly down.
It’s hearing these stories, and truly understanding the impact our lending to this sector has on people’s everyday lives which really brings to life the ways in our colleagues across the Group put our customer deposits to work in helping Britain prosper.
Why is social housing important for the UK?
A home is a fundamental human need. It’s about more than just a roof over your head: having a home allows us to put down roots in a community. It’s the stable foundation we all need to build our lives. Research by Hyde Housing has shown that social housing adds value to society by reducing unemployment, improving health outcomes and improving educational performance.1 Social housing is an integral part of the UK’s housing landscape with millions of people benefitting from stable and genuinely affordable homes.
While the sector clearly contributes so much to the UK, it is not without its challenges. In recent years it has struggled to keep up with demand, with a shortfall of around 100,000 new social homes every year and over a million people currently on the waiting list in England alone. Data from Crisis shows almost a quarter of people (22%) who need homelessness assistance from English councils were already working. As you’d expect, for many, social housing can be a permanent solution to their housing needs.
Increasing the provision of social homes can also help people on the journey to home ownership. Those in social housing pay lower rents than if renting privately, which gives more of an opportunity to save for a deposit on a first home. Social housing providers also have an important role in providing a secure path between renting and owning themselves through shared ownership schemes. These schemes allow a mortgage to be taken on a share of a property, usually between 25% and 75%, rather than the whole sum, with rent paid on the remaining part of the property.
This helps in two ways. Firstly, the deposit required is much smaller compared to if purchasing the whole property, so the barrier to accessing this path to ownership is much lower. Secondly, the homeowner has the option of ‘staircasing’ by increasing the share of the property they own until they become full owners, while benefitting from equity growth along the way.
We know that the sector is not only facing challenges in terms of demand, but also in quality and in energy efficiency. UK homes account for around 23% of the country’s carbon emissions. Of the 28 million homes in the UK, around five million are social homes, with 1.8 million currently below EPC C. Bringing the sector to that minimum presents a significant challenge, but also a huge opportunity. Housing associations are well equipped to deliver at a scale that is just not possible in the private rented or owner-occupied sectors, and so supporting them to build more, new quality homes and retrofit existing stock, will further support the UK on its journey to net zero.