Following our call alongside Crisis for one million more homes for social rent in the next decade, we answer some of the most prevalent questions about social housing and the role it plays in the UK housing market.

David Cleary
Managing Director & Head of Housing
11 March 2024
6 min read

When did social housing start in the UK?

Social housing as we recognise it today started to be provided by local councils after the First World War. By 1939 1.1 million council homes had been built, housing 10% of the population. Successive governments saw the development of more social housing as a priority, and by the late 1960s more families were renting social housing than living in privately rented homes for the first time.1 

The UK’s social housing model began to shift in the 1980s, with the introduction of the Right to Buy policy. At the same time, restrictions were placed on local authority borrowing, while housing associations (which came about in the late 19th century and were set up as charitable housing trusts by philanthropists, often to help homeless people) were given access to grant funding. In the late 1980s councils were encouraged to transfer much of their housing stock to housing associations.1

Today there are about 1.4 million fewer social homes than there were in 1980.2 21,600 social homes were either sold or demolished in 2021-22, while only 7,500 new homes were built – equating to a net loss of 14,100 social homes. As a result, nearly 1.5 million households across Great Britan are stuck on social housing waiting lists today. 

Is social housing the same as council housing?

The only difference between ‘council’ and ‘social’ housing is that the council owns the properties and acts as the property manager, rather than a housing association. Properties can be expensive and time-consuming to maintain, and so the majority of councils have transferred a significant proportion of their social housing stock to housing associations in order to house their local residents. By 2020, 10% of all households rented from housing associations and 7% from local authorities.

In addition to the expense and risk associated with property management, housing associations enable councils to have externally provided property managers that they can rely on, freeing up limited resources for other council services.

Housing associations are also able to provide residents with numerous services such as community hubs, youth centres, and support with employment opportunities and job applications, that local councils may not have the resources to offer. Housing associations help to improve the quality of life for residents in all aspects of their lives, and give residents access to more than just a roof over their heads – they give them a community.

What role does social housing play in the housing market?

Social housing is a vital part of the UK’s housing ecosystem. It offers affordable housing options for those on lower incomes, people in vulnerable situations (such as those facing homelessness or domestic abuse), as well as people with disabilities and specialist housing needs. In fact, over half (54%) of social rented households (around 2.2 million households) have a household member with a disability. This is more prevalent than for private renters and owner occupiers (both 30%), despite social renters having a similar age profile to the latter.

Households in the social rented sector are more likely to have experienced homelessness in the past (8%) than either those in the private rented sector (5%) or those in the owner occupied sector (c.1%).3 Tenants of social housing provided by councils in England also have the opportunity to purchase their home at a significant discount on the market value through the Right to Buy scheme. 

For those who want to own a property but can’t afford its full value, housing associations can help bridge the gap between renting and owning 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. 


Homes for social rent:

Rent levels are typically set at around 50–60% of market rents and seek to provide long-term security of tenure. 

Homes for affordable rent:

A form of housing introduced in 2011 which is allocated in the same way as social rented homes but the rent level can be up to 80% of market rent.

Does social housing help boost the UK economy?

Having stable, affordable housing isn’t just good for individuals – it benefits the UK economy and society as a whole. Research has shown that social housing adds value by reducing unemployment, improving health outcomes and improving educational performance. This all ultimately leads to people living happier, more productive lives, and means that communities have a better chance to thrive.

It's estimated that a large social housebuilding programme could save the UK Government £6.5 billion per year through:

  • Societal health and wellbeing: Every £1 spent on improving warmth in homes occupied by vulnerable households yields £4 in health benefits. The annual cost to the NHS to treat people who are affected by poor housing is currently £1.4 billion in first-year treatment costs alone. 
  • Educational attainment: In England, c.139,000 children are currently living in temporary accommodation, such as hostels, hotels and Airbnb’s. This is the equivalent of 4,600 school classrooms5, and  increasing the availability of social homes would help address educational inequalities and improve longer-term outcomes for children. One-in-four children in poor housing will fail to get any GCSEs, compared to one in 10 of those who are satisfactorily housed. Further, only 50% will go on to get five A* to C GCSEs, the normal minimum qualification for advancement into further education compared to 71% of children in satisfactory housing. 
  • Employment outcomes: Stable, sustainable social housing supports long-term employment prospects, providing certainty and security for those entering the workforce. Providing homes for 30,000 homeless people would mean an extra 6,500 people in work, if the employment gap between homeless and housed were closed by half.
  • The wider economy: The UK economy would see an increase in employment from construction. House building supports between 4.1 and 4.5 full time employment jobs per house constructed, and for every construction centre job, a further 1.7 jobs are supported in the wider economy.
  • Public finances: More than half of any government subsidy for social housing could be recovered through increased tax receipts from construction. In addition, government would save £7,760 a year for each homeless household moving into social housing, and £1,250 a year in housing benefit for every household moving from the private rented sector to social housing.

Social housing: support and advocacy

Helping people access affordable, quality and sustainable homes is an important part of our purpose of Helping Britain Prosper.

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How can we demonstrate the value of social housing?

While we’ve seen that there are some standalone figures that individual organisations, like the NHS, have been able to point to evidence how social housing has saved them money, there’s so far been very little research into the long-term holistic value of social tenancies. To address this housing association Hyde Housing, and Sonnet Advisory, have launched a review into the value of social tenancies with a view to being able to clearly evidence the value social housing provides to local stakeholders, social housing funders and government, as well as to social housing tenants themselves.

This research will quantify the annual value to society of all housing associations’ social tenancies, with 2024 being a crucial year to be able to demonstrate this value as the upcoming general election will give the sector the opportunity to bring the advantages of building more affordable homes to the forefront of the political agenda. 


Who is social housing for? 

Although local councils have their own eligibility criteria for who can apply for a social home, most applicants will need to have lower incomes and savings, and be able to demonstrate a ‘local connection’. Given the chronic shortage, the reality is that not everyone on a waiting list will get access to social housing. 

Each council will prioritise needs differently too, such as whether someone is living in overcrowded housing, is homeless or is facing domestic abuse. People on waiting lists may be housed in temporary accommodation, such as in a hotel or B&B, until suitable housing becomes available. 

In 2022, 227,000 households across Great Britain experienced homelessness while waiting for an available social home.7 £2 billion a year is spent on housing people in temporary accommodation - used by local authorities to fulfil their duty to house homeless households with priority need. However, much of this temporary accommodation is unsuitable, and can mean whole families living in a single room. There’s currently nearly 1.5 million households on a waiting list for social housing in England, Scotland and Wales, but in some cases the wating time can be as much as 20 years. 

However, once someone is situated in a social home they are generally entitled to an assured tenancy, meaning that they can normally live in that home for the rest of their life if they choose. 


"Research shows that England alone needs at least 90,000 new social rent homes a year in order to keep up with demand."

Who funds social housing?

Housing associations are able to rely on a set rental income over the long-term, which comes from tenants. This inflation linked, secure revenue stream enables associations to access the bank and capital markets. Since 2018, Lloyds Banking Group has enabled £17.4 billion of funding. Section 106 agreements - which compel private developers to deliver a negotiated percentage of affordable homes on new developments - also provide a major source of social housing. S106 enables housing associations to buy new homes at a lower cost as part of the planning process.

Alternatively, they can buy new homes at ‘market price’, supported by government grant funding. It is also common for housing associations to develop homes for private sale and use any profits generated to fund new social and affordable homes.

The Government part funds the development of new social housing through its Affordable Homes Programme (AHP). This is a five year £11.5 billion fund which allocates grants to local authorities and housing associations to help support the costs of developing social and affordable homes, and aims to deliver around 157,000 new homes by 2028.8 However, research shows that England alone needs at least 90,000 new social rent homes a year9 in order to keep up with demand, which will require significantly increased investment from the Government. 


What role does Lloyds Banking Group play in social housing?

There isn’t a part of the UK housing market that we don’t have an interest in, including funding social homes. There are three main areas where we play a part in the social housing sector:


Lloyds Banking Group supports over 340 housing associations across the UK, from small local associations of several hundred homes, to larger regional and nationally focused associations managing tens of thousands of properties. Housing associations and social housing providers have charitable status and are ‘not for profit ’, which means that all surpluses are reinvested in their homes and services. This means their banking needs can be different from other sectors. Whether it is the provision of term funding, capital market funding or expertise and advice, our experience in the sector is helping these clients meet the UK’s housing needs.

Social housing is also a low-risk sector to invest in. Pensions and annuities customers typically look for longer term, more stable returns, which are exactly the sort social housing provides. Through Scottish Widows – our pensions and long-term savings brand – we’re able to provide longer-term investment in social housing infrastructure and a portion of the £17.4 billion we have provided to the social housing sector since 2018 is in the form of loans from Scottish Widows. 

As well as providing funding to the sector, we know that the housing sector and government need to come together to help increase the supply of affordable homes, which is why, alongside Crisis, we’re calling for one million more affordable homes to be made available over the next decade . 


We might be the UK’s biggest mortgage provider, but of course it’s not only people buying a home who should deserve to live in secure, affordable, high-quality housing. 

We’ve partnered with homeless charity Crisis to develop a not-for-profit lettings agency so that those on low incomes can access the same quality of housing that those buying a home would expect to live in. We’re also partnering with Homes for Good, Scotland’s first social enterprise letting agency, to develop and launch a new not-for-profit lettings agency that will make renting easier, fairer and more affordable to people who would otherwise be homeless.


One of the most important areas that we are working on with our housing association clients is retrofitting their existing housing stock. In 2022 we supported £2.7 billion of new funding, of which £1.4 billion was sustainable (for green or social use) or sustainability-linked (including key ESG performance indicators) – for example, going towards retrofit investment and the decarbonisation of social homes.  

Retrofitting helps to reduce carbon output of social homes, which is vital if the UK is going to reach the Government’s 2050 net-zero target, as well as helping tenants reduce their energy bills and tackle fuel poverty.   

Spotlight on: Queenie

Video | 1 min 34 secs

Queenie is a social housing tenant. Recently her housing association Home Group retrofitted her house. Find out what difference it’s made to her bills – and to her quality of life. 

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There’s a reason that housing was labelled “the first of the social services” by the Government in 1951.1 We need to fix the social housing sector so that it’s accessible to the households that desperately need it and working effectively for existing residents. This can only be done through increasing the supply of social homes to ensure that everyone has access to the safe, high-quality, affordable home they deserve, and be given the essential building blocks they need to thrive.  

David Cleary
About the author David Cleary

Managing Director & Head of Housing

David is a Managing Director with responsibility for Lloyds Banking Group’s relationships with clients in the house building and social housing sectors. Having joined Lloyds Bank in 1989, David undertook numerous roles across Retail and Commercial Banking before joining the Capital Markets division in 2000. David was instrumental in the development of the Bank’s Capital Markets business in both the public and private debt markets in the UK, USA and Europe. In January 2017, David returned to relationship banking to create a new team with responsibility for UK Housing.

David has a passion for sustainability and in 2021 became a Board director of Sustainability for Housing Ltd and joined the Executive Committee of NextGeneration, both of which focus upon developing sustainability reporting standards and frameworks in the rental and new build markets. He also supports Regeneration Brainery which focuses on the putting the S in ESG.

David is ACIB qualified and has a first class honours degree in Financial Services from The University of Manchester.

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