Whether you’re a renter, a landlord or a property investor, the sorry state of the current housing market is an obstacle you can’t afford to ignore. It’s been less than a year since a damning report from the Home Builders Federation revealed that the UK housing market had effectively become the worst in the developed world. In response to this news, I penned an opinion piece exploring the problems affecting the housing market and the changes needed to restore it to introduce stability for its stakeholders. The piece explored long-lived issues such as the overburdened state of temporary accommodation and the gradual nationwide reduction in social housing stock.
Since then, depressingly little has changed for the housing market. Rather, there is evidence to suggest that issues of housing affordability are only worsening. So, when I read a recent Financial Times article showing that the UK has the highest recorded rates of homelessness in the developed world by a widening margin, I can’t say I was surprised.
By now many of you may have witnessed the rising tide of homelessness and rough sleeping directly. As a Londoner, a simple walk to and from work provides a stark insight into just how many people have been pushed to the extremes of living in tents and sleeping in bags. The reality of rough sleeping is far more complex and devastating than what we can see, however. The underlying systemic issues behind the rise in homelessness have much wider implications for housing market stakeholders.
Want to know how the past and present state of homelessness could impact your future? Look no further than this deep dive into UK homelessness and rough sleeping in 2024.
How Severe is the Homelessness Crisis in 2024?
In an Organisation for Economic Co-operation and Development (OECD) report on the global population of homeless people, the UK was listed as one of the OECD countries experiencing the most severe levels of homelessness. The UK also showed high levels of differing ‘types’ of homelessness, including:
- A general increase in the number of people experiencing homelessness as a direct or indirect result of the COVID-19 pandemic’s effect on the housing market.
- A rise in migrant homelessness that saw four times as many refugee households classed as homeless in 2023 compared to 2022.
- A high concentration of ‘hidden homelessness’, with one in ten people living in London experiencing it in any given year.
An Office for National Statistics (ONS) report on statutory homelessness in the UK between 2022 and 2023 further highlights how homelessness and rough sleeping affect more vulnerable pockets of the population. The number of households with children being threatened with or experiencing homelessness rose by 11.4% last year. Likewise, single households – in which an individual lives without family or dependents – were the most exposed to homelessness, as the number assessed as rough sleeping rose by 30.5% between 2021 and 2023.
Beyond the social and moralistic implications of the record levels of homelessness the UK is experiencing, research by housing charity Crisis suggests that it is costing the economy significantly more each year than its proposed solutions. According to Crisis, preventing a mere 40,000 people from becoming homeless in a single year would save the UK £370 million in government funding. With rough sleeping rising by 27% in the lead-up to 2024, intervention now is the only solution for stopping these costs from intensifying over the next few years.
Unpacking the Reasons for the Homelessness Crisis
Homelessness does not exist in a vacuum. Some of the major external factors playing into the rising numbers of rough sleepers include:
1. The Cost of Living Crisis
The inevitable result of the rising cost of living is that an increasing number of households are buckling under a lack of housing affordability. Last year, London saw a 21% increase in street homelessness as a result of its lack of affordable housing options. Meanwhile, a quarter of UK private renters were spending over 40% of their income on housing in 2023, with a record 317,430 needing government support just to make ends meet according to data from The Guardian and the OECD.
With the UK as a whole experiencing its highest annual increase in rent costs since records began and a wave of household bill increases, the cost of living crisis and the homelessness crisis certainly go hand-in-hand.
2. Social Housing & Temporary Accommodation
Over the past 10 years, the UK has experienced a total loss of 177,487 social homes to demolitions and private sector conversions, leaving 1.28 million households in need stuck on the social housing waiting list. With the Conservative government consistently falling short of social and affordable housebuilding, temporary accommodation has had to take on record numbers of households for excessive periods. As a result, an ONS report shows that the number of households in temporary accommodation has been steadily increasing since 2021, surpassing previously recorded highs this year.
Temporary accommodation is typically far less stable than social housing or even private rented housing, despite a recent rash of no-fault evictions. And, with 87% of those living in temporary accommodation struggling to keep up with costs, it is just a step away from homelessness for some. In London alone, £90 million a month is spent on temporary accommodation for the homeless, a figure which rose by almost 40% last year.
A renewed commitment to social housing could not only reduce the economic burden of temporary accommodation but also generate savings for both social renters and taxpayers. As it stands, the interplay between a lack of social housing and an overreliance on temporary accommodation has effectively created a costly funnel from poverty and desperation to outright homelessness.
3. Underfunding in Local Communities
Perhaps one of the more granular causes of homelessness in the UK is a persistent lack of funding and cohesive housing strategy for local councils dealing with rough sleepers. In 2023, 79% of councils reported that they did not have sufficient accommodation to deal with the homelessness crisis,
An additional release by the Local Government Association (LGA) shows that almost one in five council leaders anticipate a Section 114 bankruptcy notice in 2024 due to a lack of funding needed to sustain key services. The LGA also estimates that England could face a £4 billion funding gap leading up to 2025, depriving local councils of the resources they will need to contend with rising homelessness.
This is particularly concerning as early intervention at the local governmental level has been cited as having the greatest long-term potential to reduce core homelessness. As such, depriving councils of essential funding will only make it more challenging to prevent homelessness from rising more rapidly in the coming years.
Modular Construction: A Softer Solution to Rough Sleeping?
Modular construction – alongside other alternative approaches to affordable housebuilding – has a strong potential to address the symptoms of the homelessness crisis. According to an overview by McKinsey, modular construction can speed the housebuilding process by as much as 50% while cutting costs by 20%, mitigating the restrictions to affordable housebuilding imposed by the cost of living crisis and the lack of local government funding. Modular construction
At Concept Capital Group, we work closely with local councils to provide permanent, high-quality social housing for vulnerable and low-income tenants. By sourcing these tenants from social housing waiting lists, we reduce the burden caused by the homelessness crisis while providing a preventative measure that keeps households out of temporary accommodation and provides them with the stability they need to avoid the threat of rough sleeping.
Altogether, our buy-to-let property investment opportunity helps combat the homelessness and housing crises through intervention at a crucial period. With the help of private investors who get to enjoy an accessible, reliable source of passive income, we work to create lasting social impact within the UK’s housing market through modern methods of construction.
For more information on our alternative buy-to-let investment opportunities and how they support a more equitable housing market, book a call with our team today.
