Since the not-so ​‘mini budget’ last month, concerns that we are on the cusp of a housing crash have risen rapidly. If, as predicted, there is a dramatically accelerated return to an era of high interest rates, 2023 will be a year of tumbling house price growth, escalating private sector rents and a significant increase in the cost of living for borrowers. Most concerning of all is the expected rise in defaulted mortgages, repossessed homes, and renters who are unable to pay their bills.

At its harshest, we can expect this new housing crisis to result in increased poverty and homelessness. For a growing class of people, far from providing the means to put down roots in a community and fulfil their aspirations, the UK’s housing system has become the cause of anxiety, instability and misery.

To stave off an immediate crisis, the government must take two urgent steps. First, while it is welcome that the prime minister has now clarified her plans to abolish ​‘no fault’ evictions, millions of tenants still face rising rents, bills and insecurity this winter. The government must urgently confirm it will uprate social security in line with inflation and unfreeze the Local Housing Allowance. Second, it must, as experts are now calling for, urgently develop an emergency mortgage plan with the regulator and the Bank of England to deal with the impact of rising interest rates on borrowers who will struggle to keep a roof over their heads.

Amidst this lies another urgent problem: the funding of our social housing. This week the government closed its consultation on the rents social tenants will be charged for 2023 – 24. Ministers were right to diverge from the current rent setting model, under which rents were due to increase at a rate above inflation. For 2023 – 24 this would have amounted to an unsustainable 11% rent increase, piling more pressure on already strained social tenants’ household budgets.

While it is welcome that ministers appear to be moving towards plans to uprate social security in line with inflation, they must do more to avert further crisis for the most vulnerable. That is why we are calling for a rent freeze for social tenants, who have borne the brunt of the ongoing cost of living crisis after over a decade of squeezed living standards. By April 2021, the poorest 20% of households were £750 worse off per year than they were in 2010. 57% of food bank users are social tenants. And figures compiled by NEF show life will only get tougher for many social tenants following the announcements by the chancellor last month, which will push the incomes of the poorest households £900 below the cost of living between April 2022 and April 2023. New data prepared by NEF shows that, if the government introduces its preferred 5% rent rise for social tenants, the average social tenant’s household disposable income would be eroded by an additional 0.5%.

“That is why we are calling for a rent freeze for social tenants, who have borne the brunt of the ongoing cost of living crisis after over a decade of squeezed living standards.”

If rents are capped at 5%, housing associations alone will lose £3.5bn in revenue over the next decade, hampering their ability to invest. Whichever rent increase the government adopts, ministers must make up the difference in income that social landlords will lose. If not, social landlords are clear they will be hamstrung in addressing repair backlogs, retrofitting social homes, and creating the new, genuinely affordable housing the UK so desperately needs.

Social housing is a vital means for families to put down roots in communities and meet their aspirations for the future. But it is also an essential safety net. If rising arrears, mortgage defaults and evictions lead to a tsunami of homelessness over the next few years, more genuinely affordable housing will be even more vital. An estimated 8.5 million people are currently experiencing unmet housing need, 4.2 million of whom would be most appropriately housed in social housing. Our housing system fails so many people already — including the 2 million children who live in overcrowded, unaffordable, and unsuitable homes — but things could be about to get even worse.

This is therefore the worst possible moment in which to curtail social landlords’ ability to invest in affordable housing. On top of this, the number of new homes is projected to fall by 38% in 2023, which will result in a corresponding plummet in affordable house provision, the delivery of much of which is tied to the market through planning regulations.

Instead of addressing these chronic and fundamental issues in our housing system, ministers look set to water down affordable housing provision further. The government seems to understand housing only as a means to generate economic growth, failing to recognise that the only solution to an affordable housing crisis is to create more genuinely affordable housing. In the short term, ministers must insulate social tenants from a further squeeze on their living standards by freezing rents, and protect social landlords’ ability to invest in a new generation of social homes. If not, the UK’s already dysfunctional housing system will again fail to deliver the security and stability desperately needed by so many over the coming months.

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