How can technology address the UK social housing crisis?
According to the UK Ministry of Housing, Communities & Local Government (MHCLG), there are more than 1 million households on the social housing waitlist in England alone. This number has been consistently above 1 million since the data series began in 1997.¹ Social housing is big business in the UK — representing nearly 20% of the country’s housing stock. In comparison, social housing represents 8.7% of EU housing, 8.4% of Ireland’s housing and just 4.2% of Australia’s housing.
Today, we’re looking at some of the challenges faced by the UK’s mammoth social housing sector, and how technology can (and is) addressing those challenges. This was the topic of a recent talk I gave for the Disruptive Innovators Network. You can learn more about their work via their website. The UK Government have released a series of reports and papers on social housing, with two recent examples being the 2020 Social Housing White Paper and 2018 Social Housing Green Paper. Some themes emerge within these papers, and I’ve used each of these interrelated themes as a framework for this discussion. They are: i) supply and queueing; ii) affordability and costs; iii) quality build and upkeep; and iv) health, safety and comfort.
Supply and queueing
As mentioned, England’s social housing waitlist hasn’t dropped below 1 million households in the past two decades. This undersupply of social housing appears to be central to conversations about the UK’s housing crisis. This raises an interesting question: is the objective for less households to be in need of social housing (demand side), for more social housing to be provided (supply side), or a mixture of both?
Fortunately, PropTech offers both supply-side and demand-side solutions. On the supply side, local governments and housing associations can benefit from the rise in feasible modular construction companies offering faster and more affordable approaches to new builds. There’s also a lot to be said about the increased attention institutional investors are paying to residential real estate — a topic I have been researching alongside academic colleagues. On the demand side, QaaS (Queueing as a Service) is also an emerging innovation to be mindful of. How can entrepreneurial innovations shorten the wait for better matched social housing options and services? Other demand-side solutions are linked to housing affordability, which we’ll address next.
Affordability and costs
If given a free choice, 62% of social renters would choose to buy a home rather than rent. In the private rental market, this figure was even higher (79%).² With that considered, there is an opportunity to temper the level of demand for social housing by making owner occupation more accessible. One such initiative (known as Right to Buy) falls short of directly managing the supply-demand imbalance because it enables a social tenant to buy their existing social dwelling — removing one unit of demand (a household) and one unit of supply (a dwelling) from the social housing ecosystem simultaneously. However, a case could be made that it indirectly improves supply if proceeds from the sale go toward the construction of new social housing.
Entrepreneurs at the intersection of PropTech and FinTech (often referred to as real estate FinTech) have been clearly paying attention to the Right to Buy initiative and wider housing affordability issues. Generation Home, for instance, allows home buyers to pool their finances with relatives and others in order to boost their home buying power and transition from renting to owner occupying. Other solutions to the issues of affordability and costs include the management and distribution of household expenses, as well as the energy efficiency movement aimed at both reduced cost and environmental footprint. Switchee is a Pi Labs portfolio company that has made significant inroads in this area. Switchee is profiled in our upcoming white paper titled Real estate and environmental performance — Bridging the gap with PropTech. The public launch of this paper will take place on 24 November, at which time you can download it via this link.
Quality build and upkeep
In the summer of 2017, a malfunctioning fridge-freezer on the 4th floor of a west London block of social housing flats caused the building’s cladding to catch fire — leading to the death of 72 people. Since this event, known as the Grenfell Tower fire, an ongoing conversation on the issue of build quality has unfolded.
Build quality can be addressed at various stages of the construction process. This includes socially sustainable pre-construction activities such as community consultation, planning and architecture; making the supply of materials and/or labour more efficient and transparent; digitising materials tickets and tracking their impact; construction site monitoring and analytics; 3D printing and modular construction; as well as monitoring and maintaining buildings, fixtures and fittings through the concepts of smart buildings and internet of things (IoT).
Conwize, for instance, is an Israel-based start-up that participated in the Pi Labs accelerator earlier this year. They automate the construction estimating and bidding process. This reduces cost blowouts. It also improves transparency between general contractors and subcontractors. This has direct relevance to both the build quality, as well as the supply of required social housing units.
Built-ID also participated in the Pi Labs accelerator, but as part of Cohort 3 in 2016 (on a side note, we’re recruiting for the 2022 growth programme right now). This company is an example of a solution earlier in the value chain. Its role is to engage the community in local development projects — fostering collaboration between stakeholders. This speaks directly to the issues of dignity and respect, which are raised regularly in social housing dialogue.³
Health, safety and comfort
Finally, the issue of health, safety and comfort of social housing residents can be identified in both government papers. This issue has close links to build quality and upkeep, but warrants its own analysis due to the additional factors at play. Consider that in 2019, 12% of social housing dwellings ‘failed to meet the Decent Homes Standard’. As many private rental tenants likely suspect, this issue also affects them — with 23% of private rental stock not meeting the standard.⁴
The Decent Homes Standard of 2006 is currently in review, but as it stands, dwellings fail this standard if containing category 1 hazards. Examples of such hazards can include carbon monoxide, biocides, damp and mould, VOCs, noise, excess or insufficient lighting, fire and a long list of others.⁵ This is where smart buildings and IoT technologies return to the discussion. Switchee, which we previously discussed, offer a number of solutions to this social housing challenge. So does 720 Degrees — which deploys software and hardware to monitor and report indoor environmental quality. This type of solution is more widely adopted in commercial real estate, but has direct applications in housing.
Other potential solutions to the challenge of health and safety include industrial design, as well as indoor biodiversity solutions that combine technology and indoor greenery to create healthier indoor environments. If councils already maintain parks and gardens, is the next logical step for them to facilitate and maintain biodiversity in social housing complexes..? Is it possible for emerging technologies to cause benefits to significantly outweigh costs..? Well, ‘rewilding’ could be a technology-enabled answer. Rewilding is an increasingly popular concept claiming to be a low-cost way of increasing biodiversity, lessening climate change impacts and boosting mental health.
The list of property technologies relevant to social housing is growing, but there are a few key considerations that should be taken into account. First, some PropTech solutions will be limited in efficacy if they suffer from lacklustre deployment. In other words, you can’t cut corners or do half jobs and expect the same results as others. Second, with the growing list of solutions, social housing practitioners will benefit from help in selecting which is most appropriate for them. Third, be mindful of the various forms of resistance. Do some people feel threatened by this new technology? Are those fears justified? Do you have gatekeepers who prefer the status quo? How can they be managed? Fourth, be mindful of delayed gratification. Not all solutions provide immediate results. Some require a period of settling in, others might experience data lag.
¹ Live tables on rents, lettings and tenancies. Available at: https://www.gov.uk/government/statistical-data-sets/live-tables-on-rents-lettings-and-tenancies
² Public attitudes to house building: findings from the British Social Attitudes survey 2018. Available at: https://www.gov.uk/government/publications/public-attitudes-to-house-building-findings-from-the-british-social-attitudes-survey-2018
³ Examples of this conversation can be found within both of the UK Government reports cited in this article — in particular the forewords offered by the respective incumbent prime ministers.
⁴ English Housing Survey, 2019 to 2020: social rented sector. Available at: https://www.gov.uk/government/statistics/english-housing-survey-2019-to-2020-social-rented-sector
⁵ Housing health and safety rating system (HHSRS): guidance for landlords and property-related professionals. Available at: https://www.gov.uk/government/publications/housing-health-and-safety-rating-system-guidance-for-landlords-and-property-related-professionals