With a tumultuous 2017 now finally behind us, the year ahead is expected to offer a mixed bag of improvements and challenges for the UK affordable housing sector. What can the industry expect to see in 2018? Housing Association Magazine, in collaboration with Mitsubishi Electric’s ‘The Hub’ predict 4 big things to look out for:
1. Housebuilding will see an increase
The government have repeatedly stated that they intend to deliver 300,000 new homes per year by the mid-2020s. Despite this, we sadly fell short of this last year. We did come that little bit closer, however; official figures show that 217,000 new homes came onto the market in 2016-17, an increase of 20% on the year before. This means that whilst we still aren’t building enough homes, we are at least moving in the right direction and the Government are providing real impetus to the housebuilding sector.
A slight ease in demand may also be seen in 2018, as net migration to the UK fell by more than 100,000 post-Brexit - the largest annual decrease recorded thus far. Should migration numbers fall further and construction activity continue to pick up as it has been, the supply side of the housing equation could perhaps become less imbalanced than in previous years, making last year’s shortfall less of an issue going forward.
2. There will be a crackdown on HMO ‘rogue landlords’
There are about 500,000 HMOs (houses in multiple occupation) in England, and currently national mandatory licensing only applies to properties that are three or more storeys high. However, this is set to change in 2018, bringing an extra 160,000 properties under the existing mandatory licensing regime.
Rules have also been proposed that would set minimum size requirements for bedrooms in HMOs to prevent overcrowding. As part of the licensing requirements, councils will soon be able to make sure only rooms meeting the standard are used for sleeping. This will finally give councils the powers they so sorely need to crack down on rogue landlords once and for all.
3. Fuel poverty will persist
There are around 4.5 million fuel poor homes in the UK today. There are also a further 21 million UK households suffering with poor energy efficiency - below B and C on an Energy Performance Certificate.
It is obvious that the most cost-effective and enduring solution to ending fuel poverty is increasing investment in domestic energy efficiency. However, the impacts poor earnings growth, cuts to working-age benefits, the roll-out of universal credit and above-inflation rises in the cost of essential goods and services (including energy) will all prove to exacerbate fuel poverty in 2018.
4. Gas prices will drive renewables growth
In 2017, wholesale gas prices hit their highest level for six years, rising by more than 50% in total. This exponential increase was caused by a multitude of reasons; one of the largest North Sea sites is currently struggling to produce gas at its normal rate and the ageing Morecambe field is also supplying less than half its usual rate at present.
Coupled with this shortage, a cold and snowy winter has also driven gas demand in homes and businesses to their highest forecast levels since early 2013. Needless to say, we need to increase our focus on alternative ways to heat our homes in 2018, we can no longer rely on gas as heavily as we have been.
Replacing outdated heating systems with renewable alternatives can reduce our carbon footprint whilst also keeping homes warm. Heat pumps, for example, extract renewable energy from outdoor air. This offers a reduction in run costs; studies suggest by up to as much as 10% of the UK national average. Also, in addition to helping the tenant reduce their heating bills, the renewable heat from the heat pump can qualify for quarterly RHI payments for the landlord, which either offsets the cost of the heat pump or provides funds for further upgrades to property and heating.
Building new homes and helping those in fuel poverty will continue to be our mission in 2018 as an industry, but we cannot do it alone. Housing professionals need to see real commitment from their government to help tackle the issue of fuel poverty with more sustainable and long term solutions, such as encouraging housebuilders and landlords to implement energy saving and efficient heating products into their housing stock… we only hope this is right at the top of Theresa May’s new year’s resolutions list!