Housing Crisis: Britain’s housing safety net is collapsing

By Graham Vanbergen: For a decade, warnings about social housing, homelessness and local government finance have been treated as background noise. In 2025, they’ve fused into a systemic risk: high and rising public debt, bankrupt or near-bankrupt councils, dwindling social housing stock, rising taxes, and record homelessness. This isn’t a future threat. It’s underway, and on current trends, the housing crisis will take a new shape over the next 10–20 years, and it looks truly brutal.

 

A shrinking supply in an age of near-record debt

Social housing, the only tenure reliably affordable to low-income households, has been eroded for over 40 years. But some statistics stand out more than others.

For instance, government statistics show total social housing in England has fallen from around 5.5 million homes in 1981 to about 4.3 million in 2024. And this is with a population growth of 14 million between then and now.

Over 2 million homes have been sold under Right to Buy between 1980 and March 2025, with replacements consistently failing to keep pace. Here, Shelter reports a net loss of nearly 11,700 social homes in a single recent year, alongside roughly 1.3 million households stuck on social housing waiting lists.

The reality is that the taxpayer has quietly subsidised this loss via the private rented sector. Shelter estimates more than £12bn a year goes in housing support to private landlords — a structural cost driven by the absence of enough social homes.

Overlay this with the fiscal picture. As of this summer, public sector net debt is now hovering just a point or two below 100 per cent of GDP, one of the highest ratios among advanced economies and far above pre-2008 levels. Servicing this debt eats up a staggering £111 billion, resources that might otherwise fund large-scale social housebuilding or rescue failing councils.

The political message, once you strip out the slogans, is stark: there is very little, if any, fiscal headroom, and housing is competing with the NHS, defence, pensions, and social care. In practice, housing consistently loses.

 

Homelessness: the visible symptom of structural failure

The consequences are already measurable.

Those living in temporary accommodation in England rose 7.6% in a single year, with tens of thousands of children trapped in unstable conditions.

Crisis’ Homelessness Monitor series and 2025 findings show “core homelessness” (rough sleeping, hostels, sofa surfing, unsuitable temporary accommodation) rising and forecast to remain structurally high without major policy change.

Meanwhile, councils are diverting colossal sums into emergency fixes. Research cited by Crisis shows council spending on the most unsuitable forms of emergency accommodation rose by around 400% between 2018 and 2024, with total temporary accommodation costs projected to hit £12 billion in 2027.

This is the least efficient way imaginable to “manage” homelessness: huge recurring revenue spend on B&Bs and nightly lets instead of capital investment in permanent homes. It is symptomatic of a system stuck in crisis-response mode, unable to invest its way out.

 

Bankrupt councils, broken capacity

The institutions meant to plan, build, and regulate affordable housing are themselves on the brink.

The National Audit Office (NAO) reports that between 2018 and early 2025 at least nine local authorities issued Section 114 notices (effective bankruptcy), with dozens more reliant on exceptional financial support.  To put this into perspective, both the Local Gov’t Authority and NAO reports indicate around 40–45 per cent of upper-tier councils recently judged themselves at risk of issuing a Section 114 notice in the next few years without further support.

When a council is that close to insolvency, it cuts planning teams, housing-enabling units, homelessness prevention services, and discretionary support – precisely the functions needed to get genuinely affordable homes built and keep people from slipping into crisis.

And it is here, where the doom loop starts to stack up. We have rising homelessness costs; declining real funding, legal duties that cannot be abandoned and minimal capacity for proactive building projects. This is a feedback loop: a financial crisis reduces housing activity, which drives homelessness and emergency costs higher, deepening the financial crisis.

 

The next 10–20 years: where this trajectory leads

If current trends continue, limited social housebuilding, high debt, strained councils, rising taxes with little visible improvement, you can see without too much more evidence that the 10 to 20-year outlook is, at best, looking grim.

The following is not scaremongering; it is a direct extrapolation of today’s data and structural choices.

By 2035 (10 years)

Entrenched mass temporary accommodation

• • Without a step-change in social home supply, households in temporary accommodation could remain well above the awful numbers of today, with many families spending years, not weeks, in B&Bs and converted hotels.

  • Councils’ annual spend on emergency and temporary accommodation plausibly stays in the multi-billion range, crowding out investment in permanent homes and local services.

A locked-out working poor

• • Wage growth failing to match housing costs and taxes means more low and middle-earners are pushed into insecure private renting.

  • A generation of key workers — care staff, nurses, teachers — priced out of communities they serve, worsening public service staffing crises.

Weaker, more punitive welfare state

• • Under fiscal pressure, central government increasingly restricts eligibility and uprating of housing support.

  • Households are only one shock away from arrears, eviction, and homelessness; homelessness becomes a mainstream risk, not an “edge case”.

By 2045 (20 years)

On an unchanged policy path, we should expect:

Systemic homelessness, normalised

• • Core homelessness stabilising at a structurally higher plateau: rough sleeping more visible, multi-year family homelessness common, and children raised entirely in temporary or overcrowded conditions.

  • Health, education, and justice systems absorb the long-term fallout, inflating public costs far beyond what large-scale social building would have required.

 

The Great Housing Retreat

As more local authorities are effectively hollowed out, the bare minimum of statutory duties is carried out with no serious capacity for planning or building. Then comes reliance on large private landlords and institutional investors for “affordable” housing products that track market rents, not incomes.

The permanent redistribution to private landlords, unless reversed, will cumulatively transfer tens of billions in housing benefit and subsidy flows to the private rented sector instead of into public or non-profit bricks and mortar. The only result is that the state pays ever more, owns ever less, and controls almost nothing.

Political blowback and instability

As housing inequality becomes a core driver of political anger, the political blowback leads to instability. Some might be recognising this already.

Long waiting lists, visible street homelessness, and rising taxes with no improvement become a breeding ground for more extreme, simplistic political offers. populists often target migrants, welfare claimants, or local government itself rather than the structural failure to build.

In short: without radical intervention, the UK drifts towards a model where homelessness is endemic, younger and poorer households are permanently excluded from secure housing, and the state spends vast sums servicing yesterday’s mistakes while lacking the capital or consent to fix tomorrow’s.

 

Why this should ring every alarm bell

I have worked in the property industry for well over 3 decades. For years, I have been saying we are heading into a housing crisis. Not the one we have now, just because property prices are too high, or one that locks out decent, hard-working people and their families from getting on the ladder, which it is, but one that captures those less able to get out of the ever-widening and increasing potholes of despair as the safety net diminishes. The blunt conclusions are now staring us in the face.

Quite simply, the maths does not add up. You cannot run down social housing, freeze or underfund councils, tolerate high private rents, and sit on debt near 100 per cent of GDP and then expect a functioning safety net.

Quite simply, delaying or diverting attention away is itself a decision. Every year of net social housing loss hardwires in another decade of homelessness costs and human damage. The new Renters Rights Act does nothing in this regard (other than being a great distraction tool and ultimately, forcing up rent).

Quite simply, the window for a controlled correction is closing fast. Wait another decade on this path, and the mix of fiscal strain, political volatility, and social fracture will make large-scale, rational investment impossible.

And then what?

Graham Vanbergen is the Chairman of the Newbury Almshouse Trust

 

---