The housing crisis is manufactured. We can end it.

Prem Sikka is an Emeritus Professor of Accounting at the University of Essex and the University of Sheffield, a Labour member of the House of Lords, and Contributing Editor at Left Foot Forward.

The UK has been in the grip of neoliberalism for the last 45 years, enriching a few and impoverishing many. Social problems have multiplied. Unaffordable housing is one such problem, manufactured by a relentless drive to cut wages and forcing councils to sell social homes.

The crisis

In 1975, at the height of trade union membership, workers share of gross value added (GVA) was 71.9%. After 50 years of economic growth, and introduction of statutory minimum wage it has declined to 59.3%. Since 2008, the average real wage has stagnated and hardly changed. With annual median employee gross wage at £31,524 (£26,217 after income tax and national insurance), millions struggle to access good food and housing. Buying a home is beyond the reach of millions.

In 2024-25, in England alone, some 330,410 households needed support to prevent or relieve homelessness. Around 134,760 households were living in temporary accommodation as of September 2025. 175,990 children are homeless. Three in ten households (41,250) have been moved to temporary accommodation away from their home area, severely affecting links with family and friends, children’s education and exerting pressure of local services.

Social housing can alleviate some of the problems, but it is in short supply. Social housing is not based upon the principle of private profit. Therefore, rents are typically 50% to 60% of market rent. It protects people from profiteering landlords. It enables local authorities to address homelessness; provide secure accommodation instead of temporary accommodation for families, provide affordable housing to millions of people, relieve pressure on private housing sector and reduce cost-of-living crisis

Since the 1980s, governments have systematically depleted social housing stock by selling homes at knockdown prices. The depletion of social housing stock has forced families to enter private rented sector, which is expensive and forces people to live in overcrowded conditions. The number of households privately renting has more than doubled since 1980. Some 4.7m households (11m people) rented their home from a private landlord in 2024/25. The average monthly rent is approximately £1,320, higher in major cities. In the last three years, the average annual rental cost has risen by around 28%. 

After the Second World War, good affordable housing was considered to be vital for alleviating social problems. By 1980, some 4.4m new social homes, or around 126,000 a year, were built. By 1983, social housebuilding declined to 44,240 a year. In 2023/24, in England only 9.866  new affordable homes for social rent were completed.

The Tory legacy

Since the 19th century, governments have encouraged council tenants to buy their rented homes, subject to conditions. However, a big change came in 1980 when the Conservative government sought to bolster its popularity by offering council tenants a Right to Buy homes at massive discounts. Council tenants of at least three years could buy their rented home with at least 33% discount, and increasing by 1% for each year of tenancy, subject to a maximum of £50,000. In 2012, the maximum cap on the Right to Buy discount was fixed at £75,000 or 60% of house value , £100,000 for London properties.

By March 2025, 2.8m social homes were sold across the UK. The discounted sales generated £62bn. The total includes 1.9m council homes in England sold to tenants for £51bn at an average discount of 44% of market value. A study by Common Wealth estimated that the homes sold-off by England’s councils were estimated to be worth £430bn in 2024 prices. It added that “Of the £430 billion total since 1980, £194 billion corresponds to the equity that was effectively given away for free through the discount. Only £236 billion corresponds to the equity that was compensated at market value at the time of sale, for which councils received £51 billion in nominal terms, or £104 billion in today’s money”. 

The government constrained councils from using the sales proceeds to build new homes. Only around 50% of the proceeds of the sale of social homes were paid to the local authorities. Money had to be used to repay debt. There were also borrowing restrictions. Councils lost the expertise to deliver mass housing schemes. Planning, design, construction and maintenance departments had to be closed. Since 1988, governments have backed housing associations to build social homes with private finance, boosting profits for the finance industry. Their tenants can buy homes at a discount. Insufficient social housebuilding, plus too many homes being sold or demolished, has resulted in a net loss of social housing nearly every year since 1981. Since 1981, the proportion of UK households living in social housing decreased from 31% to 17%. The number of social homes has declined from 6.8m to 5.4m, with 4.5m in England.

In some years, more council homes have been sold than built. For example, in 2023-24, only 2,850 council homes were constructed. In 2024-25, 2,260 council homes were built. There were 13,966 sell-offs of council houses through right to buy in 2023-24 and 8,656 in 2024-25. Around 18,500 council homes were planned to be sold off in 2025-26 – eight times more than the number built in 2024-25. Altogether, 21,436 social homes were lost in England.

The UK social housing waiting list is around 1.5m households. With the current level and quality of stock, people will have to wait for over 100 years for family-size social home. In 2023-24, the City of Liverpool had 12,764 households on its social housing waiting list whilst it had just five “additional social rent dwellings.” In 2024/25, local councils in England spent £2.8bn on expensive private sector temporary accommodation to accommodate homeless households.

The Conservative policies, also adopted by the subsequent Labour governments, did not increase home ownership. Too many tenants resold the cheaply acquired homes for massive profits. Some ex-council tenants made profit of over £200,000 by selling homes back to the council just a few years after the Right to Buy purchases. Nearly 41% of council homes sold under the Right to Buy are now being let on the private market. The home ownership rate has declined from nearly 71% in 2003 to about 64.5%.

Labour government’s response

The Social Housing Bill, currently going through parliament, takes small steps to protect social housing stock and prevent profiteering. Its main provisions are as follows:

• Over the years, the Right to Buy rules have changed and the Bill increases the minimum tenancy required to be eligible for the Right to Buy from 3 to 10 years.
• Discounts for tenants start at 5% of the property value and go up to a maximum of 15% or the cash discount cap (whichever is lower) which can vary for areas.
• New social homes cannot be sold under the Right to Buy for 35 years after they are built to ensure that councils can recover the construction costs.
• Rural properties, which are hard to replace will be exempt from the Right to Buy schemes.
• Tenants who have previously benefitted from the Right to Buy scheme cannot buy another property.
• The Bill increases the period of time for which the council has the right to ask for repayment of all or part of the discount on the sale of property from 5 years to 10 years.
• Local councils will be able to retain 100% of the receipts from the Right to Buy sales and build new homes.
• When a property previously bought under the Right to Buy is to be sold, local authority must be informed and it will have the right of first refusal.
• The Bill contains measures to protect social tenants who are victims of domestic abuse by providing greater housing security and stability

The Social Housing Bill does not build new social homes. That is part of another government announcement. In July 2025, it announced a 10- year £39bn Social and Affordable Homes Programme to build 300,000 social and affordable homes (180,000 homes for Social Rent). Delivering 18,000 social homes a year is way short of the public need. Civil society organisations have called for social housebuilding in the range of 90,000 to 150,000 new properties a year.

The UK housing crisis has been manufactured by government policies. The post-war social housing policies were abruptly reversed by the Conservative government in the 1980s. Local councils were forced to sell social housing stock at massive discounts and prevented from building new ones, as governments sought to empower private sector housebuilding. As part of social engineering, housing stock worth some £194bn (2024 prices) was given away. It did not increase home ownership. Housing waiting lists have lengthened. In the absence of social homes, councils have been forced to spend billions to house needy families in temporary accommodation.

The Social Housing Bill, opposed by the Conservative Party, takes small steps to protect housing stock. It does not end the Right to Buy. Successive governments boast fiscal rules for managing economy but none are accompanied by any specific targets to reduce poverty, homelessness or increasing social housing.

Equitable distribution of income and wealth is a key requirement for building household economic resilience but governments are not committed to increasing workers’ share of GVA or progressive taxation.