The cost-of-living crisis is now really starting to bite hard following huge surges in energy, transport and food prices.
Many households are facing a real dilemma over whether to prioritise paying the rent, paying to get to work or putting food on the table.
This is a sad reflection of the reality faced by hundreds of thousands across the UK, and especially in parts of the country where housing costs are already high. A combination of rapidly increasing prices for energy, food and other goods, plus tax rises and pay eroded by high inflation, means that many households are fast approaching the financial danger zone. Often these are the very people the economy and society rely upon to function and grow whose financial resilience is fast being overwhelmed by the scale of the crisis.
I would argue we have faced a housing affordability crisis for at least the last decade. But that affordability issue has been partly mitigated, or masked, by relatively low inflation and consumer prices. All of these issues are now coming together in a perfect storm, and despite the measures announced in March by the chancellor, the government does need to go much further in ensuring that adequate support is in place to prevent a huge rise in homelessness as people are unable to pay their rent or mortgage.
Of course, the longer-term solution is to build more genuinely affordable homes across all parts of the country, but especially where housing pressures are most acute. However, even if the government unlocked a significant funding package to support such delivery tomorrow, the lead-in time through planning and construction would still be significant and do little to meet accelerating demand in the short to medium term.
What is needed now is a range of measures to address some of the more immediate cost-of-living challenges and to better use our existing housing stock for affordable housing provision while that additional supply comes forward. An even better solution would be to combine the two, especially in the context of exceedingly high energy prices, which many consumers simply have no choice but to pay.
At Local Space, we are seeking to do just that by enhancing our existing strategy of purchasing and refurbishing homes on the open market, funded partially through Right to Buy receipts and debt, and then renting them out within a 16-week average time, and by looking at how to improve energy efficiency.
The cost-of-living crisis is going to affect everybody, irrespective of their income level, but when the costs of heating your home and providing hot water more than double, that’s clearly going to affect people on a lower income much more as a proportion of what they earn.
The rise in gas heating bills has promoted Local Space to invest in a pilot refurbishment programme to determine the best way to retrofit some of our recently acquired properties. These are homes that are of a common standard archetype across London and will be refurbished to an EPC ‘A’ or higher. We believe it is the best thing we can do to help people afford to run their homes in the longer term against a backdrop of rising energy costs.
Josie Parsons is chief executive of Local Space