A new fit for purpose Decent Homes Standard with funding to deliver

The Decent Homes Standard (DHS) ensures a basic level of safety and quality for social housing. Last changed in 2006, the DHS needs to be updated to meet new challenges. We welcome the government’s review of the DHS, which began in 2021, and encourage final proposals to be brought forward soon for consultation with the sector.

Alongside safety and compliance checks that all G15 members conduct across the homes we provide, we also deliver extensive programmes of planned improvement works. The approximately £1 billion we invest each year in existing homes demonstrates the scale of the work we carry out and the focus we have on the condition and quality of homes. It is important to highlight that providers across the sector are continuing to invest in their existing stock to drive up standards. The Regulator for Social Housing’s (RSH) Global Accounts of private registered providers show record levels of investment in 2022. Total investment in repairs and maintenance was £6.5bn across the sector in 2022, representing a 20% increase from 2021. Investment in 2022 was also significantly above pre-pandemic levels, with comparable works from 2019 accounting for £5.5bn of investment from providers.

Whilst the rate of non-decent homes in the social housing sector has almost halved since 2010 to one in ten homes being non-decent by 2022 (compared to 23% of homes in the private rented sector), Greater London Authority estimates indicate that as many as one in seven social homes in London do not meet the standard. In the first decade of the DHS, providers across the sector invested £37bn in bringing homes up to standard at an average cost of £10,000 per home. However, funding to meet the DHS ended in 2016, outside of recently announced projects in Greater Manchester and the West Midlands.

The government should set out a definitive timeline for when the DHS review will be completed after consultation. Crucially, with the multiple pressures on providers’ resources, most notably from increased costs of delivering core activities such as repairs and costs being met by providers for building safety works, the government must outline what funding and financing mechanisms it will provide the sector to support improving the decency of homes, in addition to the significant resources already being invested by providers directly.

VAT should also be removed from housing association activity to further support the sector to invest in existing homes. Housing associations are unable to recover most of the input VAT which they incur. The irrecoverable VAT of one typical G15 member is £30m per annum, for example. Our estimate of the costs of irrecoverable input VAT for the sector as a whole is £1bn-2bn per annum. Costs of £1bn-£2bn per annum severely restrict the extent to which the sector can borrow to fund development of additional affordable housing and invest in key areas, without breaching loan covenants.

The government can:

• Confirm the timeline for the DHS review and outline funding and financing mechanisms to support not-for-profit social housing providers.
• Remove VAT from housing associations’ activity to support investment in existing homes.