Burnham needs a new approach and money to boost social housing, think tank says

By Suban Abdulla

LONDON, July 24 (Reuters) - New British Prime Minister Andy Burnham needs a new approach as well as new money to deliver on his pledge to deliver the biggest council and social house-building programme since World War Two, a think tank said on Friday.

Burnham should redirect grants towards council homes while allowing private house-builders to construct fewer social rent homes - which charge the lowest rents - and more affordable rental homes, the Resolution Foundation said.

The new government should also offer low-cost loans to housing associations, the think-tank, which focuses on issues affecting lower income households, said.

In a report, the Foundation recommended:

• Using the 10-year, £39 billion Social and Affordable Homes Programme strictly for social rent homes

• Lowering the amount of social rent homes - which are relatively expensive to build - that private developers must construct when buyer demand is weak and instead encourage them to build more affordable rent units

• Using a £2.5 billion low-cost loan facility in the National Housing Bank to encourage building of affordable homes by housing associations

Overall, the changes would mean building 66,000 low-rent homes a year - an increase of between 1,000 and 3,000 - still well below the post-war era when local authorities were building 100,000 homes a year.

More money would be required for a big increase in affordable housing supply, the Foundation said in a report said.

Burnham has vowed to increase the supply of council housing, or homes for social rent, which offer tenants around 50% discount compared to market rates, to resolve a housing shortage and reduce the long-term welfare bill and homelessness.

Friday's report said 134,000 families in England are living in temporary accommodation and 1.3 million are on the waiting list for housing.

An option for the government would be to re-link housing benefit support with local rent levels, Hannah Aldridge, senior research and policy analyst at the Resolution Foundation, said.

In the past, government housing support has been frozen for years at a time despite rent prices surging. Policymakers and charities have advocated re-linking benefits to local rents to ensure low-income households can afford to rent their homes.

(Reporting by Suban AbdullaEditing by William Schomberg)