How employers can help with housing

Lack of affordable housing and spiralling rents are affecting multiple generations of workers

Those worried about getting a foot on the housing ladder – particularly in the ever-more exorbitant Big Smoke – needn’t fear.

A quick look on Rightmove to see what’s available in London at the lower end of the market reveals one of the cheapest ‘properties’ will set you back a mere £20,000, and is ideally located in Crystal Palace… Admittedly it is a garage (although it does boast a rather exciting ‘NEW ROOF’).

Or if you prefer something a bit closer to your job in the City you can be the proud owner of somewhere just off Oxford Street for only £75,000. So long as a) you don’t mind sleeping in your car, and b) you can afford a car. You’ve guessed it… it’s a parking space.

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And so the UK housing crisis rumbles on, with the average cost of a home in the capital reaching £466,824 in June 2019 according to HM Land Registry. While Londoners and young people may be the hardest hit, the rest of the UK population is far from immune. A lack of affordable housing, with house prices rising faster than wages, has created a nation of renters.

This is particularly bad news given that the rental market is equally bleak. A typical worker living in London can expect to see 56% of their hard-earned net income swallowed by rent each month, the Centre for Social Justice (CSJ)’s Housing that Works 2019 report found.

Feeling the squeeze

So the housing crisis is creating a perfect storm for the UK workforce. According to CSJ figures almost half (48%) of large UK employers say that housing issues have a negative effect on staff wellbeing. At the more extreme end of the scale is the growing epidemic of in-work poverty.

Shelter’s In work, but out of a home report estimated that 33,000 working families were living in temporary accommodation or hostels in 2017.

Employers are starting to suffer too. More than half say housing issues adversely affect recruitment (54%) and retention (50%), and 43% that they harm business productivity.

“It’s having a damaging impact on much of the UK workforce,” says Joe Shalam, head of financial inclusion at the CSJ. “Whether that’s high housing costs locking people out of work in certain areas – leading in other cases to tiring and long commutes – or housing insecurity reducing productivity.”

It’s a reality Lauren Adams, HR director at the Confederation of British Industry (CBI), sees within her own workforce. “We’ve felt it – when it comes to recruiting talent can be limited. We have a lot of younger workers at the start of their careers, and we know from our HR data that a lot of them are renting or first-time buyers so they are especially affected by the housing situation,” she says.

Which has a knock-on effect on D&I, particularly around social mobility, Adams adds. “We don’t want only those living on the periphery of London to be able to work here,” she says.

So to differentiate themselves as employers of choice some forward-thinking firms are adding housing support to their benefits packages. Principal at Aon Jeff Fox says this is the type of perk employees are looking for today.

“Traditionally benefits have been things like pensions and life insurance. But these are no longer fitting the bill,” he says. “For a lot of workers a pension that they draw in 40 years isn’t the biggest priority facing them here and now; housing is.”

Which means a shift is taking place – away from both traditional benefits and fun office perks (free drinks and yoga…) to offerings that make a serious difference to employees’ lives.

“Housing is now very much front and centre of conversations we’re having in recruitment as we’re conscious that rent, mortgage payments and travel are a big part of living expenses and that it’s affecting what benefits people are looking for when they’re deciding whether they want to work somewhere or not,” says Adams.

Return to the model village

Employer housing support isn’t a novel concept though. It was 1879 when George Cadbury created his Bournville ‘model village’ to provide decent, affordable rental housing for his chocolate factory workers. Shops, parks and recreation facilities were all on site, taking the idea of the workplace being a home from home to another level. Dubbed ‘one of the nicest places to live in Britain’, it became a blueprint for others.

In the Army housing is provided for the families of military personnel at or near their duty station. Then there’s the travel and tourism sector, where it’s fairly common for organisations to supply group housing for reps working overseas in resorts.

Across the pond Silicon Valley heavyweights Facebook and Google are building campuses of homes near their HQs to cater for the wave of techies flocking to the San Francisco Bay Area for work only to find the number of affordable homes doesn’t match the number of jobs.

So are we about to see a return to the age of the Victorian model village? For director of policy and campaigns at the Recruitment & Employment Confederation (REC) Tom Hadley questions hang over whether such an approach can work now that a job for life is a thing of the past.

“I’m not sure it can work today as there’s fluidity in the job market, and people spending their career working for one employer isn’t as prevalent,” he explains. “Big companies like to create a campus feel to workplaces but I think a return to the old Cadbury model is a bit of a step removed from today.”

However, there are more nuanced ways employers can provide housing benefits. Companies including Grant Thornton and the London Fire Brigade were among the first to sign the Employer Housing Pledge back in 2017, part of London First and the mayor of London’s wider Fifty Thousand Homes campaign to increase housebuilding in the capital. Under the pledge employers commit to help staff with the cost of housing through initiatives such as flexible working and rental deposit loans.

A foot up

For Shalam HR’s position on the housing crisis can be threefold: to supply new homes by teaming up with build-to-rent landlords to offer private rented properties for employees; supporting vulnerable homeless people into homes as part of training or employment opportunities; and giving staff access to existing homes by helping with upfront costs via schemes such as rental deposit loans.

The latter is the area Shalam describes as both the “most effective” and “one of the simplest” for HR to roll out.

Starbucks has run its rental deposit loan scheme Home Sweet Loan for four years. Partners (employees) can apply for an interest-free loan of up to one month’s salary to pay for the deposit when they move into a property. Similar to a travel loan, payments are then deducted from the individual’s pay packet each month over the next 12 months.

Russell Butcher, senior manager in the partner resources team at Starbucks, explains that the scheme came directly out of employee feedback that housing – and specifically stumping up a deposit (which often amounts to five weeks’ rent) – posed a particular “pain point”.

“Some of our partners were turning to payday loan sharks with high interest rates,” he says. “A large proportion of our stores are based in cities and about 70% of our retail workforce are under 30. This is Generation Rent – they’re a long way off owning a property so the reality of moving and a rental deposit is stressful.”

Butcher shares one particularly moving anecdote. “I remember phoning one of the first partners on the scheme to ask for feedback and he told me his family had been at risk of being made homeless, so he’d really needed that cash quickly to secure a new property,” he says. “We shouldn’t underestimate how offering a rental deposit and reducing stress in these scenarios can make a big difference.”

Beyond renting, there’s also mortgage deposit assistance and mortgage repayment schemes. “We have flexible benefits, which means our head office partners can allocate a percentage of their salaries to a pot of funding that they can choose to spend on a number of areas; like topping up their pension or for high-streetvouchers,” says Butcher. “Employees now have the option to use this to save for a mortgage deposit or to repay their mortgage early.”

It’s a similar story at the CBI, whose own rental deposit loan has been taken up by at least 10% of the workforce in the past year. “When a quarter of staff have moved home and 10% have requested the loan that’s a high proportion of staff choosing to access it,” says Adams. “Offering the small things that have a big impact on people’s lives helps engage employees and improve their wellbeing. In turn engaged employees means our productivity is higher.”

Also key is financial support for existing workers seconding, or new people relocating, for work. This can cover upfront costs such as removal vans or rent support for a limited time.

Subsidised lets are another option. Publisher Hachette opted for this when it partnered The Book Trade Charity to offer below-market-rate rent for interns.

Meanwhile Cosmopolitan enables women starting their careers in London to become property guardians in exchange for subsidised rent.

Build to rent

On the supply side of things some are going down the build-to-rent route. Get Living for Business partners with employers to offer rental properties close to workplaces, with no deposit or upfront costs, two weeks’ free rent to get started, and concessional rates of rent.

Steven Osei, general manager of partnerships at Get Living, says it’s especially beneficial for intakes of graduates or new starters relocating.

Osei says the financial benefits are just one part of the picture. “It’s very easy to feel disconnected when you move to a new city or rent a new home, so we run networking events with the company for the graduates to come and meet each other and potentially find housemates,” he says.

“There are also regular residents’ events to meet their neighbours, and trusted teams on site. There’s a sense of community… The thinking is that employers look after their teams at work and now they look after them at home.”

There are also less formal types of support HR can provide, adds Hadley, including leave for moving days, flexible working, good IT equipment to reduce the need to commute every day, and intranet sites for staff to advertise their spare rooms.

“A lot of it comes back to general financial wellbeing,” adds Fox. “Helping with budgeting and saving, providing access to mortgage advice, and discounted mortgage rates are getting more common.”

Employer housing support of any of these types is a “win-win” for both employers and employees, says Shalam. It “improv[es] wellbeing and security, as well as aiding recruitment, retention and productivity. And in the long run raising productivity will filter through into higher wages,” he says.

So the benefits are clear. But less clear perhaps is the debate around whether this level of involvement in employees’ lives creates something of a dystopia; with no distinction between work life and home life.

“To some extent there can be a blurring of lines where it can go too far,” says Hadley. “So it’s about finding the right line that’s not overly paternalistic.”

A policy problem

The problem, says London First’s programme director for housing Mairéad Carroll, is that employers are finding themselves having to pick up the bill for a wider societal issue.

“I don’t think this is necessarily employers’ responsibility,” she says. “We as a country haven’t built enough homes. It’s great employers are responding, but they’re technically responding to a public policy issue that we need to see more from the government on.”

Carroll is not alone in thinking this. The CSJ is calling on the government to set up an Employer Housing Unit to drive and promote new employer housing schemes and incentivise organisations by launching accreditations for such schemes.

But with or without government backing, housing support is only going to become more integral to the workforce over the coming years, Hadley feels.

“It’s not a trend a lot of employers are doing yet but many we’ve spoken to have said they think this will be increasingly part of the benefits they offer,” he says.

“The housing crisis isn’t going away anytime soon, staffing shortages aren’t going away anytime soon. So innovating and supporting workers with it will need to be front of mind for employers across the country.”