167,000 More Homes Needed by 2040: The Scale of the UK Supported Housing Shortfall

Every property sector likes to talk about undersupply. Few can document it the way supported housing can. The research base assembled by the National Housing Federation over the past three years sets out, in unusually precise terms, how far short England's supported housing stock falls of what an ageing and changing population will need, and the gap is widening, not closing.

The headline projection

The NHF's landmark study, Supported Housing in England: Estimating Need and Costs to 2040, produced with Imogen Blood & Associates and the Housing Learning and Improvement Network, counted 509,873 supported homes in England in 2023. By 2040, it estimates the country will need 677,202, an additional 167,329 homes, a 33% increase on today's stock.

Spread over the period, that equates to roughly 28,400 additional supported homes every year. The NHF breaks this down into around 22,400 homes a year for older people and 6,000 a year for working-age adults with support needs, including people with learning disabilities, mental health conditions and physical disabilities. Around three quarters of the homes needed by 2040 are for older people, reflecting the demographic arithmetic of a population in which the number of people over 80 is growing faster than any other group.

The same research puts the development cost of delivering those 167,329 homes at £33.9bn by 2040. And on the NHF's wider measure of hidden demand, people who would benefit from supported housing but are currently managing in unsuitable general-needs housing, hospital beds or care placements, up to 1.7 million people may need supported housing by 2040.

The shortfall is already here

This is not only a story about future need. The government's own Supported Housing Review, published in 2023, found a current shortfall in England of up to 325,000 supported homes on its widest measure. The NHF's central estimate puts the existing gap at around 50,000 units. Whichever measure one prefers, demand already exceeds supply today, before a single year of projected demographic growth is added.

The consequences of that gap are measurable. Research commissioned by a leading supported housing provider found that a lack of available supported housing led to 121,695 additional mental health hospital bed days in 2024/25, costing NHS mental health services in England an estimated £102m in a single year. People who are ready to leave hospital cannot do so, because the housing that would let them live independently does not exist in their community.

Supply is moving in the wrong direction

Against this demand picture, the supply trend is sobering. The NHF's Save Our Supported Housing campaign reported in 2024 that providers responsible for 18% of all supported homes, equivalent to around 70,000 homes, may have to stop providing services altogether without action on revenue funding. A 2024 NHF member survey found that one in three providers (32%) had closed schemes in the previous twelve months, and nearly two in five supported accommodation services for single homeless people have closed since 2010.

The NHF's 2025 risk-of-closure survey deepened the picture: 56% of responding housing associations said schemes were likely to close or be decommissioned without long-term sustainable funding, and 22% said they would seriously consider ending supported housing provision entirely. The root cause is well documented, funding for housing-related support services was cut by around 75%, over £1bn, between 2010 and 2020.

It is worth being precise about what is under pressure. It is the revenue funding for support services, not the underlying demand for accommodation, that has been squeezed. The homes themselves remain in chronically short supply, and every scheme that closes adds to the queue for those that remain.

What this means for the sector, and for capital

A market in which need is projected to grow by a third while existing capacity contracts is, by any standard, structurally undersupplied. Three implications follow.

• • Demand visibility is exceptional. Few asset classes can point to government-commissioned and federation-commissioned projections of need running to 2040, broken down by client group and geography.
• • New, purpose-built supported housing is the priority. The NHF figures describe homes that must be built, not just managed better. Housing associations and care providers cannot fund a £33.9bn development programme from their own balance sheets.
• • Occupancy risk is low where need is high. When local shortfalls run into the thousands of homes, well-located, well-specified stock operated under long-term management agreements sits at the front of the commissioning queue.

From 31 March 2027, every local authority in England must publish a Local Supported Housing Strategy under the Supported Housing (Regulatory Oversight) Act 2023, formally quantifying need in its area. The national undersupply documented by the NHF is about to be restated, council by council, in official strategy documents, a level of demand transparency almost no other housing sector enjoys.

For investors seeking exposure to a low-volatility housing sector underpinned by long-term social need, the numbers above are the foundation of the case. Supported housing opportunities are shared privately with registered investors via Silkwood Group, register your interest to learn more.