Thursday, 5 August 2010

The real need to change social housing tenure

To repeat some snippets from the Hills Report for the Department of Communities and Local Government, a study of huge importance that was effectively buried by the Labour government that commissioned it;
  • The economic cost to the country of subsidised welfare rents is £6.6bn a year
  • We (the taxpayer) own £400bn in capital value of welfare housing, but our return on capital after management and maintenance is barely 1% per annum
  • It's a myth that council tenants all want to be owner occupiers; given the choice, 39% would prefer to stay as subsidised tenants
  • Barely a third of heads of welfare households are in full time work
  • One in eight private house moves are work related, but just a very few thousand moves a year amongst 4m welfare tenants are for employment reasons
  • Welfare tenants stay put in the same house for a very long time. Over twenty years, they will enjoy the benefit of subsidised rent worth £65,000 at Net Present Value.
  • Despite subsidised rents meaning that in theory it's much easier for a welfare tenant to move from benefits to work than for a private tenant, very few do so.
The reality is that welfare housing has become a trap for the unemployed, that 5m welfare recipients are also largely locked into outdated welfare housing tenure. In terms of equity, of Brown's much vaunted 'fairness', one must also ask why, long after mortgage tax relief has been abolished for homeowners, welfare tenants continue to enjoy tax breaks that cost the country £6.6bn a year, £65k for each tenant at NPV?

This issue may break the fragile coalition, but it needs an open and honest public debate.

5 comments:

BrianSJ said...

It isn't reasonable to expect a financial return on genuine social housing. Also, I get the impression that quite a lot of council housing is not that cheap in terms of rent. In the mix of this topic are:
- council inefficiency and corruption.
- the benefit trap/ shameless.
- wrong numbers.
- distortion of local rental markets.

thefatlady said...

"welfare tenants continue to enjoy tax breaks that cost the country £6.6bn a year, £65k for each tenant at NPV?"
"4m welfare tenants"
I make that £1.65k for each tenant, not 65k. That also doesn't tie in with your 20 year figures.
That doesn't alter the basic premise, but the figures should be correct.

Weekend Yachtsman said...

The basic problem is that people who - quite rightly - qualify for subsidised housing at some point in their lives, due to poverty, incompetence, or misfortune (or all three), then get permanent subsidised housing for the rest of their lives, regardless of any change in their circumstances, and get to pass this benefit on to their dependents regardless of their circumstances.

Publicly-subsidised housing should be a temporary benefit just like any other - available to those in genuine need, ending when they are no longer in need.

Woodsy42 said...

Point 3 - to stay as SUBSIDISED tennants. Who wouldn't want to keep a subsidy?
If the subsidising were to stop when no longer justified then many of the house supply problems would go away.
It's another example of the welfare trap.

Raedwald said...

thefatlady - moot point. I'll go back to the report and see if I've missed something.