When you think ‘social tenant’ or ‘social rent’, the word ‘subsidised’ is never too far away. Characterisation of social tenants as underprivileged and a burden on the state remains commonplace. The government’s social housing green paper reported that 90% of social housing residents felt the media projected this stereotype of them, which is not only hurtful but entirely inaccurate.
A couple of weeks ago, I welcomed the newly published report by the Chartered Institute of Housing (CIH), ‘Dreams and Reality?’. The report shows that over the five years to 2020-21, the government will direct £8bn of subsidies into private housing annually, over half of which will go to support home ownership.
Direct government support for social housing is less than £2bn annually, of which three quarters relates to housing benefit payment. Large-scale support of demand-side initiatives, including Help to Buy and mortgage guarantees, results in an enormous public loan book, currently standing at £8.3bn and rising.
Despite this, low-deposit mortgages, especially those requiring a deposit of between 5% and 10%, are still significantly fewer in number than those prevailing before the housing market collapse of 2008.
Recently, much attention has been given to the government’s £2bn commitment towards the Affordable Homes Programme, but significant as this is, housing associations still subsidise each London home by around £250,000 after taking into account grants and the rental income stream homes support. Combined with the costs of repairs and improvement to existing estates, it is plain to see that current subsidies do not go far enough.
Moreover, subsidy and taxation arrangements undermine balance in the housing market and the importance attached to home ownership is distorting cost and choice. Machinery such as Help to Buy, stamp duty exemption and deregulation of mortgage markets has done much to help those on decent incomes, or those with financial assistance, in obtaining deposits.
Broadly absent from the conversation are those on low or no income in the private rented sector – some of the most vulnerably housed in our society. While there is no denying that housing benefit continues to play an important role, years of austerity measures have reduced housing benefit. Further restrictions on private rents that are eligible for housing benefit have also resulted in a steady reduction in the number of private tenants in receipt of payments since 2013.
The CIH report confirms that the configuration of subsidy across the market is problematic. Of course, I do not suggest taking subsidy from demand-side programmes to give to the social sector. It’s important that all types of tenure have enough funding and home ownership has been in decline.
What I do call for is a levelling of the playing field between the social sector and home ownership. If the private rented sector continues to take the strain and the social rented sector doesn’t grow, the housing benefit that goes to private landlords will simply grow as people age and need access to it.
“We remain preoccupied with the freedoms that home ownership bestow upon us”
This report reminds us of that old expression ’an Englishman’s home is his castle’ and we remain preoccupied with the freedoms that home ownership bestow upon us. The reality is that intense regulation such as planning regimes, building regulation, boundary disputes and such like mean the pipeline can take years to deliver housing for purchase to the market.
It is time to stop positing home ownership as a holy grail. We must think holistically about the entire market, including the social market. Only with diversified configuration of subsidy can we achieve the greatest number of homes, with the right tenure, for the right people, in the right areas. And sooner rather than later.