Help people, not property
Britain's social housing makes a basic mistake. It subsidizes the house instead of the household. The help is bricked into a building, and it stays with whoever happens to live there, whatever their circumstances become.
Consider how it works. A council or housing association lets a home at perhaps half its market rent. The gap is a subsidy, but it belongs to the property. The tenant keeps it only by staying put. If their income rises, they keep it anyway. If a job beckons in another city, they must choose between the job and the tenancy. Many choose the tenancy. And in many cases the tenancy can pass to a family member when the tenant dies. It is a strange welfare benefit that can be inherited.
Meanwhile those in real need wait on lists that stretch for years. The system rewards the luck of the list rather than the level of need.
Worse, we make new homes dearer to pay for it. Section 106 agreements require developers to include a quota of affordable units in new schemes. That quota is a tax on building. It is paid in fewer homes and higher prices, and it falls on buyers of the market units, many of them young and already stretched. We make housing less affordable in the name of affordable housing.
There is a better way. Take the subsidy out of the bricks and give it to the person. New social tenancies would be let at or near market rents. Households who need help would receive a portable housing credit, paid through Universal Credit and tapered as income rises. The support would follow need. It would fall as fortunes improved. It would move when the tenant moved. A worker offered a job in Manchester could take the help with them instead of turning the job down.
Existing tenants should be protected. Nobody would be evicted and nobody's rent would leap overnight. Sitting tenants would keep their current terms for life. What would end is succession. When a tenancy ends, the home returns to the pool at market rent.
Tenants could also choose to cash in early, taking the value of their subsidy as a deposit on a home of their own, a bigger Right to Buy discount, or a guaranteed credit if they move. The empty-nester rattling round a three-bedroom council house would finally have a reason to downsize, and a family would finally have a home.
The affordable quota would go. If councils want developers to contribute to roads, schools and surgeries, a simple and predictable infrastructure charge is more honest than a quota that quietly inflates prices.
Two cautions matter. The credit must be indexed to local rents by law. Local Housing Allowance has been frozen repeatedly to save money, and its value has withered. A subsidy that shrinks whenever the Treasury feels the pinch is no subsidy at all. And the credit must come with planning reform. Money chasing a fixed stock of homes simply pushes up rents, and the landlord pockets the help. Vouchers work where builders can build.
None of this is untested. Germany's Wohngeld has long supported households rather than buildings. What stands in the way here is sentiment, an attachment to the council estate as an institution to be preserved rather than a means of helping people.
Social housing was meant to house those who needed help. It was never meant to guarantee a below-cost home to the same family for generations. The house does not need the subsidy. The people do. Bricks, after all, have never been known to fall on hard times.
Madsen Pirie