Some much-needed changes may soon arrive to council estates around the country, according to recent announcements by members of the government. The Prime Minister, speaking in Birmingham on Tuesday, explained his desire to transition to fixed-term council house tenancy in order to better accommodate the changing needs of tenants, as well as encouraging social mobility. Housing Minister Grant Schapps announced the introduction of a National Affordable Housing Swap Scheme, in which tenants in public housing who want to move for whatever reason may exchange houses with anyone in a similar situation in another part of the country.
The status quo is unfair to both taxpayers and residents, and causes considerable economic damage by reducing the flexibility of the labor market. Under the current system, council residents enjoy lifelong tenancy, and can even transfer council houses to their children. 1.8 million people are on waiting lists for social housing, and tenants’ ability to remain in social housing indefinitely seriously undermines any incentive for individuals to move out of subsidised housing, which in turn damages the government’s ability to provide for those who truly are in need and squanders taxpayers’ money. Moreover, despite the existence of some “mutual exchange” programs, many public housing tenants are still unable to move without giving up their house. The result has been an unreasonable system in which 234,000 units of social housing are overcrowded, while 456,000 others have excess capacity. Both the policy of lifelong tenancy and the difficulty of moving make it difficult for people to move to areas of the country where they may find better paying or otherwise more rewarding jobs. This not only harms the individual by preventing them from advancing themselves, but also prevents Britain from adjusting to new economic conditions in a swift manner. An end to lifelong tenancy would ensure that those who occupy public housing are those who need it the most, and the housing swap scheme would dissolve much of the rigidity present in the current system.
The discussion about social housing, however, must go further. A considerable proportion of Britons, approximately 13%, live in some sort of social housing, and demand for subsidised housing clearly exceeds the supply. Waiting lists and rationing are not an efficient way of allocating any scarce resource, housing included. More privatisation of the public housing stock and a more relaxed and realistic approach to housing and planning regulations would allow more people to make their own decisions about where they live, and would permit developers to step in and fill the demand for low-cost housing.