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Council tenants should be charged market rent with Housing Benefit to help them pay when needed

MossJohn Moss (who is currently contesting a by-election in the Larkswood ward in the London Borough of Waltham Forest) urges Grant Shapps to go much further in his assault on the distortions and contradictions of Housing Welfare policy

There has been a shift away from "social housing" to "housing welfare" for many years.  The bill for Housing Benefit is now over £23bn a year, dwarfing the rental subsidies on existing social properties, estimated in the Hills Report at £6.6bn a year. Capital funding for new homes is around £1.5bn a year. This isn't new. It started largely in the 1980s (the total Housing Benefit bill in 1980 was just £0.4bn) as subsidies started being moved from supporting house-builders to supporting households. This is a good thing and we ought to complete the move, ending our obsession with "social homes".

Subsidised rents and tenancies for two lifetimes distort the market and create opportunities for fraud - through unlawful sub-letting - and inappropriate subsidy with windfall gains for a few. Why should Bob Crow on £100k plus benefit from a below-market rent because his mum and dad were "poor"? Why should a City worker who grew up on a Council estate in the East End inherit the tenancy of his mum and dad's old Stepney council flat, which he uses as a handy as a pied-a-terre Monday to Thursday before returning to home counties at the weekend to wife and family in his "main home"? They shouldn’t, at least not without paying for it.

A swift move to market rents, (probably generally in the lower quartile of all rents in existing social stock) and a shift of subsidies to households in need through Housing Benefit, would give us one system, which applied the same way to everybody. As income rose, welfare payments would fall. A general Right-to-Buy would allow tenants a choice of buying, paying market rent or moving out. Higher rents would flow through to Housing Association and Local Authority profit and loss accounts, boosting their ability to build, refurbish or redevelop. Stock would turnover, become private, be bought back. the lines between private and social homes would be blurred and the concept of "the Council Estate" might even disappear entirely. Would that be a bad thing?

Alternately, "Social" landlords might operate on the basis of income-related rents, charging 30% of household income after taxes and benefits up to the market rent. This would help reduce the Housing Benefit bill. The overall cost would likely be similar though as some capital subsidy requirement might then remain and it does raise questions of privacy if you have to share your income details with your landlord as well as the Housing Benefit office.

What is not sensible is to create yet another rule with arbitrary income levels above which different rules apply, or to force higher earners out of social properties. Keep them there and let the locality benefit from their higher spending power, just ask them to pay a fair rent. That is how you create your mixed communities. But please, can we have one system of housing welfare and one set of rules for all landlords and tenants. In simplification lies reduced costs of operation and hence, more money for the actual support households need.


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