Visions of Housing Policy

Presents the Case for a Complementary Housing Strategy

The evidence for radical reform is now irrefutable. Viable policy cannot escape the realities of the capital housing market, but nor can it ignore the criteria of affordability.

Conservative policies, to revive the private rented market, have established a high cost rented consumer service, supported by housing benefit. These permanent structures of housing policy have failed to provide affordable housing. Within the UK profile of incomes and of housing and land costs, these enforced structures of supply have failed to meet the housing need.

The huge and rising cost of rent subsidies, so far contained by the strength of the UK economy, are now exposed to an economy weakened by the global credit crunch.

The high cost rented consumer service has caused even more significant changes in our social structures. While policies of residualisation burdened the poor in the past, the tenants of council houses were never so separated from the opportunities and aspirations of the majority population. The property-less poor have observed, as people once their peers, exploited cheap foreign markets with undreamed of adventures offered by transferring their equity abroad. We are a wealthier nation than ever before, but we are divided more starkly on the basis of property ownership.

The Current Debate

Labour party debate is focused on the logistical strategies of stock transfers for remaining council houses, while working within the constraints of rent and disinvestment policies, which have radically changed the structures of housing provision over the last 40 years. But, logistics should not be confused with policy. In particular, the uneven application of the Right to Buy must not be solved by extending it across all social housing because that would make the reform of housing policy more difficult. The Right to Buy is a key policy of disinvestment thought necessary to revive the private rented sector, but growth has failed to replace the disinvestment. The deep problems of housing provision, the property-less poor and the stability of the housing market are laid at the door of current policy and the loss of the low cost rented sector.>>>

How We Got to here

In 1971 the post war policy of investment in a low cost rented sector was radically reformed by new financial structures, which transformed the rented sector into a rented consumer service.

This section explains the financial basis of council housing and its use of investment to yield low cost-balanced rents. A model is used to illustrate the principle with evidence that the record of performance did match the model. Rents of the rented consumer service now equal the first year cost of a mortgage. The policy has failed to provide an alternative for affordable housing and has resulted in a huge rise in the level of risk that first time buyers are willing to take. >>>

Complementary Housing

Housing Benefit supported high rents and the discounted sale of rented stocks is a policy of tenure, which has failed to provide affordable housing in spite of its huge and rising cost to the taxpayer. Instead, it has created a poverty trap for the property-less poor and conditions of risk for first-time buyers, which has made the house price market unstable. The evidence for the advantages of using investment to provide a rented stock, rather than a consumer service is stunning. A Complementary Housing policy exploits the different timing of investment structures with a policy of open access to bring these advantages to everyone, with the further advantage of stabilising the housing market and eventually removing the burden of subsidies.>>>

Rented Housing Subsidies

The graph shows the public cost of subsidies for two models of housing provision for low income households.
a) A none profit investment stock.
b) A modest profit rented consumer service.
Both models are calculated for two cases of tenant income:
1. National Average Wage (NAW)
2. Half the National Average Wage (HNAW)
The actual rent of model a) is 30% of income, but the actual rent of model b) is 30% of income plus the Housing Benefit subsidy.

The record shows that many councils achieved 'model a' surplus after only 27yrs; sufficient to support significant building programmes, without further subsidy. (see: Colchester.)