Home ownership is the most ‘subsidised’ tenure

Another excellent housing "myth buster" by Red Brick (Website of the Labour Housing Group) "home ownership is now easily the most subsidised tenure, much more so than social housing, with private renting receiving the least help".

"It often seems that the term ‘council tenant’ automatically comes with the word ‘subsidised’ in front of it. It is part and parcel of the stigmatisation of the tenure by many politicians and much of the media – and even some within the social housing sector. Following Grenfell, the government in its green paper nodded in recognition of the unfair portrayal of council housing and noted that stigma has a deleterious effect both on the tenure and on the people who live in it. But even as they recognised it, they also repeated their underlying belief in the superiority of home ownership.

Despite overwhelming political and popular support, since 2003 or so home ownership has been in decline as the affordability of housing has deteriorated. For all its efforts, this government has not yet managed to reverse the trend. In his book launched last week, Josh Ryan-Collins showed that this was not just a UK effect, it has happened across what he calls the ‘Anglo-Saxon economies’ where banking systems have been deregulated in  the same way and at the same time. Encouraged by the collateral of bricks and mortar, overly keen banks with liberal lending policies pushed prices up much faster than incomes, hugely stretching price to income ratios. Other countries with different types of bank – notably Germany where banks are regional and based more on co-operative principles – have experienced much less house price inflation and have much less emphasis on houses being investments rather than places to live.

In the UK since 2010 we have seen the amount of public money put into social housing slashed yet there have been many, often costly, initiatives to help slow the decline in home ownership. The net effect is that home ownership is now easily the most subsidised tenure, much more so than social housing, with private renting receiving the least help.

The conclusion that the state gives far more help to home ownership cuts against the grain of conventional thinking. But it has now been very well documented in a report entitled Dreams and Reality? Government finance, taxation and the private housing market published today by the Chartered Institute of Housing and written by housing finance experts Steve Wilcox and Peter Williams. The authors reached their conclusion after an exhaustive analysis, taking account of all types of government intervention in the market, not only spending on grants, loans and guarantees, but also tax reliefs, welfare benefits and regulatory mechanisms which aim to stimulate or control the three main routes by which people get access to housing.

They show that government is directing about £8 billion annually into private housing over the five years to 2020/21, with over half going specifically to support home ownership and the remainder being more broadly aimed at the private market. In contrast, direct funding for new social housing is less than £2 billion annually.

Wilcox and Williams accept that the analysis is bound to be crude because financial support for the sectors comes in different forms – for social housing it is mainly grant spending whereas much of the private market support is via loans or guarantees. Some specifics:

• In terms of tax reliefs, home owners benefit much more than private landlords: net tax relief for owners was some £29 billion in 2016/17 (£10 billion paid in tax; £39 billion received in tax reliefs) whereas private landlords paid net tax of at least £8 billion.
• Within the benefits system, tenants receive much more assistance than home-owners, with about £15 billion annually going to social housing tenants and £8.5 billion to private renters.
• Private renting has a big advantage in mortgage regulation because it can access interest-only mortgages whereas new home buyers have to navigate various restrictions on mortgage availability.
• Despite the huge increase in general support for the market, the government safety net for those homeowners facing financial difficulty has been much reduced. Support for mortgage interest will soon migrate from paying mortgage interest charges for unemployed home buyers to providing loans – a further erosion.

CIH chief executive Terrie Alafat CBE said:

“This report demonstrates just how much government support is going to the private market, and to home-owners in particular – probably contrary to many people’s expectations. It takes a comprehensive look at the way the government supports our housing system – and we would urge ministers to do the same. Currently just 21 per cent of government investment is going to affordable housing. Rebalancing this budget to support people on lower incomes who can’t afford to buy could make a big difference. It is vital that the government supports councils and housing associations to build more homes for social rent.”

Wilcox and Williams also sneak a look into the future. If home ownership is stabilised at around 60% and if the social housing sector does not grow proportionately, it follows that future net growth will come mainly in the private rented sector. This will lead to a substantial long term increase in the cost of housing benefit (especially as working private tenants retire and become eligible for rent support). Unlike social housing, where housing benefit is retained by landlords and surpluses recycled, HB to private landlords funds profits which are removed from the sector.

‘It serves to make the point’, the authors say, ‘that the continuation of current trends is not a cost-neutral option for government’.

And in a massive understatement they comment that ‘there are questions as to whether we are spending as efficiently as we can in the housing sector, a pertinent point given the general pressure on public finances.’ In particular, they question the emphasis on intervention on the demand-side through Help to Buy and other schemes rather than supporting supply-side initiatives (ie directly building more houses rather than increasing buyers’ purchasing power).

We may have to wait a long time to see ‘subsidised home owners’ replace ‘subsidised council tenants’ in the headlines. But this report demonstrates that government intervention has become critically important to the operation of the private housing market. It seems highly unlikely that the schemes chosen by the government will lead to less volatility and house price inflation. Whatever happens, in future a much sharper focus will be needed on private renting, both in terms of the cost to households in rent but also the cost to government in benefits".

"Shifting Housing’s Overton Window"

Another great article by stevehilditch on Redbrick (even though I had to Google "Overton Window")

"It's a sign of a remarkable comeback for social housing that the new CIH report ‘Rethinking Social Housing’ contains few surprises. Only 3 years ago this report would have seemed a radical contradiction of the dominant narrative. It probably would have been attacked for lacking realism and harking back to the long lost 1970s.

Social housing reached its nadir around and after the 2015 General Election. It was unaffordable, past its sell-by date, consigned to the history books as the government and most of the housing industry focused their concerns on ‘the only game in town’, building homes that did not require grant, at significantly higher ‘Affordable rents’ or market prices, pushing forward with policies (right to buy, 'conversions', market sales) that would feed the development programme.

Housing’s ‘Overton window’ - the range of ideas tolerated in public discourse – had become very narrow indeed and those of us who argued for social housing were made to feel oddballs well outside mainstream opinion. So it was that the very expensive National Housing Federation ‘Homes for Britain’ campaign prior to the 2015 Election choked on the words social housing. Joining the newly formed SHOUT campaign for social housing felt like heading upstream without a paddle.

So, what explains the turn-round between then and now, when the government is allocating funds specifically for new social housing, everyone is reviewing and rethinking the purpose of social housing - coming to the conclusion that it is an essential component of a fair and functioning housing market - and CIH feels confident enough to describe it as 'a pillar of the welfare state' without provoking guffaws of laughter?

Here are several possible factors. First, the refusal of tenants, campaigners, many people working at the grassroots in housing, and a few brave housing leaders, to stop banging the drum for genuinely affordable (as opposed to joke affordable) housing. Second, over-reaching by the Tories so their housing policies and the consequent rise in homelessness just confirmed their lack of empathy for poor and disadvantaged people. Third, the advent of unashamedly pro-social housing Jeremy Corbyn to the leadership, which changed the nature of the debate in the Labour Party. Fourth, the general public, who did not obey the rules of the Overton window because they never lost sight of the simple idea that council housing was a good thing – even if they also thought it was subsidised and not for them. And fifth, Grenfell, which changed everything.

The new CIH report reflects a lot of background work with tenants and the sector and demonstrates that social housing is firmly back within the spectrum of acceptable thought. It identifies 3 key themes:

Social housing, its affordability and the security it offers to people living there, are highly valued
It has much wider value by allowing residents to prosper and thrive, through its contribution to tackling poverty, the success of local and national economies, and individual health and well-being
However, there is stigma attached to social housing as a ‘product’ and to the organisations providing it and the people living in it

And so,

"Social housing has a unique and positive part to play in housing people, helping to create thriving, mixed communities, and meeting needs that the market will not. Done right it does great things. But it isn’t always the case that homes and neighbourhoods are well managed and well maintained and it’s important that we own and address this.

"It’s time to reclaim the role of social housing as a pillar of the society we want to be, along with free health care and education – and it must be at the centre of government plans to solve the housing crisis. And, having ‘reclaimed’ the role of social housing, we need to push on – creating an ambitious vision of what a plentiful supply of social housing can do help people thrive in communities that prosper."

Some of the information in the report might surprise a general reader. For example, registered unemployment amongst social housing tenants is only 8%. The vast majority are either in work, retired or unable to work due to physical or mental disability or carers. Homeless people also take up around a quarter of lettings, far fewer than might be imagined.

The report contains a helpful discussion of the question ‘who is social housing for?’ based on a wide range of views from the public and the sector. The answer seems to be that ideally people want the sector to be ‘for anyone’ but that pragmatically it will remain highly rationed for many years to come. Given the vital role that security of tenure plays in enabling people to become established in their neighbourhood and having a platform on which to build their future, it is remarkable to note that there are still widely differing views on whether social housing should be a long term solution or, given scarcity, a short-term, reviewable, stepping stone.

CIH look forward by identifying six areas for further action, with some detailed proposals attached to each - including, for example, a call to suspend the right to buy which might become the headline proposal for the report.

• there should be a new definition of social housing to get away from the current confusion.
• tenants must have a greater voice.
• there should be an increase in the supply of ‘genuinely affordable’ homes.
• everyone should be able to afford a place to call home, with a move towards income-related rent-setting.
• homes and neighbourhoods should be better managed.
• there should be greater efforts to challenge the stigma and stereotyping attached to social housing.

It’s a reasonable agenda. And given the general drift back to accepting the importance of social housing it will be fascinating to see how far the government is willing to go when it releases its Green Paper before the summer recess.

Election of CIH London Regional Board 2015

I have just voted on-line for a new Chartered Institute of Housing Regional Board for London. I had to support my former Tower Hamlets colleague Jan Taranzuk. The only Chief officer I have ever known who use to work in Housing and at the same time live in an inner city estate.

The closing date for receipt of ballots is Wednesday 21 January 2015 at 6pm

Chartered Institute Housing Election 2012

I've just taken part in the first ever election for the Vice President of the Chartered Institute of Housing (CIH). You get a email with a unique security code and you cast your vote on-line at the independent Electoral Reform
Services website.

The Vice President will become the President of the CIH next year. It's a bit suspect that this is the first ever openly contested election at the CIO but better late than never I suppose. I posted here that I know one of the candidates, Jan Taranczuk, quite well (his wife Kathy use to be my Tower Hamlets Local Housing office boss for many years). I don't know his opponent, Paul Tennant, who is the CEO of Orbit Housing Association.

If you are a member of the CIH you have until 30 January to vote. You can see their election statements here. There is an online husting tomorrow 12pm on the Guardian Housing Network blog. This afternoon on the Inside Housing site here there is a online poll (see picture right: double click to bring up detail) and both Jan and Paul were running neck and neck at 50%.

CIH Presidental Elections 2012

I've been an (inactive) member of the Chartered Institute of Housing for nearly 20 years and I don't recall there ever being an election for the top jobs?

This year there will be an election for the CIH Vice President between Jan Taranczuk and Paul Tennant. Under the CIH rules whoever is elected will become the President of the CIH in 2013.

I don't think I have ever met Paul who is the CEO of Orbit Housing Association (one of the biggest).  However, Jan use to be a senior Housing Manager in Tower Hamlets and his wife Kathy was my line manager in Bow for many years.  I've never worked with Jan but one thing that did impress me was that he was one of the very few senior social housing managers who still lived on an inner city Council Estate.  They did move out eventually to Kent to be near to family. Jan also runs the Housingstories website.