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October 20, 2021

Money spent on housing support could be used more effectively, new joint report finds

A new report by the Chartered institute of Housing (CIH) and the Centre for Homelessness Impact highlights  that money spent on housing support could be used more effectively: 

  • The Exchequer could save £1.9 billion a year by moving recipients of Housing Benefit (HB) or Universal Credit (UC) from private rented accommodation to social rented housing, whilst also making low income households less vulnerable to homelessness
  • Councils could save £572 million a year if they were able to use social rented housing for the 73,700 lettings they currently use in the private rented sector for households at risk of homelessness
  • The savings in benefit and temporary accommodation costs could offset the cost of building more social rented homes
  • Moving each benefit claimant out of private rented accommodation and into a social rented accommodation will save approximately £1,100 per year in benefit payments
  • Moving each family in temporary accommodation and into social rented accommodation saves about £7,760 per year 
  • 1.7 million tenants in private rented accommodation, where rents are higher, receive housing subsidies through the benefits system which costs £7.9 billion a year.

The report found that building 10,000 homes a year in the social rented sector would cost central government around £40 million a year but could in turn save £44 million a year in housing subsidies if used to house tenants currently in private rented housing or temporary accommodation.

James Prestwich, Director of Policy and External Affairs, CIH said:

“This joint report reveals the full benefit to the exchequer of building social rented homes.

“Councils currently house almost 75,000 households, at risk of homelessness, in private rented accommodation. If these households could be rehoused in social rented homes councils would save £572m a year.”

Dr Lígia Teixeira, Chief Executive Officer, Centre for Homelessness Impact, said: 

“We should ask hard questions about whether the very large sums paid in benefits to subsidise the housing costs of people on low incomes are being used in the most effective way.
“While evidence suggests this financial assistance constitutes an important part of the UK’s homelessness ‘safety net’, our report shows that it is possible to make limited resources go further: for instance, by redirecting some of this money into social housing which can be better value and more secure for tenants.”

Before the pandemic temporary accommodation for families experiencing homelessness was costing local authorities £1.2 billion a year; almost four fifths of such accommodation is met using private rented housing.

The Department of Work and Pensions currently spends £30.6 billion a year on HB and the housing element of UC, which is around 15% of the benefits budget. This is forecast to increase to £31.3 billion by 2025-26 as more people switch to UC. 

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