Government subsidises housing costs of those on low incomes in two distinct ways: by supporting their rent through the benefits system and by providing low cost rented homes.
Because the latter are in short supply, more and more low-income households are living in private rented accommodation, where rents are higher and, as a result, they need more support from benefits. This project will take a look at if more value for money could be achieved by redirecting money which is currently spent on housing benefit and universal credit on other projects, such as investing in social housing.
- Lack of affordable homes is a key factor in rising homelessness
- Investing in social homes in areas where the gap with private rents is greatest could provide greater value for money as claimants for housing benefit would be less.
- Building 10,000 extra social homes which were allocated to those in PRS could bring savings to the order of £11.2m
- Increase of supply of social homes could be done through ways such as supplementing grant funding for new builds in areas of greatest demand, supporting social landlords with purchasing back properties that were sold as right to buy, converting homes that are let at a higher rate to social rates and cancelling additional debt imposed on local councils in 2012
- The welfare system plays an important part in helping to prevent homelessness, the shortfall of housing benefit is an issue helping to cover this shortfall could help prevent homelessness.
- Funding to cover rent gaps could be targeted to areas in most need, making the system fairer.
How we went about it
This project, carried out in partnership with the Chartered Institute of Housing, looks at the economic case for a change of priorities, towards providing more low-cost rented homes and making savings on benefit payments to private landlords.
This project highlights that a relatively modest shift in resources to deliver 10,000 more social rented homes in the short term could yield significant returns. This could be treated as a pilot project in which the associated benefits are measured, and the hypothetical savings tested in a range of different local authority areas and regions.
John Perry, Chartered Institute of Housing
Sam Lister, Chartered Institute of Housing