The government has announced plans to sell social housing in more expensive areas, and re-invest the money raised to build new social homes in cheaper areas. The plans come on the back of a report from think tank the Policy Exchange, that showed that one in five social housing tenants is living in a home worth more than the average privately owned property in the local authority in which they stand.
Proposal
The report recommends that as properties become vacant, they should be sold. At current vacancy rates, that would generate £4.5 billion a year, enough to build up to 170,000 social homes. They argue that it is unfair that social housing tenants should be able to live in property that many others who would be unlikely to get social housing would be unable to afford. The plan could help to cut social housing waiting lists and create jobs in the construction industry.
Criticism
The plans may be welcomed by many – research shows that around three-quarters of people believe that social housing tenants should not be offered homes worth more than comparable homes in the surrounding area. However, the plans have also faced considerable criticism. The plans will, critics argue, cause ‘social cleansing’ of wealthier areas, particularly when the impact of changes to housing benefits is taken into account too. The impact would vary from region to region, with nearly a third of social housing in London affected, while in the North-East, less than a sixth of properties would be affected.
The National Housing Federation, which represents housing associations, came out against the plan. They argued that with access to mortgages limited and private rents rising, it would be unfair to further price those who cannot afford to live in more expensive areas out of the market completely.
Property Owners
For those who already own property, the scheme may have an impact too. It may lead to further inflation of prices in the wealthier areas, while reducing them in cheaper areas as housing supply there increases.
The central London market in particular is dominated by foreign buyers in some areas, and this scheme could help fuel that trend. It is also not clear where the new properties would be built. Areas where there is the space to build new homes are often on the edge of town, in areas with poor infrastructure. Some are on flood plains, and therefore difficult to get landlord insurance for.
With housing minister Grant Shapps firmly in favour of the proposals, they are likely to become reality. Time will tell what impact they will have on housing waiting lists and homeowners.