Making Housing Affordable
In Part 1 we saw that the average cost of subsidy at present for each social property is around £60,000, so the cap would allow an increase in the cost of the average social property constructed (though any cost of construction would no longer have to be covered immediately as set out in the Path to Ownership scheme). This means that this cap would allow decent quality social housing while achieving the goal of preventing expensive social properties. Such a limit on the value of such properties is necessary for various reasons. Firstly, it ensures that low income households will be able to buy Path to Ownership properties over time. Secondly, it ensures that rents based on the interest paid on the bonds needed to finance these properties will not be so high as to drive tenants into poverty. Thirdly, government support should not end up subsidising housing that is better than the average home-owner can afford. Finally, these measures will reduce demand. Without some kind of cap, councils may end up housing more affluent households. Social housing should be for working low income households, not middle class ones. This cap will ensure that middle class households do not try to obtain subsidised housing. This financial cap will also create a three/four bedroom cap as the maximum size of a social property, as in no region homes bigger than four bedrooms could be provided to those in social housing within this cap. This cap follows similar recent changes in Housing Benefit. At present, families are dishonestly encouraged to believe that they don’t need to limit their family size and the council will always provide. Government cannot provide ever bigger homes for social tenants. And neither should it, particularly under current financial circumstances. For this to work there is a need for a further change in how social housing is allocated in London and potentially more affluent district councils. The new cap would mean that in more expensive London boroughs and possibly in the most expensive parts of other regions (e.g. some district councils in the South), social housing will no longer be an option because it is impossible to build a property that would fall under the regional cap. Therefore, the allocation of social housing in London should shift from the boroughs to a single London-wide allocation scheme run by the Mayor’s office. Tenants would no longer be seen as from particular boroughs, but instead as part of a London-wide allocation system, though obviously they would have preference for which area (e.g. west, east, south, north) they wanted to live in, and this should be respected. Similarly, if there are particular parts of the UK where all social property would be above the regional cap, then administration of social waiting lists within that area would have to be merged with surrounding areas so that claimants could live as close as possible to their desired location without obtaining a property more expensive than the regional cap in their area allows.
These changes will enable the scrapping of most current housing expenditure As detailed at the start of this paper, current expenditure on housing is around £9.3 billion a year. However, as part of these reforms this support can be largely withdrawn – as affordable homes will no longer be centrally supported, and social homes will be funded using the bond mechanism outlined above rather
108
|
policyexchange.org.uk