Social Housing Models: Past and Future

This paper looks at the rationale for social housing; examines the models that have been used in Europe over the last century and how social housing might be maintained into the future.

The absence of choice stigmatises Social Housing. “Intentionally Homeless” for refusal to accept a “reasonable” offer of social housing provision by Local Authorities in the UK should be done away with.
Instead, a liberalization of the tax rules to allow the private rented sector to compete for social housing tenants in receipt of Housing Benefit. To make it financially profitable for the private sector, a tax dividend/refund for charging rents at a social rent (determined as the maximum local housing allowance for the unit) and zero capital gains tax should be considered in government fiscal policy.
Currently, this provision is being made by Housing Associations which get discounted land and/or subsidy in order to enable social housing provision. The entry of the private sector in the supply of “permanent housing” would boost the supply side and reduce the cost to local authorities of temporary private sector supply in the form of bed and breakfast hostels and hotels to house the homeless/statutory provision. The social costs/consequences on families and children growing up in deprived and unsuitable environments is far ranging and a monetary value underestimates its true costs given the impact on social development of children of living in such hostels]
Though the idea of broadening supply to private sector institutions is not new; take up has not being material due to the low financial returns.
A preferential tax rate for private sector institutions set up as “Real-Estate Social Housing Companies”/RESHC (with profit companies with shareholders from Pension funds and/or private investors or landlords) may improve take up. The tax rate rates needs to reflect the discount between market and social rents to incentivise the private sector to “invest” in social housing. Where the tax differential is not sufficient to promote investment, local authorities should look to purchase agricultural land (at agricultural market values) and grant planning permission for housing; sites are then transferred to RESHC and/or Housing Associations (via an invitation to bid process with the discount to market value clearly stated) in order for bidders to assess the overall return. Such transparency may ensure that both the local authority and the RESHC shares the benefit of the market value on the sites with planning permission. (though land-owners may also require a return to commensurate?).
Appropriate safeguards are required to ensure that the private sector institutions meet standards as set out for public sector bodies in order to qualify for the tax dividend/discounted land. There should be no restriction in locations designated for private sector social housing renters and fixed terms of between 5-25 years could be muted for social housing provision on the discounted land/ or as a condition for continuation of the tax breaks.
The increase in choice will stimulate competition and ensure that standards are driven up with a greater deal of mobility for social housing tenants to move to areas of employment and growth. Provision does not necessarily have to be in urban/built up areas but could extend to rural areas – small holdings for agriculture. Special provision for gypsies/travellers/others and provision in rural areas for small holdings for agriculture/farming/poultry should also be available as well as provision for specialist groups; including elderly support schemes and youth/family employment support schemes.