Cameron’s council-housing plans could be counterproductive

David Cameron has stated that his government will consider ending security of tenure for social-housing tenants. Those tenants who were in employment would be “encouraged” to rent in the private sector or to buy, so freeing up a scarce resource for those in severe housing need. Such a policy would bring social housing into line with the private rented sector where assured shorthold tenancies are the norm.

Currently social housing is means-tested only at the point of entry, and this means that a lucky few can receive a tenancy for life regardless of how their circumstances might change. However, time-limiting tenancies means that households can be means-tested at regular intervals (perhaps every three or five years). If their income is above a certain threshold their tenancy would not be renewed. A less punitive scheme would be to offer incentives for a household to leave, such as helping with a deposit to purchase a dwelling.

The idea of time-limited tenancies is not, however, a new one. It has been around for a number of years and Ruth Kelly was apparently very keen on the idea when she was Secretary of State at DCLG in 2007. New Labour saw this a means of helping the homeless without the huge outlay of building new social housing. But, as with many policies, changes in ministers and the dead hand of Gordon Brown put paid to it.

Whilst the idea has some attraction, especially with over 1.5 million households on housing waiting lists, it does have a number of problems. In particular, it runs completely counter to the government’s welfare to work agenda: time-limited tenancies mean that households would have to leave when they find work to be replaced by workless households. This would massively increase their housing costs and perhaps encourage them back onto handouts. A social tenancy would remain for life only if you stayed poor and on benefits.

Second, we should consider the impact that the policy might have on social housing estates. As Iain Duncan Smith argued last week, there are certain estates in Britain that are work-free zones, inhabited by families who have not been in employment for several generations. The policy of time-limited tenancies will institutionalise this and ensure that an even larger percentage of tenants are dependent solely on benefits.

Third, the policy contradicts policies aimed at encouraging shared ownership and key worker housing funded by housing associations. It would seem perverse to insist that working tenants leave their dwelling, whilst allowing nurses, teachers and policemen to become part-tenants of social housing.

More sensible, as I argued in my IEA monograph in 2006, would be a common tenancy for all rented housing – private and social – with financial support offered to households and not landlords. This reform could be quite readily tied into the DWP’s proposed unified benefit system and allow for proper competition between landlords instead of the collusion that exists at present where social rents can be set according to government targets and not based on the market. Imposing time-limited tenancies on the social sector without undertaking more fundamental reforms would be counterproductive.

3 thoughts on “Cameron’s council-housing plans could be counterproductive”

  1. Posted 04/08/2010 at 14:13 | Permalink

    It seems like this is another coalition policy that has not been fully thought through. The UK’s housing problems will not be solved by tinkering with tenancy agreements. The key element is liberalising the supply side by loosening planning controls and rescinding building regulations.

  2. Posted 04/08/2010 at 20:20 | Permalink

    I agree we need to look at planning laws, but building control? As a civil engineer, I have seen some pretty poor designs (structural, mainly foundation) that building control have prevented. If we loosen controls, every “two blokes and a transit” builder will overnight become a structural engineer, leading to housing stock either vastly over engineered, or dangerously under engineered, and will resemble a third world country

  3. Posted 04/08/2010 at 23:44 | Permalink

    They could introduce laws for vacant properties or multiple homes to make single home ownership cheaper.

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