New plans by Grant Shapps are a recipe for increasing homelessness

Housing minister Grant Shapps recently announced plans to make the unauthorised subletting of social housing a criminal offence, with offenders facing up to two years in prison. The stated rationale is to free up dwellings for those on council waiting lists. But the policy fails to address the distorted economic incentives facing social tenants and in practice it is likely to exacerbate housing shortages while extending official intrusion into the private lives of tenants, lowering incentives for family formation and reducing labour mobility.

Criminal sanctions will raise the costs associated with unauthorised subletting, and this will tend to reduce the activity. However, such a reduction also means that those who previously rented such property from social housing tenants will be pushed into alternative accommodation, adding to housing waiting lists (either directly or indirectly through displacement in the private rented sector).

Moreover, it cannot be assumed that reducing subletting will free-up enough dwellings to compensate for this effect. Given long waiting lists in many areas – and much higher private sector rents – tenants will be reluctant to give up their social tenancies. With the option of subletting less attractive, more may choose to stay put rather than cohabiting or moving away to seek work. Some may live with partners most of the time while visiting their official residence periodically to maintain the tenancy. (By vacating the dwelling they would risk moving to the bottom of the waiting list should the relationship break down). Thus the likely effect of the crackdown on subletting is to increase the proportion of social properties that are empty or under-occupied. This in turn may increase the risk that the dwelling deteriorates (e.g. from damp) or is targeted by vandals or squatters – as the government’s own research on subletting recognises.

Then there is the question of enforcement. There are practical difficulties in determining whether the correct people are occupying a dwelling, particularly if traditions of privacy are respected. There are grey areas such as friends and relatives coming to stay for a few weeks. The crackdown is therefore likely to involve further authoritarian intrusion into private lives. The economic costs involved in employing specialist inspection teams, instituting contested eviction procedures, prosecuting offenders and imprisoning them are also likely to be significant.

Rather than trying to cure the unintended consequences of state intervention with more intervention (the flawed approach of the government’s welfare reforms in general), Shapps should instead focus on removing the distortions responsible for the shortage of low-cost dwellings. Liberalising the planning system and rescinding burdensome building regulations would free the private sector to provide cheap housing as it did in the 19th century. Social housing, together with the £20 billion annual Housing Benefit bill, could then be phased out, with voluntary organisations catering for those with special needs.

But, with regard to this specific issue, it should be a matter of contract between the housing association or local authority and the tenant. The criminal law should not touch the issue. Housing associations and local authorities can develop their own approaches that are appropriate to local circumstances – which may be different depending on the demand for housing. We risk ending up in a ridiculous situation whereby unwelcome squatters who live in a private house who have not forced entry will not be committing a criminal offence, whereas somebody who lets out a council flat to another party whilst they go and work abroad for six months would be doing so.

Richard Wellings was formerly Deputy Research Director at the Institute of Economic Affairs. He was educated at Oxford and the London School of Economics, completing a PhD on transport and environmental policy at the latter in 2004. He joined the Institute in 2006 as Deputy Editorial Director. Richard is the author, co-author or editor of several papers, books and reports, including Towards Better Transport (Policy Exchange, 2008), A Beginner’s Guide to Liberty (Adam Smith Institute, 2009), High Speed 2: The Next Government Project Disaster? (IEA , 2011) and Which Road Ahead - Government or Market? (IEA, 2012). He is a Senior Fellow of the Cobden Centre and the Economic Policy Centre.

7 thoughts on “New plans by Grant Shapps are a recipe for increasing homelessness”

  1. Posted 11/01/2012 at 22:42 | Permalink

    Is there such thing as a “database of occupable volume”?

    Is there a complete list of all the rooms and houses available for people to occupy in the United Kingdom?

    Such a database would allow thinktanks and other charities to make assessments on the actual “lack of housing” (or not) in the UK and may enable supply to better meet demand, without such direct intrusion as indicated.

    Of course, the specifics of the “empty social properties” must be kept confidential, but it could serve as a starting point for decisions.

    Think “big (anonymous) data” for housing.

  2. Posted 12/01/2012 at 10:45 | Permalink

    Eric – I am not aware of such a database if it exists. There have, however, been surveys and estimates of the amount of vacant housing in the UK, which is quite significant, including in the social sector. The geographical distribution of demand is a key problem which is why local authorities’ ‘local connection’ rules are a particular problem as they force councils to house people in expensive, high-demand locations.

  3. Posted 12/01/2012 at 13:53 | Permalink

    Good article, Richard.

    I’m not sure that the final point is necessarily true, though. The government is also planning to criminalise squatting – or at least, they were in June, which was seven months (and therefore probably around three U-turns) ago. Obviously illegally occupying another person’s property is more clearly a criminal matter than sub-letting, which should be a matter of contract law. It should really be enough to evict sub-letters who breach their contract; imprisoning them seems unnecessary.

    The main point that you make, however, is spot on. Subsidised lets and preferential treatment for long-term tenants create barriers to mobility. This prevents people moving to find work, discourages co-habitation and leads to a situation where people will remain for extended periods in poor quality (even sub-standard) accommodation rather than seek a new landlord.

    @Eric: The Department for Communities and Local Government produces statistics on the amount of housing, the amount of empty housing etc. They are available from the DCLG website.

  4. Posted 12/01/2012 at 15:19 | Permalink

    @Tom, Thank you for this. I will see if I can get hold of a copy. If one could produce a “mashup” of unemployment, available vacancies and empty housing as part of a GIS project, this could inform both jobseekers (and companies) of how best to target their search for employment and the best skills to attain.

    Perhaps then transport companies could tailor routes to best make use of the knowledge gleaned from this information.

  5. Posted 12/01/2012 at 16:42 | Permalink

    @Tom – You are of course correct about the plans to criminalise squatting. I wonder whether it will come into force before the legislation on subletting. The criminalisation of squatting might not have been necessary if the civil courts were more effective and if owners were not discouraged by the police from reclaiming their property by force.

  6. Posted 12/01/2012 at 18:50 | Permalink

    @Eric: You’re looking for Housing Live Tables

  7. Posted 13/01/2012 at 18:44 | Permalink

    @Tom – thank you kindly!

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