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  • LHA/Universal Credit

    Housing benefit bill to hit £70bn by 2050



    The failure by multiple governments to build social housing will send the cost of housing benefit soaring to over £70 billion a year by 2050 unless action is taken urgently, the Centre for Social Justice (CSJ) has warned.

    The alarm is sounded as the Chancellor puts the finishing touches to an “end of austerity” Budget in which he has to balance pressures for higher spending on areas such as health and welfare, while avoiding big increases in taxation.

    It also comes after the Prime Minister has sought to strengthen councils’ ability to build more homes by scrapping their borrowing cap, and get tougher on private developers dodging their social housing commitments.

    But the CSJ warns that so-called ‘affordable’ new homes will to be out of the reach of the lowest earners and so will do nothing to reduce the burgeoning housing benefit bill.

    The lack of council houses has led to a surge in the number of housing benefit recipients renting in the private sector. The number of private renters doubled since the millennium. A benefit recipient in the private rented sector costs the taxpayer 25 per cent more on average than one living in social housing.

    CSJ analysis shows half the housing bill – a total of £34.5 billion a year – will go to private landlords by 2050.

    The CSJ is calling for the Government to scrap the obligation for developers to build so-called ‘affordable houses,’ which the CSJ says are “ultimately inaccessible to those most in need,” and instead mandate the building of social housing in the planning system.

    The CSJ also argues that councils should be able keep more of the money raised through Right to Buy sales to fund new housing, rather than having to send huge sums back to the Treasury.

    Andy Cook, chief executive of the Centre for Social Justice commented: “The drastic reduction in the supply of new council homes over the decades has had devastating consequences for both the taxpayer and the lowest earners to struggle to meet the cost of rent.

    “At the moment billions of pounds are being ploughed into subsidising rents but too little is being done to boost the supply. As a result, fewer than 6,000 social rented homes were built in 2016, down from almost 40,000 in 2011.

    “Housing has become one of the most urgent political issues of our time, but often the difficulty for the middle classes to get on the property ladder deflects focus from those for who struggle to meet the growing cost of rent.

    “Rather than subsidising more so-called ‘affordable’ housing for middle earners, we need to focus on the construction of social housing for those on the lowest incomes, while also ensuring that these become a springboard to homeownership.

    “The alternative is an eye-watering bill for the taxpayer and no alleviation of the misery of ever-rising rents for those at the bottom.”

    CSJ housing commission chairman Lord Best commented: “The CSJ is to be congratulated on highlighting the costs of failing to build homes at rents affordable by those on the lowest incomes.

    “This is not only about the pain to the families pushed into private renting they can ill afford but is also about the huge costs to the taxpayer of funding support for these households – rather than investing directly in new low rent homes from councils and housing associations.”

    The report states: “The housing crisis has devastated lives. The experiences of millions of families squeezed by soaring housing costs, thousands of children growing up in (at best unstable, at worst unsafe) temporary accommodation, and many of those sleeping rough on the streets have been immeasurably shaped by the lack of housing they can afford.

    “Both the prime minster and the leader of the opposition have made fixing the housing crisis a key component of their domestic policy agendas. Yet while all parties increasingly recognise the electoral significance of housing, it is vital we do not forget those sometimes heard less loudly at the ballot box.

    “In this report the CSJ housing commission examines the costs of crisis – that is, not only the consequences of the affordable housing shortage for poorer households in England, but also the eye-watering financial implications for the taxpayer of maintaining the status quo.”

    The report concludes: “We believe that, if the Government adopts our social justice housing strategy, the people facing the worst of the housing crisis may find their lives immeasurably improved.”

    SEE ALSO  -         Cost of temporary accommodation on the rise

    UP NEXT -             First concrete signs of the impact of S24

    DON'T MISS -        What causes homelessness in the UK?

    NOW WATCH:

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    2050 is too far away for anything but an educated guess - we have no idea what will the UK pop be in 2050 post Brexit - nor which locations will pop be concentrated in at that stage.

    It is also disingenuous when talking about half of HB going to PRS - when the heavily taxed PRS already repays around 85% (£8 bn pa) of the £9.3 bn pa LHA payments via tax on rental incomes - latter being far higher post S.24

    Also noteworthy is that DWP say that 77% of the 4.7 million HB/LHA claimants are in non working households (many being retired) - so when talking of "affordable housing" being out of reach of low paid it ignores that wages are likely to form a smaller part of future household incomes as economy is increasingly automated.

    Govt need to flag details of how they propose to build millions of new social/affordable homes - as if this hinges largely around new borrowings by LAs - we can look at the outcome of HAs borrowing 86% of the cost of new housing now that Capital Subsidy from Govt has been cut to 14% - net outcome being that rents on those new builds are close to 80% MV to service loan repayments.

    Noteworthy too is that millions of the post war Council homes were built on almost free land - hence LAs CPOd many acres of cheap agricultural land at original use value of £100 (one hundred) per acre - and allowing for roads infrastructure etc built 10 homes per acre - so land plots were a tenner per home - even less for flats. Contrast that with today's land costs.

    In conclusion - taxpayer either pays for almost entire Capital Subsidy - or we opt for more HB to make up difference of social rent v 80% MR.

    Even with social rents some 65% of all HB/LA payments go to social landlords today (EHS) as SRS has since 1977 change to needs based tenancy allocation become a dumping ground for the destitute.

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    I laugh at any Govt. projection figures for 30 years in the future when they struggle to get a 3 year projection correct.

    Why are stories like this even written? Slow news day?!

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    Irrespective of the accuracy of thirty year projections the cost of benefit will increase significantly over the next thirty years.

    How is the government likely to tackle this?  Increased social housing via councils and housing associations, rent controls, increase the minimum wage, revise rules for qualifying for social housing so just for those that cannot afford to rent in the PRS.

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    My logic says rent control is the way govt will come

    if over 50% goes to PRS it has to come

    if they did bring in rent control it would also put a ceailing on capital values


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    I'm not sure they would go as far as rent controls but I think they will push in the budget for options of longer tenancies, options for tenants to buy their BTL with a small benefit in tax to the landlord but there will be no relief to landlords on S24 etc.

    Even though as JC says they ought to keep LLs on side to help with the crisis in a cost effective way, the electoral benefit of being seen to beat up landlords far outweighs using them as part of the solution.

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    I have said it we are not seen as helping the houseing probs be we are seen as causing them

    we are such easy targets that’s why I predict rent control

    the public would love it the landlord would not but who cares what we think

    they have never listend to is anyway

    if it comes it will cap all landlords from buying and speculateing on house prices

    I can’t see any reason why not to be honest

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Why would you want to keep landlords on side when they go on tv - news last week - and say they will evict 40 plus tenants, landlords threatening to evict to secure extra payment from local authority, evicting to obtain increased rent from employed person, landlords overcrowding small properties as housing benefit based on number of people rather than size of property.

    It is probably the UC tenants that have been treated worse of all in the PRS.

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    Shame is the wider public are too myopic to see that in hammering private landlords they are in effect sawing off the tree branch they are standing on.

    One thing we can be sure of - is that in short to medium term anyone needing housing - but who cannot afford to buy - will be almost 100% reliant on PRS - as only the destitute cohort are in line for social housing.

    Even then the able bodied/childless/working age singletons/couples are expected to look to PRS.

    One thing I can foresee is that with ongoing LHA cap - expensive locations will become off limits to poorest households and there will then be great swathes of ghetto locations across UK where people will be just scraping an existence day by day.

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    Rent controls could shift the public’s attitude towards landlords, not saying it will happen or viable but if rents were say 50% of current levels do you think there would be the same negative attitude towards landlords?   I doubt it, so then the question is at what level would the public’s attitude towards landlords change?

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    I dont think rent level control  alone would affect the negative attitude

    The whole tenant v LL culture would have to change and that would take a generation

    But I fear wherever there are conflicting goals, the us v them attitude will by default  thrive

    This occurs in a multitude of other  relationships

    A traffic warden has a job to do but I ain`t never going to love then even it the fine is halved

    A referee will only be supported 50% of the time

    Bosses have power over their employees so smiles between them are often tight, not natural

    I just hope the press cease their constant and deliberate stoking of the conflict

    They can make it seem much worse than it actually is with just a single inflammatory headline

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    Jonathan Clarke. http://www.buytoletmk.com