Mixed response to social problem

A review of housing has called for councils to provide more housing in areas where there are higher earners and more help for social tenants to buy their own homes.

The report by Professor John Hills was commissioned by Ruth Kelly, secretary of state for communities and local government, and is part of a wider review of housing policy.

In 1980, over five million households lived in social housing. Today it is under four million. Provision has been constrained, with new lettings focussing on those in greatest need, so people in social housing are more likely to be on low incomes than in previous decades.

There is an increasing polarisation between private and social tenure. Two-thirds of social housing is still located in areas first built as housing estates. While these areas were originally mixed, poverty has become concentrated. Nearly half of all social housing is located in the most deprived fifth of neighbourhoods. Hills calls for a greater mix of social and private housing, proposing that spare land on council estates should be used to build private homes.

The problem is exacerbated by social tenants’ limited chances to move for employment. Nationally, one in eight moves is associated with work but only a few thousand social tenants per year move for job-related reasons.

It is expected that changing demand patterns will put more pressure on housing generally. The number of households is expected to grow rapidly in the next 25 years.

House prices in relation to incomes are at a historic high and even if all the house building being promised comes to fruition, at best it would prevent the ratio rising.

And then there’s the bank of mum and dad. Those first-time buyers who have assistance can afford higher deposits than those who don’t, by the equivalent of more than a year’s income. Also, elderly owners who have benefited from a build-up of equity could leave greater inheritances. If this happened, the report says it would fuel a “cascade of property wealth through generations, helping to support house prices that would be hard to sustain on the basis of mortgages alone”.

This means those who have parents and grandparents in social housing will see their potential to own homes decline.

Speaking at the launch of the report, Kelly said sustainable home ownership is in everyone’s interests. Where the boundaries of sustainablility lie is the thing that is now up for debate.