Why time-limiting social tenancies won’t aid mobility

By Mike Haw

The comments made by David Cameron yesterday show a remarkable turnaround in Conservative housing policy. Before May’s general election, the Conservative leader accused Labour MPs of trying to ‘frighten’ voters about his party’s plans. And yet after less than 3 months in office, their concerns are ringing true.

However, there are major flaws in the policy Cameron advocates, and it’s unlikely to improve the mobility of social tenants.

Firstly, the policy would only apply to new tenants, in 2008/09 there were only 157,000 of them. This equates to around 4% of the 3.9 million social homes nationwide, and will not free up the numbers of homes necessary to meet the mobility needs of tenants.

Secondly, and more fundamentally, the policy would provide perverse work disincentives for new tenants. Once a new tenant has found work, they will be told they are no longer ‘needy’ enough to stay in social housing and be forced to look for a home elsewhere. This will only increase the marginal tax rates suffered by those coming off out of work benefits, doing little to ‘make work pay’.

Indeed, time-limiting social tenancies may see more people being trapped in poverty. In order to stay in their homes, tenants will have to prove how great their ‘need’ is, a further disincentive to work.

There is alternatives to this policy, however. The problem facing social housing is one of supply – there simply aren’t enough homes to go around. This shortage stems from Conservative housing policy of the 1980s, which failed to ring-fence the receipts of ‘Right to Buy’ sales to build new homes.

A simple way of increasing supply would be to get council’s building again. John Healey planned to do this by reviewing the Council Housing Finance system, which would have allowed local authorities to raise funds against the value of their current stock. The Conservatives pledged to continue this review, but have already missed the July deadline for publishing the government’s response.

Another simple idea would be to review the housing options of the 1.8 million households on council waiting lists. There is no assessment to join the waiting lists, meaning that using it to judge levels of housing need can be misleading. A housing options service, targeted at those on council waiting lists, would help many households find a suitable solution to their housing needs without necessarily entering the social housing market.

For a housing options service to work, those on the housing waiting lists would need to be assured that the private rented sector would provide the security they need. By improving the regulation of the private sector, and offering tenancies for longer than 6 or 12 months, many in housing need may find that private renting is the right option for them.

However, these solutions still do not tackle the major issue of housing policy – the affordability of home ownership. For too long, house price inflation has risen at a much higher rate than incomes, making homeownership all but impossible for low and middle earners. Only by restricting house price inflation, and making home ownership more affordable, will the mobility of social tenants improve.