UK housing: The £24bn Property puzzle

Generali

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The former bed and breakfast hotel close to Blackpool’s seafront has, like the northern English town itself, seen better days.
The owner, Val, has been renting its 19 rooms to long-term unemployed benefit claimants since 1982. Each tenant receives £91 a week in housing benefit to subsidise their rent — meaning that Val, who likens the house to “one big family”, earns close to £90,000 a year from the state: more than three times the national average wage.

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Val is not alone. The seaside town's landlords received £91m in housing benefit last year. Of the 17,500 privately rented homes more than 14,000 qualify for housing benefit, the highest proportion in the country. The situation is being repeated around the UK, which paid £24bn in rent subsidies in 2013/14, double the amount a decade ago and the equivalent of £1 in every £4 in Britain’s budget deficit.

Iain Duncan Smith, work and pensions secretary, has described the rent subsidies as part of a “dysfunctional welfare system” that often traps those it is supposed to help. Cutting benefit spending is high on the new Conservative government’s list of priorities.

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carslet

The whole UK housing market is a complete mess

This is a good example that there are not enough council places for people these days.

Blackpool is a complete hell hole these days. I was there working for a few days last year and could not believe how much it had gone down hill

But if the government want high house prices to stay then they know they will have to pay housing benefit towards people's rent.

So Duncan Smith talks crap about “dysfunctional welfare system”

stator

The Conservatives answer is to make people homeless and some magical force will sort things out.

wotsthat

carslet wrote: »

This is a good example that there are not enough council places for people these days.

You're proposing is to shift these people from one taxpayer funded housing option to another. At best you might be able to argue that this is less bad for the taxpayer (assuming council housing is more efficient which I doubt) but it doesn't address any root causes.

Long term unemployment and dependency culture seem to be more of an issue in Blackpool than a lack of council housing.

cells

it would be nice to have a breakdown of where and how the £24B is distributed. Is it mostly in London and the SE?

Generali

cells wrote: »

it would be nice to have a breakdown of where and how the £24B is distributed. Is it mostly in London and the SE?

https://www.gov.uk/government/statistics/housing-benefit-council-tax-benefit-recipients-statistics-by-country-region-and-local-authority-march-2012--2

A bit out of date. I suspect London and the SE will have come down a bit. London has the largest absolute number but has the largest population of any region in England so you'd expect that. Also, London has the richest and poorest LA areas in the country so the map by LA reflects that.

HB seems to be paid in cities. Looking at the map I reckon the dark blue areas cover London, Brum, Manchester, Liverpool, Tyne & Were(sp?) and the Scottish Central belt. Plus some tiresome bits of Wales probably.

I think what we take away from the map is that urban areas consume a lot of HB and rural ones very little.

cells

What proportion of that £24B goes to councils and HAs?

Those tenants are more likely to be unemployed and on average have a much lower income than private renters therefore will on average be more likely to be in receipt of HA benefits

cells

Generali wrote: »

https://www.gov.uk/government/statistics/housing-benefit-council-tax-benefit-recipients-statistics-by-country-region-and-local-authority-march-2012--2

A bit out of date. I suspect London and the SE will have come down a bit. London has the largest absolute number but has the largest population of any region in England so you'd expect that. Also, London has the richest and poorest LA areas in the country so the map by LA reflects that.

HB seems to be paid in cities. Looking at the map I reckon the dark blue areas cover London, Brum, Manchester, Liverpool, Tyne & Were(sp?) and the Scottish Central belt. Plus some tiresome bits of Wales probably.

I think what we take away from the map is that urban areas consume a lot of HB and rural ones very little.

This makes sense as the cities and new towns took the brunt of the council house building programs.

eg 10 London boroughs have >30% of their housing stock as council/HA with some of them close to 50% of the whole borough as council owned homes

The London average for social homes is 24%
Kent (13%) Essex (15%) Sussex (10%) Deven (11%) etc have much lower proportion of social homes and would therefore get less HA benefits


Also the proportion of renters to owners in a local area will have an impact. We know that London has a higher percentage of renters than elsewhere

cells

There are close to 5 million social homes, which have an average rent of ~£80 pw which gives the rents of the social sector as close to £21 Billion a year

What proportion of social tenants pay their own rent?

If the HB bill is £24B a year I suspect more than half is going to social landlords not to private landlords. And of the ones going to private landlords I think London will be taking most as it has more private renters and on average the HB bill for a london rental will be more than twice that of those outside London

The-Joker

stator wrote: »

The Conservatives answer is to make people homeless and some magical force will sort things out.

If they cut housing benefit, then either lots of people will be homeless or rents will fall. When they cut the rents will fall, bringing down artificial held up house prices with them.

wotsthat

The-Joker wrote: »

If they cut housing benefit, then either lots of people will be homeless or rents will fall. When they cut the rents will fall, bringing down artificial held up house prices with them.

..or people are encouraged to go out and earn more. I'd expect an increase in homelessness of about nowt.