UK government under pressure to increase housing stock

A report by the National Housing Federation has cast a very interesting light on the UK property market and in particular taxpayer funded housing benefit. The housing benefit system is slightly complicated because it accommodates those who have zero income as well as those in employment but not earning enough to cover the cost of housing and general living costs. So, how much has the UK government paid out in housing benefit to the private sector over the last 10 years?

Near doubling of payments over the last decade

Interestingly the UK government has not challenged the £9.3 billion housing benefit figure the National Housing Federation believes has been covered by UK taxpayers over the last decade. While this is an enormous amount of money it is worth noting that the private sector has covered a lack of supply from government sources. Indeed the National Housing Federation, which represents the non-profit housing sector, readily acknowledges that a lack of new builds has put us in this situation.

Some telling facts from the report include: –

•    A 42% increase in housing benefit paid to private landlords since 2008
•    An increase in housing benefit recipients from just over 1 million to a staggering 1.5 million since 2008
•    Confirmation that almost one in three housing benefit claimants are housed by private landlords as opposed to one in four in 2008
•    There has also been an increase in the number of claimants in the private sector for those with net incomes between £20,000 and £28,000 per annum

Private landlords smeared unfairly

As we touched on above, while there may have been a significant increase in housing benefit paid to private landlords let us not forget that the UK authorities in years gone by have underinvested in new builds to the tune of hundreds of thousands of properties. Time and time again governments have promised to increase investment in council/social housing to no avail. Even the National Housing Federation acknowledges that restrictions on funding have held back social/non-profit housing schemes leaving a gap in the market which had to be filled by someone – in this instance the private sector.

It is rather bizarre for politicians and social housing federations to now turnaround and claim that housing benefit payments to the private sector are too high. Where were these bodies when buy to let investors were injecting cold hard cash into the sector? Where were the protections afforded to UK banks when property investors struggled to make ends meet after the 2008/09 economic downturn?

The truth is that governments and social housing bodies were happy for buy to let investors to put their own cold hard cash into the sector. When you take into account that all private investors are susceptible to commercial challenges did they expect them to do this for no return?

Current and previous UK governments to blame

It is becoming more and more apparent that chronic underinvestment in new builds across the UK has led to significant growth in the number of private rental arrangements. As a consequence we have seen an increase in taxpayer funded housing benefits although it is worth noting that social housing federations also receive government assistance. So, it seems as though it is fair game for investors to take a chance on property assets with their own money but when they ask for a return on this investment, a fair return, they are deemed greedy?

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>