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Mythbuster: Home truths about housing

Red Pepper’s guide to the reality behind the housing crisis

April 22, 2013
7 min read

Myth: Housing benefit is an over-generous handout to tenants

The Tories and the tabloids have made quite a fuss about the soaring housing benefit bill, which now stands at £23 billion. But the truth about housing benefit is that it is really ‘landlord benefit’.

The cost of landlords providing accommodation generally increases very little each year. Yet thanks to the market, rents continue to rise. Landlords then charge whatever they think they can get away with. The extra money spent on housing benefit isn’t going to the tenants – it’s going to their landlords’ profits.

The standard of housing doesn’t go up with the prices either. It’s a bad deal for the public purse, and a bad deal for tenants stuck in sub-standard homes.

Myth: Housing benefit is mostly claimed by unemployed people

Contrary to the picture usually painted, housing benefit does not mainly go to unemployed people – in fact, 93 per cent of new claims for housing benefit in 2012 were from people with jobs.

Overall, a quarter of recipients are retired, and many are disabled or carers.

Myth: Public housing is subsidised

The vast majority of council homes were built decades ago, and the cost of building them has long since been recouped many times over by tenants paying rent to the council. There is no ‘subsidy’ – far from it, council housing is in fact a public asset that brings in more money for councils in rent than it costs in management and maintenance.

Until last year the government was also taking a slice of the surplus cash – £200 million a year. Now that has been scrapped, but what the government stopped taking with one hand it took with the other, by ending major repairs grants and pushing mostly-fictional ‘historic’ housing debt onto the councils.

When a council sells off homes, whether under the ‘right to buy’ scheme or to a housing association or similar, it is trading in a long-term asset for a (usually heavily discounted) short-term cash boost. Ultimately this means the public sector loses out. In contrast, if homes stay as a public asset, they can be borrowed against to support new investment.

Myth: Migrants can jump the housing queue

This is one of the most pernicious myths, used to whip up racism by the likes of the BNP but not countered properly by the mainstream parties.

The truth is that most recent migrants are barred from applying for social housing and have to rent privately. Migrants with long-term immigration status can apply but are treated in exactly the same way as British citizens. There is no ‘preferential treatment’ for migrants.

Last year just 9 per cent of social housing lettings went to people who were not British citizens – and half of them were citizens of other EU countries.

In reality, migrants who don’t have leave to remain in Britain are treated very harshly. Even if they are homeless, they cannot get short-term hostel accommodation. The only exception to this is if they have children – but while social services may provide somewhere short-term in these circumstances, their focus will generally be to try to deport the family back to their country of origin.

Asylum seekers are not entitled to social housing. Indeed, they cannot get homelessness assistance or welfare benefits of any kind.

Myth: Having children is a quick ticket to getting a council house

Again, getting pregnant gets you no special treatment in the housing system. The idea of women having kids to get posh homes is tabloid-fuelled nonsense.

A pregnant woman might be entitled to temporary accommodation but only if she did not become ‘intentionally homeless’. Until recently, once in temporary accommodation she would be put on the housing waiting list – but unlike others on the list, refusing any offer of housing could get her thrown out. As a result, homeless households tended to end up in council homes that other people on the waiting list don’t want. Since last November, councils can send homeless households into private rented tenancies, so there is no longer any link between homeless households and the council’s waiting list.

Any woman deliberately getting pregnant (and somehow getting herself made homeless without it appearing intentional) to ‘jump the queue’ would be setting herself up for a huge ordeal. She would face weeks in a hostel, months or years in temporary accommodation and would then be given one offer of a council flat or house, which she would be told that she could not refuse, whether she liked it or not. The reality is that it doesn’t happen.

Myth: The problem is planning red-tape, causing a shortage of housing

Plenty of housing projects have been given planning permission – in England alone there are 400,000 potential homes with planning consent that have not been built.

The real problem is that the private housebuilding firms have failed. During the boom they built tiny homes at inflated prices, and since the bust they have withdrawn from existing schemes and hardly built anything. Even where there is the will it is almost impossible to get the finance. A state programme of council house building, on the other hand, would break the logjam – and create jobs too.

The number of homes being built is not the whole issue, though. Solving the housing crisis is not just about increasing the supply but redistributing what already exists. That doesn’t mean poor people’s spare bedrooms but the huge amounts of housing in the hands of second-home owners, people who live in mansions and the like. If housing were allocated by need, instead of ability to pay, the ‘shortage’ would rapidly disappear.

Challenging this idea of scarcity is important, because it is one of the government’s key arguments for the ‘bedroom tax’. They talk as if every possible home in Britain is occupied, and so the only thing we can do is use housing more ‘efficiently’ by fighting ‘under-occupancy’. It isn’t true.

Myth: Selling off council housing redistributed wealth to working class people

Thatcher’s ‘right to buy’ did give some people some cash in the short-term – but the housing crisis shows we are still paying the price. Transforming housing from a public good into a private asset played a key part in fuelling the housing market speculation that ultimately led to economic bust and has left us all poorer.

Wealth was quickly consolidated in private hands, as those who could qualify for mortgages and had cash on hand for deposits rushed into the ‘buy to let’ market. Now we have ‘Generation Rent’ stuck paying through the nose to private landlords.

Today there are 1.8 million households on local councils’ housing waiting lists. It is no coincidence that this is the same as the number of council houses sold off since the start of ‘the right to buy’ scheme.

Thanks to Liz Davies, Duncan Bowie, Martin Wicks and Tom Walker

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