Housing Association riches

It is good to see a group of charities which are closely linked to the public sector doing well financially. The Housing Association movement has a successful business model. They invest in residential property, often with grant aid for the investment. They let most of the homes out to people who usually need Housing Benefit to pay the rents, so there is state underwriting of their main income. Housing Benefit stands behind many of the rent increases that are now common, owing to pressures from demand on the supply of rented properties. They make a surplus or profit on their trading accounts. They pay no tax on this surplus all the time they maintain their charitable status. They then see the value of their residential holdings go up as the market rises, yielding substantial tax free gains.

One of the largest reported a surplus of £209 million last year on trading account. It held £340 million in cash and liquid investments. Its properties which cost it £5.6 billion to buy and build were worth £16.3 billion (at market value assuming with vacant possession). It had received £2.695 billion of accumulated grants. This pattern seems common. Another I look at recorded an operating surplus of £106 million last year, held £170 million in cash and liquid assets and held £3.7bn of gross assets at book cost which was doubtless a substantial understatement of market value.

The issue I want to raise is what more can the Housing Association movement do to assist with the wish of many more people to own their own home? Could they use their cash, their skills as developers and their ability to borrow against the security of their large portfolios to make many more new homes available for affordable homes to buy? What should the government’s policy on grants be, given the financial strength of these bodies? Are these bodies doing enough to help in a market short of housing with high rents?

86% of UK householders would like to own their home, but only 64% do. This is down from 69% in 2001. Worse still the proportion of people under 40 who own their home has shrunk fastest, thanks to the pressure of demand and pre 2007 lending policies driving up prices.

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44 Comments

  1. Posted August 22, 2015 at 5:39 am | Permalink

    The great advantage that housing associations have in a county like Norfolk is they can obtain buiding permission on land outside the councils guide lines for small groups of houses if they can prove a need which it can, the cost of land is cheaper to them as they are the only ones able to get planning permission.
    As a Self Builder I have to pay the going rate for a building plot and have no chance with planning if just outside the building guide lines.
    Although Richard Bacon MP for South Norfolk got a bill through to help Self Builders unless we are treated the same as housing associations on planning it will not help the supply of houses.

    • Posted August 22, 2015 at 7:52 am | Permalink

      Brian

      Yes a self builder myself 34 years ago, and still in the same property.

      Building Societies then had a rather more flexible approach to finance for such projects then as well, with agreed percentage stage payments made as the build progressed.

    • Posted August 22, 2015 at 9:30 am | Permalink

      Indeed the planning is biased towards them too. What is the justification?

  2. Posted August 22, 2015 at 6:24 am | Permalink

    I live in an Housing Association flat. However my experience of Housing Associations does not go beyond that but if my experience of life living in one is replicated in others around the country then they are indeed a success story in social engineering. I never would have believed I would ever say that social engineering does good things. Being a cynic I suspect that my experience is very much an exception and that mostly social engineering projects are very bad things. And that the high cost involved to the taxpayer of having Housing Associated mitigates their benefits and that the same success could be achieved in other ways.

    • Posted August 22, 2015 at 2:55 pm | Permalink

      Dear Antisthenes, Mr Redwood seems to be anticipating the Government plan to give housing association tenants the right to buy. Cash rich HAs + sales proceeds = cuts in Government spending on grants.
      Wonder what you think of this given your unexpectedly pleasant experience of “social engineering”.
      For someone in ignorance, such as me, it seems fair to extend (or restore) the right to buy to tenants of the remaining bits and bobs of ex-council property that were parceled up and handed over to housing associations. But it makes a lot less sense to mess about with the economics, management and governance of housing associations’ new purpose-built developments, often modest block of flats.
      But maybe you think the opposite: that social engineering works best when private and “social” are mixed up together, whether in legacy properties or new build.

      • Posted August 23, 2015 at 6:33 am | Permalink

        I think that Housing Associations are successful because of two things. Firstly because they have by necessity adopted private sector practices not public sector ones. Secondly because of their tax exemptions and taxpayer subsidies. The latter probably accounts for me find my Housing Association a very good landlord.

        As I intimated I am no fan of social engineering but on occasions there is a case for it and Housing Associations is perhaps one of them. The private sector would not build social housing there would be no profit in it. After all us on the right have as much ambition as those on the left to assist and defend the poor and disadvantaged and to improve social justice. It is just that we would go about achieving that in a different way to those on the left. Housing Associations is perhaps one method of achieving a socially just outcome that both the left and right would agree on.

        What the left would not agree with us on the right is the right to buy. They would of course because they do not see the benefits of private ownership to put it simplistically. I am in full agreement with the idea of sell one build one. However I am not sure whether selling them heavily discounted will ease the burden on the taxpayer and wonder whether it may increase it.

  3. Posted August 22, 2015 at 6:33 am | Permalink

    “Its properties which cost it £5.6 billion to buy and build ” say £60,000 each so it holds some 100,000 houses? Making a £200 million surplus or £2000 per house?
    Are they really charities, or businesses making their money from the taxpayer?

    • Posted August 22, 2015 at 2:06 pm | Permalink

      There are about 2.8 million Housing Association homes in the UK – 10% of the overall total of 28 million. Many of the homes have been transferred from Councils (which still account for about 2.2 million homes), and were built some decades ago, when building costs and house prices were much lower.

      The BTL sector d0minates the rental market, adding over 200,000 homes a year. It is probably at around 5.7 million homes at present.

  4. Posted August 22, 2015 at 7:12 am | Permalink

    Well it is just governments damaging and distorting the market with hugely harmful results. Just as one would expect. Why should tenants some get subsidised (by tax payers and untaxed as a benefit) cheap housing while others (who are often poorer) have to pay the full market rate? A market rate now likely to be even higher due to Osborne’s moronic double taxation of landlord interest.

    The NHS and “free” state schools damage the market in a similar way. Killing competition making everyone worse off in a similar way.

    What is wrong with a level playing field for all providers of housing?

  5. Posted August 22, 2015 at 7:43 am | Permalink

    Sure most people would like to own their own house but as wages continue to be suppressed with over half a million foreigners annually imported, it is only a pipe dream.
    Today people say uncontrolled immigration is their biggest worry but still you do nothing about it. Another bomb blast in France by a known person and we can’t deport criminals and terrorists. Last chance saloon John.

  6. Posted August 22, 2015 at 7:48 am | Permalink

    Not quite sure how to comment on this topic.

    You outline some interesting facts.

    So we have an organisation which appears to be very financially secure.

    But

    Given it has charity status, Government grant funding to build assets, a captive client base which is Government funded, special planning rules so no outside competition, a market where there is so much demand that it has no real competition, does not need to advertise, all competition (private rental market) charges higher prices, and in addition has to pay tax on profits.

    Given the above surely almost any fool should be able to operate a profitable business.

    I wonder how much all the CEO’s get in salary and benefits.

    Whilst I certainly agree we need something like Housing Associations if Local Government and Councils are not going to provide good basic accommodation, I do wonder if we are giving rather too much in subsidy to such organisations.

    • Posted August 22, 2015 at 1:04 pm | Permalink

      @alan jutson.Too much subsidy and too much influence.The Housing Associations strike me as being just another part of the sinister shadow state (highly politicized and largely out of democratic control)that has been evolving and expanding under successive Labour governments and which Tory governments have done nothing to reverse let alone dismantle.

  7. Posted August 22, 2015 at 7:55 am | Permalink

    That’s why the housing benefit bill is so large.

    It’s going on profits.

    Not that they call it a profit. It’s a surplus so you don’t realize how much of your money is going

  8. Posted August 22, 2015 at 8:01 am | Permalink

    Mr Redwood, I seem to remember reading somewhere – I confess I have forgotten just where – that the figures for house building are much healthier in the commercial sector than in the Housing Association sector.
    “Private sector registrations increased by 9 per cent (5,977, compared with 5,484), whereas, as in previous months, public sector registrations contracted year-on-year, with a 20 per cent decrease in January 2012 (1,854 compared with 2,304).”
    http://www.nhbc.co.uk/NewsandComment/UKnewhouse-buildingstatistics/Year2012/Name,45864,en.html

  9. Posted August 22, 2015 at 8:15 am | Permalink

    Those who earn a decent wage and who are not in receipt of benefits nor prioritised as needy are in direct competition for accommodation and space with those who are. Therefore they cannot afford to save for deposits as rents and prices are high.

    For an aspirational home-owning society we’d be better off without subsidised housing associations. They are fine for keeping essential workers on low wages in proximity to their work but it fails when used to subsidise people who refuse to work – a never ending demand. There should be no unemployed in London.

    Housing associations are helping to cause property price rises beyond affordability. Housing benefit is clearly inflationary and too high as such vast profits show.

    Crisis levels of immigration will see the home owning society dwindling ever more.

  10. Posted August 22, 2015 at 8:31 am | Permalink

    If a mortgage lender can furnish sufficient proof and guarantees that a young couple in love will stay in love for the duration of their loan, stay together for the duration of their loan, stay in full-time and adequately paid employment for the duration of their loan; that one of them will not just up and leave the other at a time when the house cannot be sold to cover the entire money owing plus interest…then the mortgage provider should be authorised after inspection of its guarantees and proofs to see if they are worth the paper they are written on. And, to go ahead with the loan.

    You see, failure to properly regulate mortgage lenders in this way leads to broken lives, life-time debt and psychologically damaged children who have had daily hearings of their parents quarrels. Oh and there is the not insignificant matter that in such common scenarios it is the tax-payer who has to foot the bill for social rehousing, re-schooling, medical stress treatment and medicines for all concerned.

  11. Posted August 22, 2015 at 8:45 am | Permalink

    It sure helps your chance of creating a successful business model if you pay no tax on your income or capital gains – whereas your competitors do. The questions in my mind are these:

    Are housing associations doing enough to help solve the “housing crisis” we are said to face?

    Is this another example of a charity model which provides a comfortable living for those running them with little or no competitive pressure to perform better?

    Should the government require housing associations to invest, rather than harvest, cash as a condition of their favourable tax status?

  12. Posted August 22, 2015 at 9:07 am | Permalink

    From the figures disclosed it is obvious the Housing Association can stand on its own feet and not look to Government or other sources for financial support . Housing shortage for the needy is exacerbated by the lax approach to immigrants ; it is another example of why our soft approach does nothing to keep things under control . One “illegal”said on TV recently , “I want house” ; he had arrived in Folkestone the day before he was interviewed .

  13. Posted August 22, 2015 at 9:16 am | Permalink

    The whole area of charitable stays needs to be addressed and highly restricted from the current position. So much that is done in the name of charities is highly questionable. As are the huge running,admin cost of many of the “charities”.

    Get tax rates down and restrict tax reliefs and simplify. Make a level playing field. Why does Osborne want rent to rise for some with his daft double interest tax on landlord yet he wants to subsidise others to pay half rent with grants and charitable tax releifs?

  14. Posted August 22, 2015 at 9:28 am | Permalink

    The glaring questions would seem to be, why is government providing grants to such successful entities and why are they carrying so much cash and the third is why has the author thought these are unnecessary questions to ask?

    If I am not mistaken, these are the successors to the council houses and as such one might question the underlying reason for their success but, failing that should they not be left to persue their agenda without the need for further government handouts even in respect of their subsidizing of needy tenants?

    These are, after all government owned entities who have aquired their housing stock at deeply subsidised prices which of itself should allow the more efficient of them to continue trading with a surplus.

  15. Posted August 22, 2015 at 9:46 am | Permalink

    The first thing they must do is lobby for controls on immigration in order to stabilise demand. Excessive immigration adds to the population and immigrants tend to have more children than those already here and so demand grows out of proportion to supply.

    The other thing we need to is work with other countries in order to establish safe towns and cities abroad so that recent immigrants can return to their native countries or third countries with newly established towns and cities that (unfortunately) we will need to fund, with the blessing of the new host country. This would, of course, need to be entirely voluntary.

    It would not be cheap. We would also need to provide financial grants to emigrants in order to effectively buy their UK passport from them.

    Labour tried this when they were in power but they idiotically forgot to take away their passports so many returned on the next flight.

    We must reverse the recent unnatural rise in immigration as this is the root to so many supply/demand issues (not just housing).

  16. Posted August 22, 2015 at 10:03 am | Permalink

    John, I am 43 and still renting.

    My rent costs are as much as mortgage and goes to a private landlord who is about your age and bought this place as a buy to let. I am resigned to the fact I will be renting forever but I do feel like your generation rigged ever increasing house prices so your generation would stay wealthy at the expense of my generation who found it too hard to get on a housing ladder.

    Perhaps this is just soar grapes on my part? But is there anything the government could do to help people (over 40) who are still renting to get on the ‘housing ladder’? The problem is not the mortgage which I could easily afford, it is the lump sum deposit.

    All your initiatives seem to be for the under 40s. Please keep the over 40s in mind as well.

    Reply I fully understand your feelings which are shared by others of Generation Rent. I am working on what more can be done to bring forward affordable housing for sale, and see there can be an issue for people now over 40 as well.

    • Posted August 22, 2015 at 1:27 pm | Permalink

      Thank you for considering my plight.

      I would just add that more Housing Association homes are not really the answer for me because I do not want to own a home on a Council Estate. I would rather rent somewhere a bit more pleasant than own an ex council house (as nice as some of them probably are), but if that is the only option I will have to accept that.

      • Posted August 22, 2015 at 3:31 pm | Permalink

        RB

        Why not purchase your Housing Association/Council House at a huge discount under right to buy, live in it for a while to clear any qualifying period, then sell it on the open market at its full price.

        You will then have a huge amount of equity in the property, so you can then purchase on the open market, where you would prefer to live.

        Thus the taxpayer completely funds the deposit on your second property.

        Do not agree with it, but that is the system all governments want to promote, so take advantage of it while you can, daft as the scheme is , thousands do it.

        Just like planting a money tree in your back garden really.

      • Posted August 23, 2015 at 5:12 am | Permalink

        RB,

        I’m not sure if it’s any consolation but my reading of the UK housing market is that it is not a good investment at present. If we compare UK house prices to prices in the rest of the EU they are clearly out of kilter. Over the course of the years they can only come back into line.

        They are artificially high because Govts, of both political parties, have seen that the economy can be stimulated by reducing interest rates and at the same time reduce their deficit spending. In the short term it seems like a win-win, but in the longer term it just leads to a build up of debt in the economy which brings on recessionary pressures. However, as interest rates are ultra-low this “soft” option is no longer available. They can’t be lowered any further.

        Having said this, we need to look at the balance between owner occupiers, renters and private landlords. In Europe it is much more common to rent than in the UK. But there, tenants have more protection against eviction at short notice and sudden rent increases by their landlords. There is also the question of tax allowances given to landlords which aren’t available to owner occupiers.

        In general, there should be a presumption that families can reasonably expect to own one home but not multiple homes. It’s difficult to completely ban this in a free society, but nevertheless, the taxation system, particularly on the treatment of empty properties, and the laws applying to landlords and tenants can be rebalanced to ensure a more socially desirable outcome.

    • Posted August 22, 2015 at 2:05 pm | Permalink

      RB ,

      I’m 5 years older than you and fortunately was in a position to buy about 17 years ago .

      If I was in your position I’d probably say the same as you : “The problem is not the mortgage which I could easily afford, it is the lump sum deposit. ”

      I don’t think that analysis is correct though .

      In a situation where there is a shortage , the easier it is made to borrow money , and borrow more money , the more house prices will go up . This is how we have got in the mess we are in now .

      Two examples :-
      – Government intervention like “Help to buy” has pumped house prices still further and has made the situation worse for people who don’t qualify like you .

      – The U.S. Govt forcing lenders to lend to subprime borrowers . This lead directly to the 2008 great financial crash .

      I suspect most people taking out a mortgage cannot properly afford it .

      At best they are paying it with money which they should be putting away for old age . They are banking on wage progression which may never come .

      How many of them could keep their mortgage in good standing if interest rates rose by only 5% or they had no income for months ?

      Sadly to rectify the situation owner occupiers need to default , be evicted and for their houses to be repossessed and dumped on the market . BTL operators who are overextended need to go bust .

      The Govt has chosen to favour house owners over those looking to be housed like you .

      If evictions become too great don’t put it past the Govt to use public money to keep people with children in houses they can’t afford .

      Rather than buy now at the current what is likely to be top of the market , I’d be waiting to pick up a nice little repo in 18 months time or so when the market has collapsed .

    • Posted August 22, 2015 at 2:15 pm | Permalink

      “I am working on what more can be done to bring forward affordable housing for sale, and see there can be an issue for people now over 40 as well.”

      About 25% of houses for sale are purchased by buy-to-letters; that is a major supply side issue affecting availability and cost. Then there are the adventitious landlords who inherit property and decide to join the rentier classes, possibly later deciding to sell; I have personally viewed several properities in this category where in many cases the attempt by such landlords to make the property more marketable were bizarre. Examples: new carpet fitted in sitting room, not matching unpainted, yellow faded walls with a thousand and one nails (for family photos?) still sticking in one of them etc; three bedroom detached property with third bedroom turned into en-suite bathroom etc. (this one was rented by a couple of teachers in their forties with a child who could have been kicked out with two months notice). However, usually the buy-to-letters seem to stick to whatever was originally there unlike the new owner-occupier who replaces kitchens, bathrooms, carpets, decor etc. Buy-to-let does not increase housing supply or lead to property improvement and as such should be deprecated by the tax system in favour of single owner occupation of one house only. It is also time to give good tenants far more more protection than they get at the moment from eviction in terms of duration and justification as well as unreasonable rent increase; this would also help to deter unsuitable buy-to-letters.

    • Posted August 23, 2015 at 2:15 pm | Permalink

      I agree it’s offensive when I hear all this talk of under 40’s. There are plenty older than that who have been saving for years to buy. Every time they get close the government inflated prices again. Especially those with chaotic incomes, like some freelancers, who could not get mortgage.

  17. Posted August 22, 2015 at 10:06 am | Permalink

    Presumably if these properties were not owned by Housing Associations most of the tenants would still be getting the housing benefit subsidy from taxpayers, but at least in this case that subsidy will be kept within what is in effect part of the public sector rather than going to private property investors. Whether that is better than simply having the properties owned by local councils with some possibility of democratic control seems a moot point. Personally I would not allow these associations to be classed as “charities” when they rely on money extracted from taxpayers under pain of imprisonment rather than voluntary donations, in my view the essence of “charity” is its voluntary nature and once any element of compulsion is introduced then it is no longer “charity”.

    • Posted August 22, 2015 at 2:04 pm | Permalink

      Presumably if these properties were not owned by Housing Associations most of the tenants would still be getting the housing benefit

      >
      Just to say, I work hard and do not claim any benefits, I earn about the national average for someone my age but still can only afford to rent. I am sure there must be many others in my situation (who are hard working and do not claim benefits)? Please do not think that all people my age (43) who are still renting are on benefits.

      • Posted August 23, 2015 at 10:20 am | Permalink

        I don’t think all those who rent are on benefits, not least because I know several who aren’t, but clearly many housing association tenants are.

  18. Posted August 22, 2015 at 12:08 pm | Permalink

    There are thousands of cases where someone has bought their council/social housing accommodation and then a few years later applied and got from the self same authorities another rented house/bungalow or flat on the grounds that their now privately owned accommodation is too big for them to manage.They then sell their old house.

    Similarly, elderly people who have always owned their large property have acquired social housing. And with no bar to them ultimately buying their social housing after a few years.

    Successive governments of all hues have encouraged and legislated for such practices.
    The housing market both public and private is a money making racket: a vast waste of financial and human resources. As always the tax-payer foots the bill for irresponsible and very expensive management by social landlords and private landlords alike.

    Houses, statistically, do maintain and rise in their selling prices over time. But there are ifs and buts. Divorce and separation often thwarts at least one of the couple. Such marital breakdowns are complicated by the confiscation by the mortgage lender of their homes in negative equity. It is a lose-lose situation for many young people who signed a business arrangement/mortgage agreement when they were senselessly in love.

    Renting is the only way forward for a reasonable country. The idea of owning ones home is very attractive. So is owning ones own Rolls Royce. Owning ones own mansion. Governments and its lap-dog the BBC should not foster unrealistic aspirations in the young. It is not fair. It is callous.It also obstructs the internal mobility of labour so necessary in a modern economy.

    One would expect the Labour Party to promote such enslaving debt and the destruction of free movement. Not the Conservatives. Home ownership as nothing to do with capitalism. That is why even in the most leftist of Communist regimes including Russia at all historic periods, home ownership has never been forbidden.

  19. Posted August 22, 2015 at 12:22 pm | Permalink

    The Tories took council houses out of public ownership and then outsourced and thensubsidised the provision of affordable housing instead.

    Why did they introduce middle men into the arrangement ? It’s not as if the country has saved on welfare – in fact it’s rocketed.

    This has backfired. Massive profits have been creamed off by ‘charities’ (and their execs) from the welfare system. The housing market has become more and more rigged since subsidy has been put into it. Housing Association stock has taken up finite space, in high value areas, thus driving up its own value.

    This while young, aspirant, working people – who might otherwise be fully fledged property owning Tory voters – are priced out of local housing.

    In fact the surest way to get housing benefit and a council/HA house is to drop out, or at least not try too hard – or turn up at Dover with a large family in tow.

    Our system of giving things away to the undeserving is now world famous. The Tories can do nothing to stop people coming here expecting their share.

    5 years to go.

    How long do they think they can pretend it’s not happening ?

    • Posted August 22, 2015 at 2:35 pm | Permalink

      “This has backfired”

      I think the results you speak of with enrichment of vested interests at societies expense were fully intended .

      Unfortunately the great unwashed don’t bother distinguishing between this sort of cronyism and capitalism .

      The tragedy is that honest businesses get tarred with the same brush , “profit” becomes a dirty word and the country becomes uninvestable .

      The Conservatives were lucky it all held together until the election was over . The cracks are getting wider .

      All the while people vote tribally , Conservatives and Labour will keep pretending so no change in sight .

    • Posted August 22, 2015 at 6:06 pm | Permalink

      Good read here.

      http://www.telegraph.co.uk/news/uknews/immigration/11817508/Nigel-Farage-Immigration-will-be-the-defining-issue-of-this-EU-referendum-campaign.html

      We will always have a housing crisis with the level of immigration we have to put up with. None of us will recognise this country in the next 20 years.

      • Posted August 22, 2015 at 10:02 pm | Permalink

        Fedup – 20 years ? No. The transformation will be well underway during this administration.

        It will dwarf what happened under Labour.

        The Tories will rue winning a majority. In fact I don’t think it was ever their intention to do so.

        The Daily Mail reports today that the Government are under the cosh of state funded charities (in their efforts to curb immigration.) I think not.

        They’re all in cahoots. We have uncontrolled immigration because the Tories want it as much as any other organisation.

        This will be clear for all to see in the next five years.

    • Posted August 23, 2015 at 9:54 am | Permalink

      I don’t think there’s much in it: there were about 6.5 million Council homes in 1979, falling to 4.4 million by 1997, and to 2.3 million by 2010 and 2.2 million currently, while Housing Association homes (first recorded in 1977, so originally a Labour idea?) went from 0.3 million in 1979 to 1.1 million in 1997, 2.6 million in 2010 and 2.8 million currently. Labour seem to have overseen about the same amount of the change in less time.

      • Posted August 23, 2015 at 10:25 am | Permalink

        Footnote: the explosion in BTL tenure was very much originally a New Labour phenomenon. It had been in steady decline since the early 1950s (7.1 million homes) as people bought their own houses and rented from councils instead. In 1979 it was down to 2.3 million, and actually fell below 2 million in 1986 when the new ASTs came into effect – yet by 1997 had only risen to 2.4 million, yet reaching 4.5 million by 2010 and perhaps 5.7 million currently.

  20. Posted August 22, 2015 at 3:22 pm | Permalink

    Dear Mr Redwood: You write that housing associations “let most of the homes out to people who usually need Housing Benefit to pay the rents”, creating a double subsidy that was probably not intended.
    There is probably some self-selection bias here among tenants of the portfolios of council property handed over to associations, because most of those who could afford to exercised the right to buy.
    It would be more worrying if more than a minority of tenants in new association developments could not afford fair rents (ie cost-based rather than market). As others have pointed out, there are a awful lot of people looking for homes who can afford fair rents but not market rents, particularly in cities.
    Perhaps it would be fairer to all, including taxpayers, if new-build grants were made conditional on some specified majority of tenants paying fair rents without welfare top-ups.

  21. Posted August 22, 2015 at 4:31 pm | Permalink

    Government statistics reveal that weekly average rents in Housing Association properties are a little over £90, and these rents are supposed to be at 80% of “market value”. That implies that rents are subsidised by about £3bn p.a. in addition the the Housing Benefit element. You could think of it as a hidden tax on Housing Association profits that funds the subsidy. Of course, if you look at Council Housing a similar calculation applies.

    At present we do not have an overall shortage of housing – some 28 milllion homes for 65 million people is about 2.3 people per home. What we do have is the ongoing property bubble that has inflated prices and rents. Council and Housing Association properties are allocated to tenants who qualify on a quota basis, and come with subsidies and security of tenure built in: they are not competing on a level playing field with BTL rentals.

    Perhaps the best thing would be if all rental property did compete in the same market, increasing competiton and presumably lowering prices in at least some of the private sector. That would force government to recognise the hidden subsidies for bubble rents, which in turn might encourage a re-think about stoking the property bubble. The only way more people are going to be able to afford their own homes will be for the bubble to deflate in real terms. Piling one subsidy on top of another is no way to solve this problem.

    • Posted August 22, 2015 at 10:07 pm | Permalink

      Mark – You do realise that what you propose would destroy the house bubble/equity release led economic ‘recovery’, don’t you ?

      They’ve even got pensioners to cash in their pensions to inflate the property market too.

  22. Posted August 22, 2015 at 9:05 pm | Permalink

    Housing is a problem and the only way for those on lower incomes , in other words a manority is shared ownership. Perhaps the details of shared ownership should also be looked at as some complain that the share is not equal due to repair bills etc.

  23. Posted August 23, 2015 at 3:16 am | Permalink

    They are the problem not the solution. They are local monopoly providers. The maintenance is often poor. As they hold all the cards (they hold the subsidy not the tenant) they keep large numbers in areas no longer with a jobs market that would otherwise have moved. Many of their houses are worthless as they are in areas with no jobs, if it was not for state benefits those houses would have been abandoned. Indeed they keep rents too high in marginal areas where rents should collapse due to lack of jobs, which could have attracted new employers as workers would need less money due to lower rents. They get many free houses (from developers as a condition for gaining planning permission) so it should be easy to make money. The houses are often allocated in corrupt ways. We need to start giving subsidy to needy people not housing association s. We need to stop the unfair competition to other large reputable landlords that would otherwise emerge. They are everything that is wrong with this country.

  24. Posted August 24, 2015 at 2:38 pm | Permalink

    Well said, but the Coalition government and the current government have kept house prices artificially high by keeping interest rates artificially low for years on end. Unfortunately, reversing that policy will take time to work. It’s worth looking at a graph of the ratio of average house price to average salary over (say) the last 35 years. It reached its trough of about 2.9 in 1996 and is still over 5, having reached its peak of 6.5 in 2007.

    Try seeing what the minimisation of State interference – realistic interest rates, abolition of rent controls, saying ‘yes’ to developers and selling off all Housing Association and Council property – would bring about. Housing subsidy should be paid to families just so long as they need it, and not tied to particular properties. And when the kids have grown up and left home, you lose your subsidy.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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