by John Hackett
"The provision of finance for social housing would follow the individuals who are deemed to need it, not the houses themselves. In this way, supply would expand to meet demand"
The current position of the Labour party is unequivocally in favour of social housing. Policies as they have recently been elucidated would greatly enhance the welfare of millions, stabilise the housing market, and solve the twin crises of affordability and availability of housing. But this would not withstand a subsequent Tory government any better than social housing initiatives in the past: the right to buy, a punitive welfare regime and swingeing cuts will work the same way thirty years hence as thirty years prior. This begs the question of whether there is an alternative more likely to advance the cause of decent housing for all, for longer.
When Jeremy Corbyn stood for the Labour leadership contest in 2015, one of the ideas floated by his campaign was that of the right to buy for private tenants. That idea has since largely been left behind, but its consequences would be vast and deserve examination. It presents a possibility which has gone entirely unspoken: that of universal home ownership.
Home ownership has draws and flaws: while it offers safety from eviction and the ability to accrue equity, it places on owners the burden of finding buyers when they wish to sell, and similarly forces new entrants to find finance when they wish to buy. Being unable to find either finance or buyers leaves people trapped in housing that does not meet their needs. Furthermore, the duty of maintenance is on the property owner, even if they are ill-equipped to discharge it. It also sets in stone the relationship between interest rates and housing costs.
To bring about a meaningful right to buy, we would have to confer a right to borrow. The government recently began relaxing rules on councils borrowing to build social housing, and the crux of recent Labour party policy is based on coupling the building of new housing and the provision of social tenures. In other words, the only parties that have formed a government since 1945 have committed to borrowing on behalf of social tenants.
“Social mortgages” - analogous to social rents and intended to extend mortgage lending to those normally unable to access it - could de-couple the provision of finance for housing from the construction of housing itself. The end result would be people paying the same as they would today for local authority housing, but instead of being limited to properties the council owned, they would be able to access the whole housing market much as homeowners do today. The provision of finance for social housing would follow the individuals who are deemed to need it, not the houses themselves. In this way, supply would expand to meet demand: those whose circumstances merited social mortgages would gain access to them in the same way that they can access housing benefit today. Additionally, it would be redistributive, and begin to close the asset gap.
Borrowing alone would be insufficient to recreate the (few) benefits of renting, though. To create a system that shares the convenience of being able to move on short notice, we would need to confer the right to sell. A public body could value, purchase, hold and then resell houses. This would represent a socialisation of risk, as the body would generally be exposed to the risk of declining property prices, and low desirability – risks which are currently borne by individuals ill equipped to carry them.
The other main benefit of renting is the sharing of maintenance: councils and private landlords alike provide what is in effect a welfare service. They carry the risk of broken roofs and boilers, periodically update interiors, and (in principle) shoulder the burden of keeping a property habitable. There are cases of homeowners in squalor who have not been able to cope with carrying that responsibility alone, and many cases of landlords who are not inclined to uphold their end of the bargain.
Ultimately, these are services that underpin people’s welfare: as with “social mortgage” provision, “upkeep assistance” as enjoyed by those with conscientious landlords should be offered based on need, not housing tenure. With the addition of the right to sell, the mobility of renting could be made universal, too.
These elements in tandem could be natural extensions of the right to buy rental housing. They would all but eliminate the need for landlords and letting agents to act as as brokers and maintainers of property, and pave the way for us to eventually converge on a single housing system. The tripartite system of private rental, private ownership, and social provision could give way to a system of private and social borrowers, accessing one undifferentiated housing stock according to needs, not means. By ending that system, Labour could end the vicious contest between building social houses and having them sold off, and write the rules of the game that is to be played for years to come.
John Hackett is a Young Fabian member.