Fiscal myopia: that’s the telling phrase in a report out this week on the long-term value of social housing.
In a way the verdict of Capital Economics merely confirms what we know intuitively: building social housing at low rents costs much less in the long run than not building it and instead subsidising high rents through housing benefit.
But the report for SHOUT and the National Federation of ALMOs demonstrates just how good long-term deal social housing represents. Capital Economics compared a programme building up to 100,000 social rented homes a year from 2020/21 with existing policies. Among the conclusions:
- Looking over 25 years, lower housing benefit costs alone justify government investment in social housing in most parts of the country.
- However, that takes no account of the value of the asset created that remains after 25 years. Once this is done, investment stacks up in most of the rest
- In a handful of cases where the sums do not add up (mostly larger homes in areas where private rents are the same or lower than social rents) there are still good arguments for investment (urban regeneration, positive impacts on health and education etc).
- Tenants will also be better off: the report estimates that families would see their net incomes after housing costs rise by £942 a year.