88% of the UK’s housing budget goes into the pockets of landlords, according to the 2024 UK Housing Review.
In fact, the UK spent more on housing in recent years than it did in the mid-70s. But the difference is almost the entire bill is going to subsidising landlords, rather than actually building or maintaining social housing.
Ludicrous wealth extraction from the public housing budget
For the years 2021/22, government spending on housing was £30.5bn. That’s compared to £22.3bn in 1975/76 in real terms. Yet out of the £30.5bn expenditure only 12% (or £3.7bn) was used to build or improve homes. 88% (or £26.8bn) was used to subsidise landlords with either legacy housing benefit or the housing element of universal credit.
But in the mid-70s the opposite was true. The government spent 96% (£21.3bn) on building or repairing the actual homes, compared to only 4% (£1bn) on housing benefits.
There are number of lenses to understand how the situation has deteriorated.
One way to look at it is real wages, which are still down 2.7% since the financial crisis in the UK. In contrast, real wages have risen across OECD developed countries at an average of 8.8%. Another way to look at it is the decrease in affordable social housing. 50 years ago around 30% of people lived in social housing. That has now fallen to 16%.
The general cost of housing has also increased, partly due to eye-watering private rents. Millennials spend about 28% of their income on housing costs. Whereas, people of a similar age in the 60s and 70s spent around 5-10% of their income on housing.
Increases in inequality are also a factor here. Britain in the 1970s was one of the more relatively equal countries of richer nations. But these days it’s the second most unequal, with only the US exceeding it. In fact, the wealth gap between the poorest and the richest in the UK increased by a huge 48% in the decade up to 2019.
Fix housing
Newly elected Green MPs in parliament are trying to fix the UK’s broken housing system. Co-leader Carlya Denyer received a seat on the Renters’ Rights Bill Committee. In doing so, she put forward 12 amendments including tenant protections and rent controls, which the Green manifesto floated.
For more than 70 years, between WWI and the late 1980s, the UK had a system of rent control. Short of stopping treating housing like an asset altogether, it’s a policy we need to adopt again (and another factor in almost the entire housing budget going to housing benefit).
Denyer spoke of her experience on the committee on social media:
Renters’ Rights Bill committee has finished – 3 weeks earlier than planned 😮
I presented 12 amendments to try to strengthen it, on things like landlord licensing, reasonable adjustments for disabled tenants, protection from eviction, and of course rent controls… https://t.co/RG0erGgdpo pic.twitter.com/w99A5K7CeT
— Carla Denyer (@carla_denyer) November 12, 2024
Featured image via Shelter – YouTube
