Social rent homes would cut billions in housing benefit

The LGA said its new research shows why the Government should use the Spending Review to work with councils to ensure that the genuine renaissance in council house building – needed to increase housing supply, boost affordability and reduce homelessness – is a success.

The LGA commissioned Cambridge Economics to assess the implications if 100,000 government-funded social rent homes had been built each year over the past two decades.

It found that, building 100,000 social rent homes each year for the past 20 years would have enabled all housing benefit claimants living in the private rented sector to move to social rent homes by 2016.

The housing benefit claimants that would have moved from the private rented sector to social rent homes would have benefited to the tune of £1.8 billion in extra disposable income over the period.

Overall, the Government would have had to borrow an additional £152 billion in 2017 prices to build the homes over the 20-year period. With every pound spent on building homes generating £2.84 in return, the cost of investing in social housing would have been offset by additional tax revenues from the construction industry – as well as welfare savings from moving housing benefit claimants to lower cost social rent homes. The rising proportion of housing benefit caseloads in the private rented sector has cost an extra £7 billion in real terms over the past decade.

Cllr Martin Tett, LGA Housing spokesman, said: “Every penny spent on building new social housing is an investment that has the potential to bring significant economic and social returns.

“Now is the time to reverse the decline in council housing over the past few decades. This is the only way to help families struggling to meet housing costs, supply homes to rent and reduce homelessness while also offering economic growth and lowering the housing benefit bill.”


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