In an era of housing affordability crises, a variety of broken solutions have been adopted by a number of countries. The advertised success and persistent failure the solutions is clearly reflected in renter support programs in the United Kingdom.
Faced with a dramatic shortfall in the number of specialized ‘truly affordable’ housing units to rent (a.k.a. social housing), government ‘quick-patch’ solutions reveal over and over again the inadequacies of such fixes.
Depending on the country, we can find various roots of the problem. The UK’s particular folly was to allow social housing tenants to buy their rental home, removing them from the ‘truly affordable housing’ stock without replacing them (regardless of promises to maintain the levels of truly affordable housing stock).
The current ‘quick patch’ solution in the UK to this government-initiated crisis? (It’s one that’s common among exasperated, penny-pinching governments.) It’s a ‘local housing allowance.’
Here’s the dilemma: free-market housing subsidies, like the local housing allowance, are demonstrable failures everywhere they are implemented.
First of all, the underlying principle of any government patch money is that it will be spent in the free market, where low income renters are unable to compete. As well, rent regulations do not control the rents that are charged.
Government subsidy money is therefore being steadily injected into the free market, supporting landlords who are asking for higher and higher rents. To stay affordable, the public funding to keep rents in the free market affordable must continuously be increased as rents go up.
Naturally, any self-respecting government will balk at the idea of chasing its own tail in this manner. And so caps are arbitrarily placed on the expenditures.
In the US, the federal government supports the Section 8 (also called Housing Choice) rental subsidy program. The entire Section 8 voucher program is capped: it is reported that only 1 household in every 5 that qualify for a voucher ever ever receives one.
Government penny-pinching is further enhanced by allowing landlords to refuse to rent to tenants who have a voucher in some US states. Add to that the stringent ‘snatch-back’ rules, which penalize those who cannot find a willing landlord before the voucher expires. And there you have a housing support industry that by and large doesn’t support the people who are most in need.
The UK’s local housing allowance has its own set of ‘now you see the funding, now you don’t’ restrictions. They add up to the headline of the following article in LocalGov: Local Housing Allowance failing to cover costs
The report in LocalGov is based on analysis by the Chartered Institute of Housing (CIH) and uses data that is collected by England’s Valuation Office Agency (VOA). The VOA collects data on rents that are being paid by tenants. The CIH compared the rents being paid with the maximum assistance available from the housing allowance. On average, the gap between the housing allowance and the rent is £151/month (USD$193).
London has always had high rents compared to the housing allowance. The data from the VOA shows that high rent levels have now spread throughout the county. The findings have been mapped and are available at Shelter: Nowhere Left To Go For Private Renters Receiving Housing Benefit
