The latest absurdity to emerge from Britain’s dysfunctional housing system concerns London properties being advertised to housing benefit claimants at rental costs that would make working professionals residing in Zone 5 weep.
In Pimlico, a three-bedroom maisonette will cost around £6,000 a month on the private market. On HomeSwapper – the council-housing exchange platform which enables social rent tenants to move without going through a lengthy reallocation process – similar properties have been listed for around £820. In Brixton, where a room in a shared house can easily set you back £1,100, a seven-bedroom terraced house has been advertised for £744.
There are now two reliable ways to live comfortably in the capital: wealth or welfare. Everyone else is having their pips squeezed. Leftist politicians, always fighting the last class war, love to frame London’s housing crisis as a battle between rich and poor, with foreign investors and unscrupulous landlords cast as the villains. Ken Livingstone described overseas buyers acquiring London homes as “appalling”; Sir Sadiq Khan has repeatedly complained that overseas money is pushing up prices and locking Londoners out; Angela Rayner has made a habit of pillorying landlords for “strangling growth”.
Curiously, we hear less about the 790,000 social-rented households in London. Or the fact that roughly a quarter of homes in Westminster, Hammersmith and Fulham, and Kensington and Chelsea are socially-rented. In Camden and Lambeth, it’s a third; in Hackney and Islington around 40 per cent.
When people think about housing inequality, they imagine segregated cities with wealthy districts on one side and deprived estates on the other. Yet much of London no longer looks like that. Walk through Westminster, Islington, Southwark or Camden and the façades will often be identical, but inside are households occupying entirely different economic worlds. More than half of social-rented houses contain no adults in work. They are completely economically inactive. Around 143,000 are retired, but the majority are not. Close to half are headed by somebody born overseas. Those with no jobs and no family connections to London may need some support, but it’s not clear this needs to be in a des res in the centre of the capital.
Contrast this with a couple earning £100,000 between them in the capital. Income tax and National Insurance will hoover up roughly £27,000. Rent can easily absorb another £30,000. Student loan repayments take a further slice. Before council tax, childcare, commuting costs, utilities or groceries, well over half their income has vanished. For many middle-class professionals, such as teachers and nurses, the numbers cannot add up.
Some have left: Londoners purchased 57,660 homes outside the capital last year, according to Hamptons, the highest figure on record. Most people cannot relocate to Norfolk or North Yorkshire whilst retaining a London salary. Nurses cannot triage from 100 miles away. Teachers cannot educate children via Teams from Cornwall – even in these days of Zoom and working from home. Most working professionals are trapped in a city they can barely afford.
Nor is there much prospect of improvement anytime soon. Mobility within the social housing sector is extraordinarily low: only around 5 per cent of households move in a given year, compared with roughly one-third of private renters. Many may be stuck in accommodation which is now unsuitable for their needs – the kids have left home – and in some cases may be damp, crumbling and poorly maintained.
But there’s a £1,000, on average, gap between social housing rent and market rent, so they’re likely better off staying put. If they do want to move, there may also be the option, dodgy though it may be, of illegally sub-letting to an acquaintance. The horrors of Grenfell Tower showed us a glimpse of this.
All of this is occurring in a city suffering one of the most acute housing shortages in the developed world. Renters in London will on average pay more than twice those in Munich, Helsinki, Madrid, Lisbon, Berlin, Prague, Vienna and Rome. For decades, our restrictive planning laws have inhibited housebuilding, constraining supply whilst demand has continued to rise with migrants moving into the city in growing numbers: over 40 per cent of London’s population were foreign-born according to the 2021 Census.
There is one area in which we’re leading the pack: the UK spends a larger share of GDP on housing benefits than most other OECD nations. Researchers estimate that taxpayers spend around £18bn annually subsidising housing in London alone. Roughly £9bn comes through maintaining social rents below market levels, whilst another £9bn is distributed through Housing Benefit and the housing component of Universal Credit. Put another way, taxpayers fund the system twice over: once through direct welfare spending and again through a housing market distorted by scarcity.
The original purpose of social housing was straightforward. It was designed to provide decent homes for working-class families when private markets failed to do so. It was not conceived as a largely permanent tenure with limited reassessment and waiting lists stretching for decades.
If we continue down this path, London risks further developing its own peculiar form of banlieufication, where middle-income households are steadily pushed to the periphery and Zone 1 is increasingly populated by people at opposite ends of the economic spectrum: those affluent enough to absorb its costs and those subsidised enough to avoid them.
That may satisfy politicians and academics who get off on talking endlessly about inequality, handing them a crisis of their own making, but it’s profoundly unfair on those doing exactly what successive governments told them to do: studying hard, getting a good job, paying taxes, contributing.
For now, social housing remains the dog that has not barked. But as more and more working Londoners discover they are paying for a housing system from which they have no realistic prospect of benefiting, it’s going to start yelping sooner rather than later.