What is social housing?
Social housing in the UK is low cost housing allocated on the basis of need. With the exception of Northern Ireland, where it is provided only for rent, in the rest of the United Kingdom social housing includes the provision of rental dwellings, affordable home ownership as well as shared ownership schemes.
Social housing accounts for 17.5% of the total homes in England, while it is about 24% of the total housing stock in Scotland, about 17% in Northern Ireland and about 16.4% in Wales.
Who provides social housing?
The reduction of council house building to virtually nothing combined with sale to sitting tenants and the transfer of over one million local authority dwellings to housing associations between 1988 and 2009 have meant housing associations are now the majority delivery vehicle for affordable housing in England, currently managing 54% of social housing. A decline in public provision of social housing occurred also in Scotland and in Wales, although in Scotland the local authority housing stock continues to be larger than that of registered social landlords, and in Wales the social housing sector is evenly split between local authorities and registered social landlords.
The situation is different in Northern Ireland in that there was no large scale stock transfer of public housing to housing associations. Instead, local authorities transferred their homes to the Northern Ireland Housing Executive, Northern Ireland’s strategic housing authority which currently manages over two thirds of the social housing stock in the region.
How is social housing financed?
The provision of new housing and associated land costs is financed through three funding sources, housing association’s reserves, government grants and private finance, which consists of bank loans or funding raised on the capital markets.
Prior to 2007, development of now social rented homes was also cross-subsidised through the provision of low cost home ownership, but following the global financial crisis opportunities for this type of activity have diminished.
Capital subsidy is coordinated by the devolved administrations, and more specifically by the Homes and Communities Agency in England, Scottish Government’s Housing and Regeneration directorate, the Welsh Assembly Government’s Housing Directorate, and Northern Ireland Housing Executive. Furthermore, social housing also benefits from discounted land and development contributions under “section 106” provisions, which require that a proportion of affordable housing is included at least in major developments.
Tenants in social rented homes pay a weekly rent which is well below market level. Property rents are related to the valuation of the individual property as well as to area based incomes and are increased according to a specific formula. Subject to a means test tenants may be eligible for Housing Benefits – administered by local authorities - to cover either all or a proportion of their weekly rent. In fact, the balance between supply side and demand side subsidies has changed significantly over recent decades in favour of individual housing benefits.
Who can access social housing?
As for the beneficiaries of social housing, since implementation of the 1977 Housing Act, all municipalities in the United Kingdom are theoretically obliged to provide housing to those in housing need, assuming they meet a certain number of objective criteria and match the target groups to be cared for with priority.
Social housing is targeted to vulnerable groups within the population and priority is generally given by law to certain categories, including people who are homeless. In 2003, the Parliament in Scotland adopted the Homelessness Scotland Act, a law which goes beyond the 1977 Housing Act. As of 2012, all Scottish citizens who are not adequately housed will be able to file claims in court to obtain permanent housing from their local authorities if their application for permanent housing is not dealt with.