Housing subsidy’s long-term shift from supply to demand and what might be done about it

A common feature in much of the western world, and notably in the UK, has been the phenomenon of the long-term shifting of rental housing subsidy from capital for building new homes to personal housing subsidies to help people pay for their homes.

Until the late 1970s, the great majority of subsidy was on the supply-side aimed at building new housing, and improving the stock, often poorer quality owner-occupied housing. Since then, the ratio has been completely reversed with the preponderance of identifiable housing spending now taking the form of demand side or personal subsidies in the form of housing benefits (i.e. the housing element of universal credit, local housing allowance and housing benefit).

This briefing paper looks at four questions arising from this long-term trend:
– Why did it happen?
– What do the figures tell us and why is it a little bit more complex than at first sight?
– Why might it make sense to reverse the trend and why is that not straightforward?
– What might be a progressive way to proceed at least in terms of initial steps?

Author(s): Ken Gibb
Published: 05 June 2024
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