Excellent piece in the Britain section on the UK's social housing distortions this week. Enormous effective subsidies and lifelong tenancies encourage tenants to cling on to units, especially in London, causing an enormous misallocation of scarce stock.
economist.com/britain/2026/0
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It needs some more, as other comments have pointed out, to the extent of foreign ownership of social housing in the capital (and of other major cities) - the borough map also doesn't how extensive some particular areas can be!
Doesn’t it seem like the issue here is not enough housing is being built in general? Seems like it wouldn’t be a problem if there weren’t such strict limits on building housing, although I’m not sure how much that would help with prices given that it is London…
It's a good start but it needs a follow-up piece on how many of these have been given to those who were born abroad - roughly 50% in London. A diabolical misallocation and indicative of how poor immigration policy has been. Stuck minimum wage taxpayers in Wales pay for this!
I was once told this is linked to bombing during the blitz; focused on central london, with rebuilding prioritising council housing.
Why go after social housing and not the huge amounts of vacant properties that are used as money laundering deposits for oligarchs, dictators and your mates?
Expensive properties are bought up forcing the rich to buy up poorer quality homes making them unaffordable for the rest.
What’s the argument here: that poor people shouldnt live in London?
That might have been a legitimate argument if there wernt hundreds of thousands of low income yet essential peoplr working in London across retail, hospitality, facilities, healthcare services.
Where’d they go?
The only developed nations who aren’t suffering a housing crisis (at least not to the same extent) are countries with strong social housing stock.
Of course, we didn’t have a housing crisis until we stopped building council houses and replaced them with benefits for landlords.
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Also, I believe the discounts in Britain are much higher than in the Netherlands, even though the amount of social housing is lower.
So the cheap homes are the problem? Not the extremely expensive ones surrounding them
The solution is neat too: raise all social rents to market rents and then use housing benefit as the buffer to offset impact on some. I’d also say that, in prime London areas, continued tenancy should only be allowed for working people.
Develop satellite London metro areas via subsidy and folks will disperse.
The misallocation of stock in Kensington and Chelsea (and other London boroughs) is the number of unoccupied properties - 2nd homes etc! 25% in that borough! If it were not for social housing there would be even more unoccupied dwellings!
Yes heaven forbid the poor having lifelong affordable housing in London.
Rent seeking in the housing sector is a massive drag on the real economy. Why don't you write about that?
the problem with late capitalism is you eventually run out of elderly people's homes to steal
Accounting by "pooled historic costs" is not a distortion.
Recent spot market prices for new private tenancies and for capital transfers are not relevant.
the economist has never in its history published an excellent piece
Should we then use the tax system radically to change the incentives for house-owners to ‘encourage’ them to move to smaller houses if they are not fully occupying the houses they have? That would also help address the misallocation of scarce resources.
In the 60's and 70's there was lots of mobility as tenants lived in the inner city and then transferred to suburbs/New Towns thru organised Council schemes. Have you looked at any tenant move/transfer stats over last 50 years at all?
No social housing should be provided in heart of economy capital of Europe, London.
Councils should move freeloaders to cheaper, less developed areas.
This will break down dangerous parallel societies
There is nothing more unjust, more unholy than subsidising people who don’t work and many who are not even British Citizens to live very cheaply in the best housing in one of the best cities int he world
London had always had wealthy and poor living side by side for generations. Really don’t want London to get like Paris with appalling deprived and underserved suburbs that breed crime.
It's not just enormous housing subsidies.
The below chart on the left (from the IFS) of working-age social security per capita (so *not* including pensioners) isn't even updated for the increase in 2024/2025. In fact, it's now almost as high as 2010-2013 when unemployment peaked
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