The Future Cost of Housing Benefit for Older People, released today by the Strategic Society Centre, looks at the impact of the growing pensioner population on the cost of financing Housing Benefit.
James Lloyd, Director of the Strategic Society Centre and author of the report, argues that the discussion about falling rates of home-ownership is overlooking important public spending implications.
"At present, concerns about 'Generation Rent' are typically portrayed in terms of the 'human cost', families forced to rent, young people missing out on the satisfaction of owning their home," says Lloyd. "However, although the 'human cost' of declining rates of owner occupation are undoubtedly important, the costs to public spending in the long-term are mostly ignored, despite – arguably – being more important."
The report suggests that, on the assumption that two out of five of today's 20-year olds will rent for their whole life, by 2060 the state will need to spend an extra £8.13 billion in today's terms on Housing Benefit for older people.
"Higher rates of home-ownership are ultimately cheaper for the taxpayer," says Lloyd. "Given trends in longevity and owner-occupation which will conspire to see the cost of the Housing Benefit bill for the public purse increase by 153% by2060, it is legitimate for policymakers to take aggressive steps to increase rates of owner occupation now, in order to reduce these costs."
He points in particular to the importance of new home building and construction of new social housing and suggests policymakers should examine 'overconsumption' of housing such as second home ownership, and the size of the buy-to-let sector.
"Although the current rules around ownership and property-taxation enable some individuals to own multiple properties, such behaviourwill impose significant costs on the Exchequer in the long-term, and policymakers therefore have alegitimate reason to implement strident measures toreduce such activities," he concludes.
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