According to the Government, England is about to spend £39 billion on social housing. That may be just the start. Andy Burnham, the frontrunner to replace Keir Starmer if he wins this Friday’s Makerfield by-election, has made a large-scale expansion of social housing central to his pitch. Yet the discourse around this number focuses almost entirely on the technical details: how many units, which tenures, the speed at which they will be delivered.
No one is asking whether those homes will actually improve the long-term prospects of the people who receive them.
Social housing performs a genuine and valuable function: it provides stable, affordable accommodation to households who cannot compete in the market at current prices. That function should not be dismissed. But we should be honest about the trade-offs.
What social housing does not do is generate wealth. The tenant pays a subsidised rent and receives a stable home. When the tenancy ends, as it often does, with the death of the tenant, the asset reverts to the landlord. No equity has been accumulated; no inheritance is available. The next generation therefore starts exactly where the previous one did: without capital, dependent on the state’s largesse, using the same scarce social housing stock, in the same allocations queue.
People from the most advantaged parental backgrounds are three times more likely to own a home by age 35, and their average housing wealth is roughly ten times higher than those from the most disadvantaged backgrounds
Housing wealth is the largest component of wealth for most households. It enables families to absorb income shocks, generate additional income and support the development of the next generation. Social tenants are excluded from this process entirely – not because of their behaviour or their earnings history, but because of the tenure they occupy.
The direct public subsidy committed to each social home is substantial. The average government grant per affordable home in the 2021–26 Affordable Homes Programme ran to approximately £64,000. That subsidy purchases access to stability – something genuine and important. What it does not purchase is wealth accumulation. The state spends heavily; the tenant receives something real; the generational transmission is zero.
Social housing provides a facsimile of the security that ownership creates: it looks, from the outside, like settled housing and it delivers many of the day-to-day benefits; but it is missing the foundational feature that makes ownership transformative across generations. It is security without substance – and no volume of units changes that.
The scale of this exclusion is easier to grasp through a concrete example than through aggregate statistics. Under pre-2012 succession rules, two successions were permitted on a social tenancy. The following scenario is perfectly possible: a couple move into their new home in April 1963, as the Beatles hit number one for the first time. They are 20, occupy for 60 years, die at 80. Their son, born the year they moved in, succeeds at 60, occupies for 20 years, dies at 80. His daughter, born when he was 45, succeeds at 35, occupies for a further 45 years, before dying at 80. That home is unavailable to anyone else on the housing register for 125 years – and at no point in that chain has a single penny of wealth been created or transmitted. That home has remained unavailable to address any new housing need from 1964 to 2088, at which point Elon Musk expects humans to have been living on Mars for nearly forty years.
While the succession rules have now been changed, the underlying dynamic of social housing failing to develop wealth for its users across multiple generations has not. In our example, if the son sold the house at the point he received it, leaving him free to raise his daughter wherever he saw fit, he’d receive around £275,000 in inheritance: enough to propel him and his family into a different life entirely.
The context for this argument has sharpened considerably. Home ownership is no longer primarily an earned condition. It is increasingly an inherited one. Since the 2010s, the Bank of Mum and Dad has ranked among the top ten mortgage lenders in the United Kingdom. In 2023/24, Savills data shows approximately 40% of first-time buyers received some form of parental assistance – gift, loan, or inheritance – in raising a deposit.
The divergence this creates is stark. People from the most advantaged parental backgrounds are three times more likely to own a home by age 35, and their average housing wealth is roughly ten times higher than those from the most disadvantaged backgrounds. Over the coming decades, trillions of pounds of housing wealth will pass between generations, compounding this divergence with every transfer.
Social tenants sit almost entirely outside this process. They receive no housing wealth to transmit. Their children will not use it to enter the market. This gap between households with accumulated housing capital and those without is a generational phenomenon – and social housing, as currently designed, enforces that exclusion permanently. Every £39bn programme that houses people in social tenure without converting them into asset-holders is a programme that both preserves and extends the gap.
We have, of course, tried to remedy this generational transfer problem before. Right to Buy (RTB) was the only mass-scale attempt in English policy history to treat social housing as a vehicle for wealth creation rather than as a permanent accommodation. The underlying insight was correct: the most durable resolution to housing scarcity is not managing access to scarce stock, but converting occupants of that stock into asset-holders who no longer need state provision.
For those who exercised it, the wealth transfer was real and lasting. Since its introduction in 1980, more than 2.7 million public sector dwellings have been sold to sitting tenants, transferring accumulated public asset value directly into private household balance sheets. The societal mobility implications were significant for a generation of working-class homeowners who would not otherwise have become independent or accumulated any meaningful asset.
But RTB had a structural design flaw that limited its reach and ultimately undermined it. The mechanism (a discounted purchase but which still required mortgage finance) selected for tenants who were already financially capable. This is borne out in the data: the higher the income quartile, the higher the RTB take-up rate. The intervention created wealth for those best positioned to acquire it, and left the remainder behind.
The correct lesson from RTB is not that wealth creation through social housing was wrong. The mechanism needs to reach further – decoupled from mortgage-creditworthiness – and the institutional incentive to replace transferred stock needs to be built in from the outset.
It currently isn’t. The entire Registered Social Landlord (RSL) financial architecture rewards accumulating and holding stock: portfolio size determines borrowing capacity, rents on existing stock service the debt that funds new development. A tenant whose housing need has been genuinely resolved represents, in institutional terms, a loss – of rental income, asset base and borrowing headroom. The RSL has no financial reason to create that outcome and every financial reason to avoid it.
The logical alternative is to redesign social housing as a transition mechanism – a structured pathway from housing need to housing ownership – and to transfer title to tenants at the earliest genuine opportunity rather than managing them within the system indefinitely.
The mechanism must be conditional, and should select for behaviour rather than financial capability. A tenant who demonstrates ten years of good tenancy – sustained occupation, rent discipline, maintained landlord relationship – earns a right to the freehold of their home via a title transfer, conditional on demonstrated capability, earned through the tenancy itself.
The ten-year threshold is the period where a tenant learns and demonstrates the ability to be a responsible steward of their wealth. A decade of tenancy demonstrates the financial discipline, household management and stable relationship with property that are the actual prerequisites of successful ownership. It is also long enough for the RSL to observe, support and prepare the household for the transfer – and for any early-stage tenancy difficulties to be identified and resolved. What RTB required applicants to prove through creditworthiness, this mechanism develops through the tenancy record itself.
The objection that title transfer represents money leaving the system deserves a direct answer – no, because the money has already left the system. It left when the home was built, when the grant was paid and when the first subsidised rent was charged below market rate.
Under the current model, the state purchases the permanent dependency of the home’s occupants. Under title transfer, the state purchases resolution: a one-time asset transfer that permanently extinguishes the housing need of that household and every generation that follows. Given the many obligations on social landlords, relinquishing the property could even be a net gain to the public purse. It is also worth stating that – should the former tenant choose to sell the property and relocate to a different and cheaper area – the cash paid for the property comes not from the state (as in various reimaginings of RTB) but from a buyer and their mortgage provider.
The RSL depletion problem requires a separate institutional fix. If title transfers out and the portfolio shrinks, the building incentive disappears unless something replaces it. Here, the mechanism should be a portfolio-level tax credit: for every unit transferred to tenant ownership, the RSL receives a credit against the cost of a replacement unit. This creates, for the first time, an institutional financial incentive for RSLs to transfer stock rather than retain it. Build, transfer, build again.
The calibration of that credit will be the central design challenge: set it too low and RSLs will continue to favour retention; set it too high and the fiscal cost exceeds the saving from extinguished subsidy obligations. But this is a problem good incentive design can fix. If Andy Burnham is serious about helping social tenants rather than simply expanding social housing, the tax credit rate is precisely where he should be investing political and fiscal attention. The goal is not more homes in perpetual public ownership. It is fewer households who need them.
The underlying problem which social housing addresses is that some households cannot meet their housing needs at market prices. In the end, this can only be resolved if households accumulate assets that allow them to buy or rent without subsidy, to pass something to their children and to exit subsidised provision for good. Simply building more social housing is not the answer. It manages the symptoms while the condition persists.
The current £39bn programme – or whatever expansion Burnham may introduce – will house people. It will relieve immediate pressure. What it will not do is generate wealth, convert tenants into owners or create any institutional pressure on RSLs to do either. In twenty years, the children of today’s new social tenants will be on the same waiting lists, requiring the same subsidised provision, at whatever the 2045 equivalent of £39bn turns out to be.
A policy that converts tenants into owners – on the basis of demonstrated behaviour rather than prior financial capability – resolves individual cases generationally rather than temporarily. Correctly designed, it also creates the building pressure that the current architecture suppresses: an RSL that transfers title must replace stock to maintain portfolio, and the tax credit mechanism makes replacement cheaper than retention. The scarcity machine runs in reverse.
That is what a housing solution looks like. What we are building instead – at great public expense, with the best of intentions – is a very sophisticated holding position. Instead of solving the problem, we are subsidising its continuation.
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