Thursday, 19 November 2015

Social housing tenants in the UK and Hong Kong

Parker Tron linked to this article in The Guardian, none of this is news but worth repeating:

Almost half of social homes are occupied by only one person, and only a quarter have two residents:
43% are one-person households
32% have more than two residents.
This is partly down to the high number of retired people living in social housing, especially in supported accommodation.

... in terms of economic activity, the difference in employment status between owner-occupiers with mortgages and social renters is stark.
92% of owner-occupiers with mortgages are in employment
41% of social renters are employed

But the reasons for the disparity aren’t immediately obvious:
Half of economically inactive social renters are retired
The remaining renters are full-time carers, or long-term sick or disabled

How old are they?
People in social housing are considerably older than the people in the private rented sector:
28% of social tenants are over 65, compared with 8% of private renters
Only 25% of social renters are under 45, in contrast to 70% of private tenants
Five times as many people over the age of 75 rent in the social, rather than private, sector

This is partly down to the high number of retired people living in social housing, especially in supported accommodation.

So to generalise, social tenants are disproportionately pensioners and one-parent families.

Coincidentally, Kj emailed me a link to an article about public housing in Hong Kong (link extremely dodgy, open at your peril):

Impoverished inhabitants have reappeared in the city. The public renter-housing sector today is a concentration of poor elderly retired households and low-income single parent households.

Between 1976 and 2011, the proportion of public housing renter households from the lowest income quartile increased from an estimated 24.5% in 1976 to 48.4% in 2011, and the proportion below the median household income rose from 53.3% to 80.0% (see Figure 1).

At the same time, among households with heads aged 20-65 the percentage living in public renter housing declined from 36.3% in 1976 to 27.4% in 2011, while among heads aged above 65 the percentage rose from 30.6% in 1976 to 48.6% in 2011.

Same old, same old.

The article was written by somebody working on behalf of banks, insurance companies and possibly the old-age care sector, who are salivating at the proposal of selling off public housing.

How about this for a Home-Owner-Ist tour de force, all done presumably without any intention at irony:

Given that demographic, it seems obvious that old age support should focus on selling our public housing estates to sitting tenants at an affordable price. In particular, this would allow the elderly to immediately and cheaply acquire an asset to provide old age support. It would go a long way to addressing the problems of elderly poverty in Hong Kong.

At present, elderly homeowners can mortgage their homes in exchange for an annuity to provide a constant stream of monthly income support for the rest of their lives. Upon passing away the property is inherited by their designated heirs, who can either take ownership and assume repayments on the outstanding mortgage loan, or receive the net value of the property after the loan is repaid in full.

Using land to finance old age retirement and to benefit the next generation has been a tradition in many civilizations long before the modern world made governments the preferred provider of those in need.

Privatizing the public renter housing estates would create a very large client pool of elderly homeowners willing to take advantage of mortgage backed annuity schemes. This would create better opportunities for diversifying risks associated with the uncertainty of life expectancy. A bigger market could also lead to better terms for all participants.


Kj said...

Mr. Wong (apparently professor of political economy), is my favourite for academic homeownerist of the year.

"This is not the only way in which land as wealth could be used to benefit those in need. There are the poor who are not elderly. The money the government saves on public housing expenditures could be transferred to other needs. Society as a whole would benefit if only we could unlock the value of public housing wealth."

I could agree with that last sentence ofcourse, his plan OTOH, is a one-off handing of this wealth over to banks/current tenants. Everyone who comes after and have to service these debts can fuck off as is the usual case. HK land premiums are some of the highest in the world, and that's *after* a reasonably high rate of land taxation. If mr Wong gets his way, it's hello 75 year Mortgages, goodbye to any chance of any later generations being able to do MEW, and most likely goodbye dynamic envy-of-the-world-market-economy.

Kj said...

And what "Public housing expenditures" does Hong Kong have? I'd be extremely surprised if HK Public housing costs are not covered by rents, excluding land premiums.

Lola said...

That really is a face-palm moment.

Mark Wadsworth said...

Kj, what public housing expenditure? None, as you say. Which is exactly the same in the UK, it doesn't cost the taxpayer anything (and saves him a fortune).

L, indeedy.