Paragon warns of ‘dangerous' social housing cuts

Nigel Terrington, chief executive of The Paragon Group of Companies, the buy-to-let mortgage specialist, comments on the Government's plans to reduce the social housing budget, announced in today's Comprehensive Spending Review.

"The trend in housing tenures over the past 10 years has been away from social housing and towards the private rented sector, and these measures will inevitably accelerate this shift. The number of properties in the social housing sector has fallen by one million since 1991, and the private rented sector has largely picked up the slack, increasing by 1.3 million properties.

"The decision to move social housing rents more in line with the market rate will make private rented property an option for people who wouldn't have considered it previously, whilst the end of social homes ‘for life' will result in a higher turnover of social housing stock. 

"However, private rented sector stock is under strain as more people look to rent than buy, and this surge in tenant demand is causing rental inflation. Whilst we recognise the positive regulatory changes already introduced by the Government, it has to be careful not to shift the role of housing people on low incomes on to the private rented sector without ensuring it has appropriate levels of support at both an economic and regulatory level. Failure to do so could be dangerous because it could lead to a shortage of rental property at a time of unprecedented levels of tenant demand."