A major new report from Policy Exchange calls for a fundamental overhaul of England’s social housing and housing support system, arguing that it has become too static and insufficiently responsive to changing needs and circumstances.

There are currently 1.34 million households on social housing waiting lists, but only 263,000 households received a new social letting in 2024/25. A further 134,210 households were living in temporary accommodation at the end of December 2025, including more than 176,000 dependent children. Meanwhile, expenditure on Housing Benefit and the Housing Element of Universal Credit is estimated at £37.2 billion in 2025/26, rising to £43.5 billion by 2030/31. 

Fairer Housing Support argues that social housing should remain a strong safety net for people facing acute hardship or enduring need, but should also do more to support work, mobility and greater independence. It proposes moving away from a system in which a social tenancy allocated at a moment of need can automatically become a home for life. 

New Policy Exchange modelling estimates that the package of reforms would generate £14.3 billion in savings and additional revenue over the five years to 2031/32, while creating more than one million additional social housing opportunities over a decade. This includes 793,000 additional letting opportunities through a new Opportunity Route and 155,000 homes released through Graduated Pay to Stay. 

Some of the report’s key recommendations include: 

• Reserve new social housing allocations for British citizens and put contribution at the heart of allocation.Councils would replace narrow local connection rules with a broader Local Contribution Criterion, recognising work, training, apprenticeships, caring, volunteering and moves that make better use of existing social housing. The reform is modelled to redirect 220,000 lettings to British citizens.
• End lifelong social tenancies as the default. A new Safety Net Route would provide stability for households facing acute or enduring need, while an Opportunity Route would use time-limited tenancies to support work, training, caring responsibilities and mobility. The Opportunity Route is modelled to create 793,000 additional letting opportunities over a decade.
• Introduce Graduated Pay to Stay for higher-income social tenants. Additional rent would begin once household income exceeds the national gross mean household income and rise progressively until households earning £88,000 pay full market rent. The policy is modelled to raise £1.1 billion in additional local authority rental income over five years and release 155,000 council homes over a decade.
• Reduce long-term housing support for working-age claimants who are expected to work. Claimants would receive their full Housing Benefit or Universal Credit Housing Element entitlement for two years, after which support would be reduced by 20 per cent, followed by a further 20 per cent after four years. Those with no work requirements would remain protected, with additional safeguards for exceptional circumstances. The reform is modelled to save £6.1 billion to 2031/32.
• Reform the Social Rent formula, replacing its reliance on earnings and property values from 1999 and 2000 with more current measures. As an interim measure, annual social rent increases would be limited to CPI, a policy modelled to save £2.6 billion over five years.
• Replace the current Local Housing Allowance freeze-and-reset cycle. The report proposes maintaining the current freeze until housing support expenditure has fallen in real terms from its 2025/26 baseline, before setting LHA at the 10th percentile of local rents and subsequently uprating it annually in line with local rent growth. 

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