A new report from the think tank has called for what it describes as a fundamental overhaul of social housing and housing support, arguing the current system is “too static” and fails to reward contribution or support mobility.

It pointed to new figures that show 1.34 million households are currently on social housing waiting lists in England, yet only 263,000 received a new social letting in 2024/25. A further 134,210 households were in temporary accommodation at the end of December 2025, including more than 176,000 dependent children. Spending on Housing Benefit and the Universal Credit housing element is put at £37.2 billion this year, rising to £43.5bn by 2030/31.

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 £1.1bn 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%, followed by a further 20% after four years. Those with no work requirements would remain protected, with additional safeguards for exceptional circumstances. The reform is modelled to save £6.1bn 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 £2.6bn 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.

Policy Exchange estimates the combined package would generate £14.3bn in savings and additional revenue over five years, while creating more than one million additional social housing opportunities over a decade.

Responding to the think tank’s newly published report, Fairer Housing Support, Francesca Albanese, executive director of policy & social change at Crisis, said the proposals would push more people into homelessness rather than address the root causes of the crisis.

She argued that decades of failure to build enough social homes — rather than the design of the current allocation system — are behind record waiting lists, pointing to a net loss of almost 4,000 social homes across England last year alone.

“We know a safe home is the foundation for people to live a healthy life – a base from which people can thrive in their job, improve their health and wellbeing or provide stability for their family,” she said. “The reason waiting lists have topped record levels is because successive governments have failed to build enough social homes for decades. Last year we saw a net loss of nearly 4,000 social homes across England.

“In 2021, 60,660 households who were either at risk of or experiencing homelessness in England had at least one person in the household in work.

“With housing benefit frozen, more and more people are struggling to cover the cost of rent and essentials like food and bills. Across Britain, fewer than 2% of properties are affordable for renters on housing benefit.

“We need to focus on the evidence-based solutions. That means having a welfare system that supports people on the lowest incomes and building enough social homes, not policies that create further division across society.”