to think people are being deliberately perverse about Council/HA..(486 Posts)
1) Social (council or HA) rents are not subsidized.
2)Social (council or HA) tenancies are not a form of welfare benefit.
It's not that hard to grasp is it?
cross post there fideline.
So tenants right reduction = higher rents because landlords were allowed to run amok?
Obviously the council could charge higher rents. They could charge five magic beans and a kidney if they wanted to.
But the whole point of council rents is that they are fair/ not-for-profit, so they've got no reason to.
And no, doing it purely to make council tenants as poor and miserable as private tenants is not a valid reason............
I actually contacted Shelter to ask, because I was so fed up of people saying it. This is their reply.
Thank you for contacting Shelter,
I have spoken to our policy department who have responded with the below email;
In terms of whether this is true, social housing developers (usually housing associations) are often given a capital subsidy, in the form central or local government grants to assist with the building of new social homes. These grants are recouped through the rents and when the grant is paid back, it’s recycled into further social housing developments.
But the rents aren’t directly subsidised and, in fact, social housing tenants (via the rent they continue to pay after the cost of building the homes has been paid off) subsidise the building of new homes. Until the recent reform of the Housing Revenue Account, council housing rents generated a great deal of money for the Treasury, as highlighted by the Local Government Association report: My Rent went to Whitehall (2008).
I sincerely hope this is of assistance
I love social housing. . There should be more of it. .However it is 'subsidised' a social house/council house in my area costs 200 pcm less than my private rental. The social/ council rents are used as a bar for 'fair rent'. So anything above 'fair rent' in the private sector is disregarded. Therefore I am approx 200 pcm 'worse off' than someone who works the same hours and receives the same benefits as me. Oh well such is life...
You mean why would councils want to charge market rates? Because they could put the 'profit' to good use. I say 'profit' but it wouldn't end up in some private individual's pockets, it would go into the council's money pot. Buy in more housing stock so that there is enough to go round everyone that wants it (by the way, that would mean private landlords would have to reduce rent in order to attract tenants). Improve the existing housing by making it more energy efficient. Improve the local area.
I was taking the following;
"And while council houses/HA houses may not technically be subsidised, the council could charge market rates but don't"
which was then quoted by someone else. I think I took you both to have the same meaning. To wit, that councils should charge market rate.
X post Crohn
So you DO think they should.
Then everyone would be paying extortionate housing costs, with the exception of people who bought pre-2000.
Paying less than somebody else for something different doesn't at all mean that you are being subsidized.
If I buy Tesco Finest sausages for £4 and you buy Tesco Value ones for 50p does it mean that yours are subsidized? No. It just means your product was cheaper to produce.
Iseeyoushiver I like your style. Do you carry a copy of the email around in your wallet?
I'm not saying they should or shouldn't. I was answering your question as to why councils might want to charge market rent- and therefore the fact that they don't is effectively a subsidy.
As subsidy is effectively taking money out of the council's budget and putting it towards housing, yes? Well in the case of council houses, it means the council isn't putting money into its budget, which has the same effect.
I actually think there should be more social housing, if supply caught up with demand it would take the wind out of the buy-to-let-for-profit landlords' sails. The occasional landlord (people like my next door neighbour who needed to move but couldn't sell so had to rent out, or people who have bought a house to provide in retirement) wouldn't be too badly affected by a drop in rents, as they aren't looking for a monthly income from rent.
I think there's a genuinely interesting debate here - it's not clear cut.
Let's say my Mum has a second home. She doesn't need it for herself and has paid off the mortgage. She let's me live in it for a rent which is much lower than the market rent but covers the costs of maintenance? Is she subsiding me? At one level, no, because her costs are being met. But she is foregoing the rent she could be getting, so there's an opportunity cost, which some would think of as a subsidy.
Let's say I have a brother, who also needs somewhere to live. Mum only has one spare house. My brother gets no help because I got the house. Is she subsidising me at my brother's expense?
We live in a council house and pay our own rent. We live in an area where private rental is scarce & very expensive.
If we rented privately we would be eligible for some housing benefit due to the cost so would be costing the government money
Sorry for the rogue apostrophes and question marks there.
Ahh but saucy.. I could choose to buy more expensive sausages. I don't have the choice about social housing. I can't just say well to be honest I would rather have a council house than a private rental so I can have more cash in my pocket. There is no social housing!! As I said such is life. .
" councils might want to charge market rent- and therefore the fact that they don't is effectively a subsidy. "
Not sure I agree that. An actual subsidy would have to come from somewhere.
When people insist rents are subsidize they frequently go on to say that they, as a taxpayer, are doing the subsidizing. They aren't. There is no subsidy, just a self-funding housing loop.
"I actually think there should be more social housing, if supply caught up with demand it would take the wind out of the buy-to-let-for-profit landlords' sails"
Completely agree with this^ though.
Exactly pancakes. Whether or not it is subsidised depends on what angle you look at it from. If your mum rented the house out privately, she could split the profit between you and your brother- it might even be enough to pay rent for both of you in social housing! So she would effectively be subsidising you at your brother's cost.
"Opportunity cost" is the term I have just been groping for! Thanks pancake
I just don't agree that there is an opportunity cost when the landlord's purpose is not the profit motive.
The 'subsidy' does come from somewhere- albeit the lack of money to make improvement, mend roads, collect bins weekly. All the things that they could potentially do with 'profit' from housing. Councils are making huge cutbacks, at least my council is. Charging market rates could prevent the need for that, and even maybe prevent the need for council tax to have risen this year.
Also, on the question of subsidy...
Many council and housing association properties are old and the bill for building them is long gone. But for more modern properties the funding comes from three things:
Surpluses (money in the bank)
Borrowing against the future rent (just like a buy to let mortgage) and
The grant is needed because the sub market rent that the HA will charge isn't enough to get a big enough loan to build the property. So government fills the gap. Put another way, if rents were more like market rents they wouldn't need grant funding. I think it's hard to argue that the rent for those properties isn't subsidised .
In the last few years those government grants have gone up and rents on some new HA tenancies are now much closer to market rent.
Your point being what Jupiter
The fact you personally don't have the option to choose a council property still doesn't make council tenants subsidized. That's what I was replying to.
fideline - the difficult thing for councils is that they have lots of purposes. I think that's a benefit of housing associations. They are focused on housing.
Well if Social Landlords did increase rents, the first thing they would have to do is bring their housing stock up to a better maintenance standard.
If people pay private-level rents they will want private-rental standards.
I'm not sure there'd be much left over to subsidize owner occupiers' council tax bills.
For example Crohn you wouldn't expect to pay market rental and pay for carpets, decor, plumbers etc on top, would you?
Private-rental standards? So, leaking windows where the wooden frame is rotting (and finding slugs on the windowsill inside your house), damp and mould, kitchen cupboards falling apart, plaster peeling off the walls, and a boiler that doesn't work properly so you never quite know if you're going to have enough hot water for your shower or not, as in my SIL's previous private rental property?
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