Discrepancy between social housing rents verses private sector rents - how is this legal/fair?

What difference would it make to private renters if council tenants paid more rent?

Why don't people in social housing pay proportionately for their homes, so if your income is £1000 a month you pay £100, if it happens to increase to £3000 then you pay £300 etc

redbrickblog.wordpress.com/2011/05/27/is-social-housing-welfare-2/

This is a good article on this issue.

They require subsidy to build but eventually the debt to government will be paid off. Then the below market rents become not for profit rather than subsidised and the money can be channelled into maintenance and even building more homes. In the long term it is the cheaper option.

"The market rent isn't what private landlords rent houses for. That is an overinflated rate. The council housing is a realistic rental value."

The market rate is whatever people would be prepared to pay if the house were on the open market. You may think the house is only "worth" £500/month, but if similar houses are going for £850, then that is the market rate. (Incidently, that rate seems very cheap compared to what it would be in many parts of the country e.g. the South East).

What you don't seem to grasp is the indirect costs associated with your subsidised rent. Let's say that, hypothetically, the council could let out a house like yours for £800 on the open market (assuming that is the going rate for 3-beds in yor area). By charging only £500 then you have an invisible subsidy of £300/month.

"The council goes from paying out £450 to receiving £200 (the LHA becomes cost-neutral..they are paying themselves so no gain and no loss)."
Do you seriously think there is no cost involved in building and maintaining houses? Let alone the opportunity cost of the lost rental icome by renting out art below market rate.

Absolutely, Trickle. We were very fortunate with our current house, because my Uncle is a landlord, so although a relative, we could demonstrate that he has a portfolio of properties, so therefore qualified for HB despite him being a (declared) relative.

However, even though he is very flexible and we were allowed to do anything with the property, there comes a point when you have adapted as much as the property can be adapted and it still doesn't meet the needs of your child.

The market rent isn't what private landlords rent houses for. That is an overinflated rate. The council housing is a realistic rental value.

WRT the over-simplification, I disagree.

Currently - rent £650, LHA £450, we pay £200.

New house - rent £450, LHA £250 we pay £200.

The LHA is council money, and the rent is going to the council. Therefore, the LHA is reduced by £200 but also goes back to the council and we pay the council £200 rather than my uncle.

The council goes from paying out £450 to receiving £200 (the LHA becomes cost-neutral..they are paying themselves so no gain and no loss).

Yes, they have costs associated with the house, but they would have that with whoever was living there.

Trills, it's a little different if you are in an adapted house - no matter how much you fiddle with the rent it won't make it easier to move at the end of the day as you still need the adaptations and LL that would allow this are few and far between, there is also no point in spending £1000's on adapting a property without an assured tenancy, it makes little sense to move someone out only to have to find a property that can be adapted every couple of years.

Exactly brad.

If the house is worth £800 a month and you are personally paying £300 a month, then right now the government as a whole are subsidising you by £500/month.

If you later earn much more money and so receive less or no housing benefit, but the "rent" on the council house is fixed at £500 a month, then they will still be subsidising you by £300 a month. You would find it very hard to move out because you would be used to paying this lower amount.

If, instead, council houses were charged at market rent, but housing benefit was enough to cover market rent, then right now you would still pay £300 and they would still be subsidising you by £500.

As your income goes up your housing benefit would go down, so you would gradually (if your income continued to increase) get to the point where you were not being subsidised at all and you would be paying the full £800. You would then find it very easy to move house if you wanted, and there would be no worry of "what if our income goes down again?" as there is now.

Lougle: I see what you are saying, but I think you are over-simplifying the costs aspect.

Fair enough, your rent will fall and so the sum paid out in HB will fall, too. But there is a cost in providing social housing in the first place that you haven't factored in - the cost of the land, of building a house and of maintenance. And if the council is letting out social housing at below the market rent then that is also an indirect subsidy. In other words, if the open market rent for your new home would be, say, £800 and you are charged only £500 then the local authority is, in effect (if not in fact), sacrificing £300 per month of rental income.

A real example:

Our rent is £650 pcm. The house we are in is cheap for the area. The typical rent for a house of our size is £850 pcm. We have been assessed by the Council OT and our house is unsuitable for DD1 (it has no downstairs toilet and she struggles with stairs due to her brain condition).

DH has a low paying job. Or rather, his two jobs are above NMW but the combined hours are only 27 per week, which leads to a poor salary. He has to have this sort of job, because he can compress his hours in the school holidays so that he can assist with DD1's care. If he worked full-time he wouldn't be able to do that and it puts the other children at risk.

As a result of his low wage and our family circumstances, the LA makes up the shortfall in our rent. We pay approximately 1/3, they pay the remaining 2/3.

When we move, our house will be bigger (although still 3 bedrooms - it's not sleeping space that we are short on, it's living space and toilet location) but the rent will be about 2/3 of the rent we pay now, probably half of 'average rent' for the size of the property.

When we move, we will then pay 1/2 of our rent and the LA will pay the other 1/2 (although they'll be paying themselves).

Overall, by having us in social housing, the council will save £200 per month.

If net migration is running at £250 00 per year (as it has been doing so for at least the past decade), then it is disingenuous to claim that the increase in population is not having some effect on the housing shortage. That is at least an extra 2.5 million people who have to live somewhere.

And as for rent control: "Economists don?t spend much time debating the issues they agree on, and to them, rent control is about as dead an issue as the earth revolving around the sun. In 1992, 93% of American and Canadian economists surveyed agreed with the statement ?A ceiling on rents reduces the quantity and quality of housing available.? Opposition to rent control among economists spans the political spectrum from Milton Friedman and Walter Block to leftist Nobel Laureates Gunnar Myrdal and Paul Krugman. In fact, it was the socialist Swedish economist Assar Lindbeck who famously said, ?In many cases rent control appears to be the most efficient technique presently known to destroy a city?except for bombing it.""

marketurbanism.com/2009/03/19/undead-ideas-rent-control/

@tether well you have insinuated that people have not suggested a broad range of views, and that those that have been expressed are not valid.

What do you mean?

"Nobody should have to sell their home to pay care fees."

Why not?

If you're moving into a care home you don't need the home you're moving out of.

Do you really think public money should be used to subsidise large inheritances for the children of homeowners?

Beezaaaaarre

I agree with not kicking an elderly woman out of her home to put a family in it.

All HB is doing is keeping rents artificially high.

Imagine if HB was abolished, people wouldn't be able to pay inflated rents, landlords would have to reduce the rent that they charge just so that they could keep their properties inhabited.

The only people who could afford to charge over market rates would be landlords with zero debt on their property, while they exist they possible are in the minority.

The problem is the interim and the possibility that people would be evicted.

No need to get upset, tardis- I didn't say that anyone was wrong.

@tether well what do you mean? It's a slightly pathetic form of argument to just smugly point out that everyone else is wrong but refuse to explain why.

"Give everyone enough housing benefit to afford "market rate"

The Government is capping benefits inc HB because rents are too high. So people are already being forced to move from private housing where rents are high to other areas and still they have no hope of finding affordable housing, because there isn't any or they move to cheap areas with no work.

If you then move people out of HA and council housing and into the private sector, you are simply playing pass the parcel because people who work but are on modest incomes would then NEED to claim HB to pay these rents.

If you inflate council housing rents to market value this will inflate the market value of all housing.

The only answer to the problem is not to cut HB or move people, it is to regulate the private rental sector and cap rents, otherwise low waged workers in inner city areas who perform menial but nessasary work will be forced to leave their work, who will serve coffee in costas or empty your bins?

Even if this forces private landlords to sell up, this will help to drive lower house prices anyway. Invest in the building of affordable homes/council homes and give people who are house blocking on higher income a financial incentive to move out/buy/rent somewhere else.

My father aged 81 and blindl ives next to me, on his own in a three bed rented property, he has lived there for 26yrs.

If this numty Government make him move, so be it,they can bloody well look after him in his new one bedroom flat.

I'll be too busy meeting the new requirements to quality for universal credit to travel far to look after him.

People don't need to be forced to move or starved out of their homes, there has been a wilful neglect and underinvestment in affordable homes since thatcher.

No tardis. I don't mean that at all.

@tether What do you mean has it all? Do you mean a fairly broad range of views, most of which are pretty valid?

Do you really think I should then be chucked out of my house just because things had improved for me?

Not 'chucked' but given we have a massive shortage of social housing, these need to be targeted at those who have the greatest need.

So whilst you see it as unfair that since things have improved you have to move out, the family who are in desperate need may see it as unfair that you are living in a house you do not NEED.

Yes, another solution would be to build more social housing but in the current climate, where would the money come from? Even if we did find some money, I sincerely doubt there'd be enough cash to build a home for everyone in need. Meaning we still have to prioritise.

We cannot simply build our way out of this problem anymore than building more motorways would solve traffic congestion.

This is why I think council houses all need sorting out.

No more "this is your house and you can have it forever".

Do up all council houses so that they are suitable to be let out.

Let them out at market rate.

Give everyone enough housing benefit to afford "market rate" - means-tested.

If you need full housing benefit you pay nothing.

As you earn more, you receive less housing benefit and so pay more towards renting your house - no matter if it is a council house or a private rental.

No huge gap between the two.

If you do well for yourself the housing benefit will dwindle away to nothing, but there will be no shock because it has done it gradually.

No ones mentioned a 52 inch plasma yet.

BINGO!

My, this thread really has it all, doesn't it?

Open borders are good thing, I just doubt how popular our open borders would be without the Nhs and a welfare state.