To think some social housing rents should be tripled?

[LondonMan]

First of all, please read the post carefully, this is not meant to be a benefits-bashing thread. It's meant to be a thread in favour of "economic correctness."

I want all rents to be set at the market rate, which apparently might mean tripling them in parts of London. I was watching the "How to get a council house" series, and in the program in which Tower Hamlets was featured, the rents seemed to be about a third of the market rate. (I have also watch the Manchester program, so realise there is less of a discrepancy elsewhere.)

I think it is wrong to price anything at other than a market rate, as it results in misallocation of resources.

I presume realistic rents would make no difference to those most dependent on benefits, it would just increase the amount of housing benefit they received. Obviously some other people would be affected. For example some working people who pay social rents with no help from benefits might decide that if their council house no longer had a subsidy, they might prefer private housing, freeing up their council house for someone else.

I know from previous threads that lots of people on here have a confused idea about what subsidy means. It simply means getting something for less than it would cost in a free market. If the owner could rent out a property for £300 a week to the highest bidder, but do in fact rent it for £100 a week to a social tenant, then the social tenant is being subsidised by £200 a week the owner is forgoing.

Essentially the point of "social housing" should be to provide secure tenancies, since the market currently doesn't do this. (Though possibly there should also be changes so that the market does.) It should not be to provide "cheaper" housing, since there is no such thing. Housing is worth what it's worth: when people talk about "affordable rent" or "low-cost" housing the correct economic view of what they mean is almost always housing with a hidden subsidy. I'm not against explicit subsidy, via higher housing benefit for example, but I am against the hidden subsidy in below-market rents.

(Before I saw these programs I was under the impression that central government had already introduced a rule that social rents had to be raised to realistic levels, so I was surprised by the size of the discrepancy in Tower Hamlets. Are Tower Hamlets just being slow in complying, or am I wrong to think there is such a rule?)

The system needs to be made fairer. The trouble is people have different ideas of what fairer means.

Rather than hiking up social rents we should be capping private rents to make them more affordable.

No definitely the wrong solution. You will reduce the number of available properties (some landlords will disappear) and increase demand for those (some people sharing will be able to compete for their own home at the reduced rents.)

There are better solutions. Building more property. Taxing property more so that second homes are less attractive. Reducing the population would also work, though I'm not personally advocating mass murder. I also suspect the benefits system currently incentivises the formation of single-adult households, but that's a controversial theory that should perhape be left to another thread.

Is it lying to ourselves to have free at the point of delivery healthcare? Because it's the same thing. We have decided that healthcare is a human right and shouldn't rest on someone's wage. IMO housing is too.

You raise a good point, as I wouldn't argue for abolition of the NHS.

Yes, healthcare free at the point of use is "lyng to ourselves", and one consequence is that for most of my life in the UK I've been unable to see a GP on half the occasions I've tried to make an appointment. Another consequence is that I've had to lose a couple of hundred pounds in self-employed earnings getting to a surgery during their opening hours to pick up a repeat prescription, because apparently my time is worth nothing and there's no other way of doing things.

One defence of free health-care is that the extent to which people over-consume is limited. For every lonely pensioner who likes to chat to their GP once a month, there's someone like me, who only tries to make an appointment once every three years, and half the time gives up when he's told he can't have one for two weeks.

While most people don't try to consume much more health-care than they really need, I don't think it's fair to argue that the same is/would be true of subsidised/free housing.

"I'm in favour of private compulsory purchase, a private developer should be able to compulsorily purchase poorly used land and convert it to a higher-value use"

What do you regard as poorly used?

I'm not claiming this is fully though out idea, but I see lots of 2-4 story semi-derelict looking commercial property in this part of Tower Hamlets, in the same area there are already some private high rises ranging from several to 15 or so stories. I think the area would be much improved (and a huge amount of housing generated) if the commercial property were replaced by high-density residential. I suppose the measure of "poorly used" could be the total rents they would generate in comparison with the proposed replacement use?

Of course private landlords could in theory just buy property by offering an attractive price (which they would have to pay anyway under compulsory purchase) but I think there is a flaw in that when they need to combine adjacent parcels of land one or more current owners would hold out for an unreasonable price. (Unreasonable meaning more than the free-market price they could get for their property in isolation.)

I would argue that a family, housed with vaguely the right number of bedrooms, not a million miles away from work and family, no second home, no spare room, is NOT using more than they need. Just because they work and live in London, doesn't make them greedy, overusing bastards.

"(I'm in favour of private compulsory purchase, a private developer should be able to compulsorily purchase poorly used land and convert it to a higher-value use.)"
Would that include huge mansions owned by the very rich but not lived in for 10 months of the year? Or just social housing? I wonder if you are just trying to be provocative with this thread?

Not trying to be provocative, I know "private compulsory purchase" sounds like an outlandish idea, and it's not one that I've thought through thoroughly. It's really designed to solve a problem I perceive in land-use, whereby it's relatively easy to subdivide land, but quite difficult to combine plots. (I don't work in property, so may be entirely imagining this problem)

In answer to your first question, no I don't think the fact that property is empty necessarily makes it "poor use", the owner is entitled to use it how they like. I suppose the mansion might be "poor use" if it was in the middle of a city, was already in an area where high-rise development was deemed suitable, and could be replaced by a high-rise worth several times as much. However maybe private compulsory purchase shouldn't be needed for cases like this, normal market forces should do the job. Maybe it should be reserved for cases where land needs to be combined.

working people who live in Social Housing and pay the full rent actually subsidise those people who live in mortgaged property in the same Borough. Did you know that? There are no mortgages on these properties, so the rent goes to the Council to pay for services for all.

Private rent is too high with little security. Wouldn't it be better for Councils to take over all the "buy to lets" and rent them out at affordable prices. The people that owned these houses would be fine, they wouldn't mind. They could go and live with their folks and clean toliets. They don't want to I here you say...

Camden Council are talking about taking over "mansions" that are not lived in, that are used as a sort of holiday home or bank for their very wealthy owners. I don't know the legality behind this but think it is interesting that it is even being discussed.

I think rent in social housing should be linked to income ie if your working or on low pay you pay the current social rent, then it increases. It disgusting that social housing tenants in theory could be earning large wages yet still paying low rent.

I have lived in social housing for 20 years, up until a few years ago worked and paid rent, but how would I afford £2000 a month for a two bedroom house if it was market rent? getting housing benefit at the moment while I look for a job, but seriously what would be the point of me getting a job if the rent here wasn't 1/3 of market rent? I think the new 5 year tenancies are fair, gives people a few years to get on their feet and if they are earing over a certain salary the are excepted to move.

OP your argument only works if (and it is a big if, these are highly-disputed theories not fact) your theory of markets is in fact correct

You make many valid points, but don't throw the baby out with the bathwater. However little economics in general (and housing in particular) matches the idealised version of how things are supposed to work, that's not a reason to ignore what it tells us altogether, by allowing mispricing where we don't have to.

Op you really aren't that bright are you.

Mum of wee boys do you think social housing was only meant for poor people?

Private rent is too high, and there aren't enough protections for renters. That should be sorted - house prices in the UK are still overvalued (in some areas by around 30%) so the government shouldn't be doing it's damndest to raise prices.

I have council house envy. We are stuck in our house due to economic climate so have put family plans on hold yet my friend just got rehoused in a 4 bed house (rare I know) and is expecting her 5th now - I'm jelous

Londonman, but then you must recognise that if the market is already mispriced through speculative imbalances, then to revalue all housing costs at "market" rents massively augments the original mispricing, creating the conditions for a catastrophic collapse even if the market only returns to mean. What you are proposing would see this increased risk being borne by the taxpayer via housing benefit, sucking more demand out of the system to prop up overvalued private assets.

I am choking on my noodles at BrokenSunglasses

Yes, it is that easy to get the job that you want/think you deserve. That's why I am President of Europe.

Maybe the social housing rents are realistic rents and a better reflection of wages and cost of living. I live in a housing association house and pay my full rent as a single working parent but if I was renting privately housing benefit would be paying the bit I couldn't afford so where is the sense in that. I would rather be paying off a house I can leave my children as I wont have anything else to leave them rather then paying into someone elses retirement.

mumofweeboys what in your eyes is too high a income for social housing?

I'm in social housing and if our rent was tripled it would be well over 100% of my salary. We'd be homeless and hungry again.

I know I'll be judged and I know I disgust a lot of MNers. In my defence before I started a family I had training, qualifications, a well paid job, I was married, he was employed too, we owned a house with only a small mortgage and still lost everything.

What I'd like to know is what I've done that is so bad that makes other people wish a second period of homelessness on me. Even more so why do they want my children to suffer.

I'm very grateful for our socialized tenancy.

I've no idea how my mental health would be without it.

We are another family that lost everything, through no fault of our own.

I think private rents should come down.

always the foot stampers in private rented on this thread

"oh lets make those in social housing suffer just cos we are"

how about look at the bigger picture

god i could rant for hours on this subject

dirtyface. I would love to get a house in our town that is not privately rented. I pay well over 50% of my wages on rent. If I could get social housing locally it would save me nearly £200 a month.

But am I saying that the price should go up. No. I can understand why people are fed up and want change.

sorry ilovemyself. to clarify, i don't mean EVERYONE in private rented thinks that. of course i don't. there just seems to be lots on here that do, and its just bitter and nasty.

and i am sorry about your situation., it really does suck and its so, so unfair., there needs to be affordable housing for everyone.

you are absolutely right, things do need to change. but what needs to change is the lack of affordable housing, not plunging more familiies in to poverty by "social" rents being ramped up to the silly prices of private.

as others have said as well, if everyone wasn't skint cos of paying most of their salary out on housing there would me more money being spent in retail and leisure thus boosting the economy :S

Social housing rent shouldn't increase. Ideally, private rent should come down, but landlords have a mortgage to pay. Some make money from the rent, some don't.

There should be more social housing.
When I was a single parent, I had to rent privately as there is a huge shortage of social housing in my area.
I had help with housing benefit to top up my wages because the rent is more expensive. £280 pcm more expensive. If I had social housing, I could have paid the rent out of my wages and not claimed any form of benefits.

They were paying my landlords mortgage.

Madness!