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?)

It's not just the rent though. It's fuel prices. And that then gets passed on to the end user as it costs nor to produce product and transport it. In the 25 years I have been driving fuel prices have increased from 35p/litre to £1.38/litre. And the majority of that rise has been in the last few years.

And just how exactly is the price of private rent a free market in this country? Tread carefully now.

god yeah petrol prices are an f ing joke :/ dont get me started on that either! and gas and electric. and car insurance. and FOOD for that matter

Exactly. All that most HB does is pay for landlords' personal property empires. There are six million people in the UK on housing benefit. The majority of those are in private tenancies, and the majority are working. Free fucking market my arse.

The problem is its not the fact the landlord is trying to make money. It's the stupid price of houses that is the problem.

A landlord buys on a buy to let mortgage and the mortgage company insists in the minimum rent that must be charged to cover the mortgage.

If house prices weren't so ridiculously high the mortgage company would insist on a lower mortgage and everyone would be happy.

We live in a inner London borough which has become quite expensive recently. We live in the bottom half of a converted Victorian house, family of four in two bedrooms which is not palatial but we manage. We pay £1400 pcm plus council tax.

Our next-door neighbours have the same house as ours, but not divided up so the whole place is theirs (four stories). They pay £600 a month to the council. They have 9 children, this is because as the woman explained to me her husband doesn't like condoms because they're 'too fiddly' and she didn't like taking the pill because it gave her acne. They are also fifth generation unemployed. Yes, you read that right, every single person in that family has been entirely dependent on benefits since before the First World war. They found this out by doing internet gynaecology. Furthermore, some of the children are teenagers who work for cash in hand and the council and the benefits people don't know about it.

But the thing that shocked me most was when she told me the whole family were going on holiday to Turkey paid for by Nectar points. I said I shop at Tesco not Sainsbury so I didn't know but it sounded like they build up faster than Clubcard points since we have never had that kind of amount. No she said, i also go to Tesco.

Turns out the council give every single tenant Nectar points every single month that they pay their council rent on time. This is to encourage paying on time as most people don't. Of course private tenants also have an incentive to pay their rent on time, NOT GETTING KICKED OUT OF THEIR HOUSE.

These Nectar points have to be paid for by people who aren't council tenants who pay their tax. I also spoke to a friend who shops in Sainsburys and she confirmed that to get enough points for a holiday with 1year (which is what they did) you would have to be getting thousands of points each rent payments, the equivalent doing twenty families worth of shopping every week.

have they a massive flat screen telly as well mcavity?

and a goat

Wallison: I applaud you.

Mrs Thatcher was the start of the problem by introducing the Right to Buy for council tenants.

This country had a good social housing stock until the Right to Buy.

I know someone who gave his 85 yr old Mum money and organised her council house purchase, which was a pittance as she had lived in it for 50 years. She died, he sold the house at a massive profit and went back to his home in Oz with the money.

well I rent privately £650/month in a lovely three bedroom thirties semi in the northwest this does,nt seem to bad to me am on a reasonable wage with dh wage as well just over nmw after a disastrous mortgage we live ok at present I think its a renters market at present

but macvity would the family you described get housing benefit? so the council pays rent to themselves?

x2boys. Are you being serious. Unless we all move north ( at which time demand will be higher than supply so prices will rise rapidly) we can't all benefit from that sort of rent. My small 3 bed ( that was a 2 bed but had a loft conversion) is £775 per month. And that is pretty average for around here.

And you would be lucky to get shoe box for £650 in London.

ohi kow ilovemyself think I am just glad to rent what I consider reasonable for a lovely home after a truly terrible owning on home experience sorry to offfend and think rents in London are completely ludicrous

So misallocation of resources would mean the tendency to invest too much in things that are unproductive and irrational during times of too much credit/low interest rates,leading to a crash?

How does the provision of public housing at a rent that working people can potentially afford while still having a life, create a risk like that? Unless the plan is to flog off all the public housing as soon as the crash ends and then e.g. refuse to allow reinvestment in the same sector? Having solid public assets created which can then produce an income for a community sounds like something quite other than a malinvestment.

And if there were good quality public housing available on a secure tenancy in good areas, surely it's more likely that very rich people would want to move in to the public housing, displacing the working poor, rather than that poorer people would choose to move out? If there's one thing rich people love, it's a bargain - I say it as a rich person myself.

My sister has just moved because her previous LL sold the flat she was in - her new 1 bedroom flat (South London/Croydon borders) is £900pcm . It's nice but not posh or particularly luxurious. I don't think I'd want to live in whatever you'd pay £650 privately for around here!

joan but surely "very rich" people could just buy a house? :S

why would they want to rent?

Wallison. I love being called deranged. If you read what I said, I said that one of the reasons for private rents being so high was that with the rise in buy to let and house prices being so high, they have to rent at the price that is stupidly high.

Sorry, I meant that the OP was deranged.

But re your point, like I say if there wasn't this insistence on private individuals providing rented housing, it wouldn't matter about house prices being high.

In fact, house prices would probably come down if there were proper public investment in housing/large scale organisations had ownership of private sector housing.

Ah. Ok.

I agree to an extent but I am also for choice. House prices are stupidly high and this is part of the reason we are in the mess we are in in general.

What I meant was that if decent landlords could charge a reasonable rent they would.

Quite, IamFluffy. Social housing generates revenue. It is initial investment that is rewarded by a substantial, steady and long term income stream. Tenants in social housing make a significant contribution to the tax take. Tenants in private housing who rely on housing benefit in order to pay their rent are a drain on the public purse. Through no fault of their own, I might add - clearly, it isn't up to them how much rent they pay. But they or more rightly their landlords cost the country £billions every year.

IamFluffy - it's even worse than that. A significant portion of housing in the capital is not only owned by foreign investors but they don't even rent it out - it's just a convenient way for them to park their millions. So there is no-one living in these places, no-one paying council tax or shopping and paying VAT etc.

I do feel that anyone owning a place that sits empty for more than 2 (6?) months of the year should pay triple council tax. But no doubt this would have unintended consequences, because most punitive laws do.