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?)

You're right IASK - I don't see the situation changing, but it isn't a new thing.

This was 2008 when we made the decision that we had to rent out and buy somewhere else (or Mr would rent and we'd live apart)

wallison - in what way is social housing fair to someone who does not live in social housing?

In what way is social housing supposed to be 'fair' for someone who doesn't live in it? Or are you applying a toddler's logic to the situation - Bobby has a toy and Billy doesn't, therefore it's not fair.

People should be looking up and saying 'it's not fair'

Not down.

wallison - rather than applying toddler logic, I am applying....democracy. social housing is in decline because most people don't want it.

usual - if we are talking about global equality or just the uk? because there are very few people in the uk who aren't very fortunate in global terms.

Most people support the death penalty. Just how far are you going to go in your pursuit of some perfect democracy?

And how do you know that to be the case anyway? Have you seen surveys? Because I've never been asked whether or not I want social housing. And there is still plenty of demand for it at least - millions of people on council house waiting lists - what about their democratic rights that were sold down the river by that mental old hag Thatcher?

"I am applying....democracy. social housing is in decline because most people don't want it."

I take issue with that statement - the waiting lists and frankly personal anecdotes suggest otherwise - either way it's not like there has been a serious acknowledgment of it ever being something to deal with other than talk of getting people to buy more.

Ownership is presented as the only serious option despite (it seems to me) a lot of people constantly bringing up renting as an issue - not one to get rid of but one to improve.

so if people do want social housing why does no mainstream party make it an election issue?

if it would get them votes.

There are other ways for them to get votes without compromising their position as land-owners and property speculators.

so social housing compromises people who own their own homes does it?

No, of course not. But MPs and the rest of their mates at the top personally profit from ever-increasing house prices. The ordinary voter of course, does not. Why there isn't a party that actually represents the ordinary voter, particularly the ordinary left-wing voter, any more is a debate for another time.

Why there isn't a party that actually represents the ordinary voter, particularly the ordinary left-wing voter

isn't the problem from your perspective that there aren't enough 'ordinary left wing voters' to make their/your politics mainstream?

didn't labour move to the right to become more electable?

the problem you have is joe public likes house prices to increase. so MPs are doing that the majority wants.

That will change as Joe Public works out what this means for their children and grand children, but by then it might be too late.

My personal theory is that they are quite happy for the illusion that mortgage holders are somehow making or will make a profit to continue as it ultimately keeps house prices high in an economy where they shouldn't be.

Without the private rental market we have, the option for people like LadyBryan to rent instead of sell at a loss just wouldn't be there. The cost of housing benefit leeching into private pockets must be a lot less than a housing price crash and loss of votes. The proportion of people who should be in social housing (pretty much anyone receiving HB) are caught up in the private market.

I'm pretty convinced this government and all those wannabes in power have absolutely no desire for the housing market to actually correct itself and reflect what people actually earn on average. There's a lost generation of people who had to wait longer and are increasingly getting too old, too poor or too dis-infranchised with the whole idea of ownership to maintain a healthy movement in the market.

It's very much like the economic illusions that came crashing down in 2007 - it's just not sustainable because it's based on nothing.

I think a lot of people fall into the category of those been screwed over without realising, the admittedly small but significant minority of people who would directly benefit from social housing should be joined by those who would benefit from a stable market more than an increasing one. I genuinely think that a lot of people don't realise that having a mortgage and being on the property ladder isn't enough. If you own outright then yes you're out of the game so to speak, but renting or buying for the last 15 years is a massive gamble - which is very different from investment.

But increasing house prices benefit no one long term anyway? Even those right at the top of the property ladder. Should they decide to sell their property they would still have to live somewhere. So they either rent or buy somewhere smaller, both options are affected by the price of property?

The only people who benefit (or organisations) are the banks. The higher the house prices, the more people have to borrow to buy, the more interest is paid back to them, thus increasing their profits.

Wallison the current rental system does need a massive overhaul I agree 100%. I'd like to see it more like in Germany, where I believe a landlord doesn't have the option of a S21, which effectively terminates a contract for no reason with 2 months notice. So if a tenant pays rent and maintains the property they can if they choose live there forever. The only way for them to get the property back would be to prove to a court that they need it for themselves. This would I think give tenants more incentive to pay the rent on time and maintain the property.

We live in rented accomodation and have done for 7 years. In the same property. We have done the normalo decorating/carpets/minor repairs but if we knew we had a secure tenancy then we would do more.

Although my landlord is one of the good ones I am aware that I can be given a S21 notice and 2 months to leave. My landlord has a portfolio of property so I can't see him choosing to do so as we make good economic sense to him. However things can happen beyond his control that could force the issue. So we have our name down for one of the council houses that no one wants. I hope whoever said that the demand isn't there is right and our home town would catch on to this.

9 years I have been waiting now. No demand my arse lol.

Right now I don't think it's about increases more than preventing major losses.

There are a lot of people sold on very long term plans that can't absorb a dip in the market for more than a very short period of time.

Reluctant landlords can eventually be at a point to break even if they sell, that's a long way a way if you think of average mortgage terms and when the height of the property boom occurred. That's not great but acceptable, any attempt to rectify the market within the next decade could be a huge blow to most mortgage holders.

Much easier (and wins more votes) to keep up the marketing of the pyramid scheme of ownership and hope it doesn't crash on your watch.

It's no good pointing out odd empty buildings here and there. To make any real difference to the problem we'd need very large numbers of social houses and in the right places. Then you need schools and hospitals to serve them. There just isn't space in the right places. You can build them outside the towns but then there is no work.

Sallying I live in a major city - there are constantly new private developments going on. There is plenty of land it's just never been approached as a serious option by any government since M.T.

If anything had been attempted I might be swayed more by the argument, but it has been left alone as an argument amongst ourselves.

Also if housing didn't eat such a large % of peoples income then perhaps commuting wouldn't be such an issue. I already commute (by buses for my sins ) 1.5hrs each way purely because my rent is cheaper where I am. I'm looking to relocate and where I'm ending up this just isn't an option because the transport links are not worth what I can earn.

Luckily (kind of) I'm in a position where how much I earn isn't a massive issue, I can earn well below the average (is it £26k pa now?) as long as I stay above £14k (well above NMW). Which is a shame because for the same time commuting I could be in and out of London, but the cost is just too high and I can't afford to live there.

It's all a balancing act I suppose.

I don't think Joe Public does want houes prices to rise necessarily. But I do think they NEED them to be of a certain level to make moving viable.

Froubylou - I would absolutely support a system like that. I think that sounds excellent. FWIW we have NEVER severed a tenancy, save for the one involving the tenant who didn't pay. We have a larger turnover because the property is near a hospital and we get a number of trainee doctors etc who want 6 months/a year then move on. If a LL finds an excellent tenant it is sheer stupidity to get rid of them.

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

I sense a trap about to spring shut and sever my head from my body...

But to answer the question, I meant in the simple and most straight-forward sense, that at the instant a rent for a tenancy is agreed, the landlord is getting a price that is more or less the most he can hope to get, and the tenant is paying a price that is (in quality-adjusted terms) more-or-less the least he can hope to pay.

The big picture of why prices are what they are is a separate issue - I'm not against the big picture being changed, but at any given moment before, during transition and after implementation of such changes, the market price is what it is, at each particular moment.

Private individuals cannot provide affordable good quality housing on the kind of mass basis that the UK needs. More than 30% of households rent.

I agree, and would go further: individual landlords and short tenancies should be a miniscule proportion of the private accommodation market, as both are undesirable from a tenant point of view. And I say that even though my circumstances are such that I'm more likely to be a landlord than a tenant. (I hope to remain neither.)

Essentially in the past the only way to obtain decent housing privately in the UK was to be a owner, and the financial crisis has thrown a spanner in that.

My definition of "decent housing" includes that you should be able to stay in a home for as long as you can afford it. Individual landlords, unlike institutional ones, tend to want to sell from time-to-time, perhaps because they've died, or divorced, or need money for something else. We need massive provision by institutional landlords. I'm not sure what needs to change to get that, but removing the prohibition (which I think exists) on pension funds investing in residential housing might be a start.

I disagree. I lived in social housing. I worked a part time job, so got paid around £600 per month, but couldn't claim benefits, because some months I had overtime, other months not. I could never have afforded private rent, so social housing was my only option. Without it, I would still be living with toxic parents or probably be dead through suicide because of living with toxic parents right now.

frankly if your solution to all of this is to encourage more private sector pricing and behaviour then you are deranged.

My proposal wasn't meant to be a general solution to the problems of rental housing, though I think it would be necessary as part of a solution. Sorry to be tautological, but it was meant to be a solution to what it's a solution to! By that I mean it's my understanding that mispricing inevitably causes misallocation of resources, I can't necessarily tell you how the latter manifests itself. (Though I have gone examples up-thread and again in the next paragraph.)

There are only two kinds of pricing, accurate and inaccurate. Or maybe truthful versus fantasy would be better labels. The OP was in favour of accuracy/truth, because the alternative is likely to have adverse consequences. Such as people who don't currently need public assistance receiving public subsidies for their housing, which is intrinsically wrong, but may also cause them to over-consume, raising prices for everyone else, including people who may be poorer than them. Even more simply: fantasy pricing leads to working people getting subsidised rents in social housing while poorer people with greater need are on waiting lists.