To think rent is so bloody unfair

[Tar19891]

My rent is 800 per month. A mortgage on the same value flat would be 450 per month. Not in London obviously. It’s not fair is it?

@Blossomtoes

Social housing is subsidised

It’s not.

Old fashioned council housing is subsidised.

More recent housing association schemes are run as businesses.

But huge numbers still live in subsidised council housing.

The initials costs of building council houses are not recovered - they aim only to recover the ongoing maintenance costs so that kitchens and bathrooms and boilers and roofs are replaced periodically - that is a massive subsidy because the taxpayer covered the cost of building them and that is not recouped!

Although the replacement schemes are a disaster - locking people into part buying new builds with rental elements they won’t be able to afford long term and without the income to cover repairs. Wholly unethical.

@Annette32123

The initials costs of building council houses are not recovered - they aim only to recover the ongoing maintenance costs so that kitchens and bathrooms and boilers and roofs are replaced periodically - that is a massive subsidy because the taxpayer covered the cost of building them and that is not recouped!

It is recouped. Anyone who has lived in a council house for decades will have paid for it several times over. Just admit you’re mistaken and move on. It’s

@Blossomtoes

Social housing is subsidised

It’s not.

It really is. Look up opportunity cost. There is an opportunity cost in the local authority or housing association having its capital tied up in assets that are not producing the return which they could on the open market. That's effectively the subsidy.

It's very much like the arguments that often go on on Mumsnet about teenagers living for no rent, or "cocklodgers". You could say that if the the cocklodger covers the cost of the electricity he uses for his playstation then that's fair enough. He's not actually costing his partner anything.

Council housing was never intended to be on the open market and local authorities aren’t businesses so there is no opportunity cost.

Unless you kill all of us who need affordable safe homes and there's lots of us in need including lots of children, is cheaper to "subsidise" us in council. Those of us needing benefits, if we in private rent is costing lots of money more than council housing. Last time I had to claim housing benefit cos of illness was lots more than what a neighbour had to pay rent for his housing association flat next door. Lots of us on benefits costing lots of money when we could have chance to recover and contribute to economy and not need to claim if had safe affordable homes. If you don't want to "subsidise" us who have had bad situations happen, what do you want? Kill us? I'm an adult and ready to go if killed quickly but there's lots of children also needing safe affordable homes including ones I was in refuge with.

@Blossomtoes

Council housing was never intended to be on the open market and local authorities aren’t businesses so there is no opportunity cost.

That's a novel interpretation of opportunity cost!

Capital costs money. If you don't have it and need it then you have to pay someone else to use theirs. Borrowers pay interest, companies pay dividends, tenants pay rent, all so that they can use someone else's capital.

Local authorities, and housing associations have plenty of capital. They certainly do have the choice of charging the going rate to let people use it. They choose not to do so. Legally they could. The difference between what they could get and what they accept is the subsidy.

(None of this is to say that I'm opposed to social housing. It's a fantastic idea. But it's definitely subsidised, and I don't see how it helps to claim otherwise. That's why it's so much cheaper. Someone is letting you use their capital for less than it's worth.)

For those who are renting and think the price is unfair, why don’t they buy a property instead? Obvs they can afford a cheaper mortgage.

@ScrambledEggForBrains very apt username have you not read the thread at all? If only it was that simple, myself and many others can't get mortgages even though our rent costs more then what a monthly mortgage payment would be, also deposits are impossible

@ScrambledEggForBrains

For those who are renting and think the price is unfair, why don’t they buy a property instead? Obvs they can afford a cheaper mortgage.

That is the exact issue. A mortgage would be much more affordable. But the large lump sum savings of deposit/stamp duty/solicitor costs/etc plus limitations put in by mortgage lenders are prohibitively expensive for the average wage. It causes a hurdle that is incredibly difficult to get past.

This hurdle becomes even larger when rent prices and cost of living increases; making it even more difficult for renters to save that lump sum.

But yes, once you’re past that and own a property, a mortgage tends to be a lot less than rent.

Are you new to Earth?

Sorry but can people give actual example of how a mortgage can be half the rent on a property please? I think I missed the calculation where the OP's house would be £450 to mortgage vs £800 to rent. That seems crazily unbalanced.

For example, my tenants pay £1050 on our rental, which is worth £300k. If they were to buy, they'd need at least £15k deposit. A 2 year fixed rate at 2.25% comes in at £1271/month. The mortgage is assumed over 25 years.

Ok so rents have gone up but I don't increase until the tenants move out but then keep it slightly below market. I think market is currently £1300/month but that's still in line with mortgage costs + maintenance.

@SmolCat i’ll keep saying it and everybody can keep ignoring it because it doesn’t suit their narrative if you are working and you are early and Ava would say 25,000 a year you can save and buy a property. It might not be where you want to live and it might be a difficult 2 to 3 years in the lead up to the purchase of it and processed purchase but you’ve only got a jump on TikTok and there are kids all over the country the buying renovation properties sprucing them up and selling them at 10% profit do that 10 times and you’ve got a very decent deposit to put towards the real house in the south-east if that’s what you want

It really is. Look up opportunity cost. There is an opportunity cost in the local authority or housing association having its capital tied up in assets that are not producing the return which they could on the open market. That's effectively the subsidy.

Keeping people in safe, secure, affordable social housing has lots of cost saving measures in other areas. For instance

• not paying out high rates of housing benefit to private landlords, which is a never-ending cost, where the money will never be seen again

• children growing up with stability, not having to move schools repeatedly and so on will do better at school, get more qualifications, be more likely to get a better paying job and pay more tax in future. They're also less likely to need social services involvement.

• More stable communities are more likely to be cohesive. I can't see the point in making friends with the neighbours, getting involved in the local community or frankly giving a shit about the local area because I know my landlord can evict me on a whim. It's just not worth the time and effort of getting involved in somewhere you'll only be living in the short term, and you don't want to get attached. If you get lots of people living in the same area who don't give a shit, the whole area goes downhill, subtly and then noticeably - no Neighbourhood Watch, no litter picking, no one reporting flytipping or graffiti on the council app...

• reduced healthcare spending - which can mean anything from damp affecting asthma to mental health. I've previously ended up on antidepressants when a spell of bad physical health coincided with an impending eviction, and I spiralled into depression and anxiety, which has never quite left me 7 years on. Being evicted meant I had to move across the country at an inopportune moment, lost my place on a surgical waiting list, needed more expensive more complex surgery when I was eventually seen in my new city, and will now live with reduced organ function for life.

I could go on. The bigger picture is one where safe, secure, affordable social housing produces benefits for the individuals, benefits to society, and cost savings to local and national government in both the short and long term.

@DietOrDie A decision was made that there is no such thing as a society. Therefore the bigger picture is absolutely irrelevant because government and its responsibility towards its citizens it has been decided should be absolutely minimal look at the pandemic.

People have voted to want to stand on their own 2 feet. That’s what the people decided and now the people will have to bear the natural consequences of it.

I rented out my old hours for 7 years.

I paid £420 a month in mortgage, £15 a month insurance and charged £495 a month rent. I didn’t earn anything at all after ongoing small repairs, yet lost £3000 each time someone moved out (only one tennant did a flit to be fair) in decorators charges and replacing carpets because it was constantly destroyed.

Fault possibly, I wanted them to feel at home so said they could decorate and have dogs.

It’s broken my heart, selling it this month, but I love the house and can’t see it wrecked anymore.

Don’t tar all landlords with the same brush.

@Tar19891

Okay! Further info needed. Flats are worth about 120k (one bed) and with a 15k deposit mortgage payments are about 450 per month.

Where do you live? That's an amazing yield.

We have several one bed flats which we rent out for £400-500 which are worth about 120K.

If you can't afford it, move somewhere cheaper and save up. (that's what we did).

Sorry but can people give actual example of how a mortgage can be half the rent on a property please? I think I missed the calculation where the OP's house would be £450 to mortgage vs £800 to rent. That seems crazily unbalanced.

My landlord bought my flat in 2015 for £110,000 (I moved here in 2018, so not that much later in terms of house price rises).

Assuming a 10% deposit of £11k and a mortgage of £99k, interest rates of 1.7% (default set on the HSBC calculator) and a 25 year term, the monthly repayments would be £405.
www.hsbc.co.uk/mortgages/repayment-calculator/

My landlord charges £800pcm, which is now below market rate as she hasn't put the rent up lately. No bills are included in the £800.

Obviously not compulsory for lives to go tits up but I'm replying to people saying do right thing and everything will be ok which is rubbish and victim blaming of disabled, ill, domestic violence, women who have dad of kids walk out, and other bad things that happen to lots of us despite doing right thing
We are talking about a social phenomena, so looking at the majority, not the exception. Of course some people will never be in a position to buy and that's who social housing should prioritise. However, there are many people who don't make becoming a house owner a priority early enough in their lives. They want to enjoy their youth, take jobs that still allow them to take it easy, then have children. It's not until the kids are at the age that they start school and need security and want a garden to okay with that the question of owning comes up and then see themselves the victim of a system that doesn't work for them.

Rubbish. I am a landlord that pays building insurance, pays tax on any profit and sorts out maintenance quickly. I also pay building and contents insurance on the house that I rent from the military ( although quarters are probably not owned by the MOD anymore).

Sorry, my message was aimed at the poster that stated that landlords don’t pay insurance.

@DietOrDie

Sorry but can people give actual example of how a mortgage can be half the rent on a property please? I think I missed the calculation where the OP's house would be £450 to mortgage vs £800 to rent. That seems crazily unbalanced.

My landlord bought my flat in 2015 for £110,000 (I moved here in 2018, so not that much later in terms of house price rises).

Assuming a 10% deposit of £11k and a mortgage of £99k, interest rates of 1.7% (default set on the HSBC calculator) and a 25 year term, the monthly repayments would be £405.
www.hsbc.co.uk/mortgages/repayment-calculator/

My landlord charges £800pcm, which is now below market rate as she hasn't put the rent up lately. No bills are included in the £800.

Thanks.

I appreciate that it's based on what it was bought for in 2015 but how does that equate now? Therefore, if you were to buy now, what would the numbers be?

Definitely not being arsey but just interested.

[quote Nothappyatwork]@SmolCat i’ll keep saying it and everybody can keep ignoring it because it doesn’t suit their narrative if you are working and you are early and Ava would say 25,000 a year you can save and buy a property. It might not be where you want to live and it might be a difficult 2 to 3 years in the lead up to the purchase of it and processed purchase but you’ve only got a jump on TikTok and there are kids all over the country the buying renovation properties sprucing them up and selling them at 10% profit do that 10 times and you’ve got a very decent deposit to put towards the real house in the south-east if that’s what you want[/quote]
I did it, I agree with you: But only if your sole goal is to buy a property and you have no ties. If your job or family is in a specific area then you’re tied to that area and the surrounding commute.
And if, like you say, you start early. Lots of renters in their 30s/40s can’t jump on the properly ladder in a studio/one bed flat in the middle of anywhere because they have careers and children. Your view is not wrong but it is wildly over simplistic.

Re Council Housing is subsidized - of the 4 Council Properties (later transferred to Housing Associations) I'rented between 2006 and 2016, 3 of them were postwar prefabs. The smallest was the most expensive property of the 4 - I was paying rent of £115pw in 2010.

I think that as most of the prefabs have been rented for over 60 years, that their initial build costs has been repaid several times over.

@Lunar27

The rent on our house would be circa £1400 a month, the mortgage (if for the full amount) would be £2200 so renting is definitely cheaper if you do not have a significant deposit. We have 50% equity so pay £1100 a month on a 20 year mortgage.

We pay for insurance, repairs etc on top so buying costs more than even half equity