to ask why so many people think social housing is subsidised?

[butwhythen22]

Not a TAAT but inspired by a recent mention on here - one of very, very many.

I live in a council flat, FWIW.

So, so often I hear people say that it’s subsidised (the implication that someone else is paying part of the cost on my behalf).

This is not correct. The building is owned outright by a housing corporation. It’s a non-profit organisation that charges enough in rent and service costs to cover all its overheads, which are presumably many. This rent is, however, substantially lower than what the flat would fetch on the open market.

However, nobody is paying that “shortfall” on my behalf. It’s simply that the housing corporation’s mission is to provide affordable housing, so they are not charging more than they need to in order to keep everything running well.

(I don’t even receive UC or rent subsidies or anything like that, not that there would be anything wrong with it if I did. I support myself from paid employment.)

Why don’t people get this?

Because social housing rents are lower than private rents it doesn’t mean they’re subsidised. It just means they are affordable and not over inflated to line a landlord’s pocket. The rents are regulated unlike the private sector. If you’re looking for any subsidy consider the fact that interest rates were kept artificially low for years. That’s a subsidy that we all had to suffer especially those with savings

It is subsidised as the government are not charging the full market rate they could charge. It is therefore an opportunity cost.

Ah yes, but state schools and hospitals are open to everyone. The police and fire brigade serve everyone. You may not use any of them, but they're there if you have the need. Council houses, arguably benefit only the recipient.

The counter argument is that the whole of society benefits from the neediest being adequately housed and that council housing is there for all of us should the need arise. But neither of these are true, often the most needy cannot access social housing and no-one believes that it's a provision available to all. It either has to be a system we can all benefit from or we should stop subsidising it. Currently it's a lottery and those struggling to pay twice the amount of rent are also subsiding their social housing neighbours.

Because it's fact?

People in social housing have subsidised rents. They may pay enough so that the housing association can make it all work financially but this is only because the housing association can access funding and other privileges in a way that other landlords can't. If subsidised rents aren't available to everyone then there is inevitably going to be some controversy about who can access them, especially if people feel that the most needy aren't eligible for the biggest subsidy.

Why are people desperate to claim that the rents aren't subsided and are somehow mythically 40% lower than the private sector. Everyone knows landlords aren't making that kind of profits so how else could housing associations make it work?

How can you say this? Substitute housing benefit with, say, food stamps. Would you say the food stamp recipient isn’t getting subsided grocery shopping, that in fact it’s supermarkets who are getting subsidized profits?

Say the same for anything: tax credits, lower prescription costs, dental treatment. Is it actually HMRC, pharmacies and dentists who are being subsidized, or the people receiving full benefit of the service provided but paying less than everyone else getting the very same service?

No one is forcing anyone to be a private landlord. There must be financial gain in it for them or it’s pointless
Investment. For the past 10 years or so, I have only just about broken even. I've been renting for 15 years.

I hope to have paid the mortgage off in 5 years and that as I retire, I can finally get some limited income from it. That will be after 20 years of paying hefty tax on it.

@shenandoahvalley

The landlord gets to keep the house at the end of it whereas the supermarket can only sell the goods once

Many landlords have interest only mortgages, especially if they have a big portfolio. They hope to make money as the market rises but don't make substantial (or any profit) on annual rents. In that regard the mortgage company is the one you should be directing your anger at as they are the one ultimately getting the interest the landlord pays them and ultimately keeping the house at the end as the capital is never repaid.

Just calculating it and the rental of my property will have paid over £100k in tax and I will have put less than £25k in my pocket, with almost all of it having gone in repairs and upgrades over these years. What a horrible landlord I am!

Just checked my local development and the houses were gifted to the housing association by the developer in return for permission to build the other houses, so yes the housing association was essentially subsidised by homeowners paying more for their properties. I don't begrudge this at all, I think it's good but I get cross when those in the essentially subsidised housing (because the build cost nothing) claim they were not subsidised.

Can we agree that social housing is a good thing but it is subsidised in a variety of ways at the build stage, and sometimes the administration side too?

It's because private renting is more expensive and instead of seeing it that private landlords charge more, they see it that housing associations and councils charge less. Iyswim.

People who see private renting prices as the 'true' cost see anything less than that is someone getting "subsidised"

If someone is jealous that others don't have to pay as much it's easy to be bitter and sneer about subsidising. 🤷

What does that have to do with it? We’re talking about the subsidy itself. As between the shopper buying cheddar cheese full price, the shopper buying cheddar cheese with a food stamp , and the supermarket earning profit on the sale of either one, who is receiving the subsidy?

And, even if you are bothered about the capital investment, tescos will take all their profits and distribute them to their CEO who will buy 5 homes for his single family to enjoy. It’s a specious argument.

If you really think what you’ve written is relevant, your problem is with freehold/leasehold property. For as long as owning legal title but charging for usage exists, you will ALWAYS have someone who owns the property at the end.

We had a flat with a mortgage that we bought years ago on an interest-only mortgage. Hoped we could give it to the kids one day. Mortgage not paid off. The rates have rocketed and we can no longer pay.

We had the same tenant for 12 years. A single mum who was lovely. We lost a little bit each year because the rent didn’t cover mortgage but that was fine as it was not meant to be a source of income for us. However, with the recent surge in interest rates, we have finally had to sell the flat. The single mum was gutted as she could no longer afford to stay in the area. We were on really good terms, exchanged Christmas cards etc, she was a good tenant and we were attentive landlords so it was not the ending we had planned either. I’m not looking for sympathy of course, but just explaining that being a landlord does not always lead to lots of money any more. Especially if you are just renting one flat out with a big mortgage and do not have a property portfolio.

I think it's a pride thing of needing to feel that you're paying 'your way'. I get it, but it's important to stick to reality and facts rather than pretending we live in some weird alternate universe where landlords are pocketing all the additional rent from all the poor private renters.

Exactly. There should be more social housing available.
Right to buy was a mistake, but new ones should be built or acquired by councils.

Stories like this are important as it proves the greedy fat cat landlord narrative can be way off the mark. Historically the government have played to this to strip away many of the tax advantages of being a landlord and shock horror this has led to an increase in rent. This isn't just because landlords want to make more and more money all the time but it can be that they need to pass on the costs to keep the whole thing viable and ultimately give someone a home. Your tenant is the loser in all this!

This thread is a perfect example of the 'start a bunfight then move on' style of posting.

If someone is jealous that others don't have to pay as much it's easy to be bitter and sneer about subsidising . 🤷

That's because not everyone can acess a HA home.
There is a proportion of people who are just above the threshold for any financial help from the government.

They are the ones struggling to raise the rent on their property while nx door have no such worries.

And then there is the whole issue with people in HA properties who's circumstances change for the better. People who could just about afford to private rent. But don't move, because the HA House is their home, they pay for it ect.
When realistically people should be made to move on, to avoid others being stuck in B&B's or inadequate housing.

I worked with someone that thought council rent was about £25 a week,at the time it was about £300 monthly+ council tax for a one bedroom flat.

Move on to where? Private rentals? So the tenancies would be transient. There would be no community. That’s how you turn somewhere into a ghetto. Tenancies are for life like it or not

When you have a mortgage, you are responsible for the maintenance, the roof, the windows, the boiler, the heating.
You don't have any of these costs as a renter. You would quite rightly expect any plumbing issues or whatever to be sorted ASAP.
how could this happen if rent was less than a mortgage?

When I was in social housing people either assumed my rent was paid by the government or it was really cheap. It was cheaper then privately rented but it was still a considerable amount of my salary.

I think people get stuck in the cheap rent thing rather than cheaper

Rent used to be less than mortgage when the idea wasn't to make a profit twice over - enough to cover all your costs including the mortgage payments and then you get to sell the house typically at a significant profit if you later decide to .

The removal of most council homes has enabled a rental market that is distorted , has driven. House prices sky high so that most first time buyers now rely on parents / inheritance

People also forget with social housing you’re also moving into an empty shell and will have to decorate, put flooring etc in. Unlike with private rentals, that can eat into any savings.

yes, landlording is an investment activity, which is why the cost of borrowing money to purchase the investment cant be offset against tax!
(But they all still whine on and on about it)