Council vs Private Rent Unfair

[UnfairSociety]

Hello

I have a few friends I met in London living in a council/housing association in zone 1/2 and paying lower than the market rate. They had the apartment many years ago but now earning way above average workers' salaries, yet the rent doesn't increase at a similar rate to the private sector.

For example, there is one bedroom apartment that only pays £600 a month. Another 2-bed rooms apartment only pays roughly £700 a month. Do taxpayers have to subsidise the remaining cost of their rent? One of the couples earns a combined salary of £90k per annum and pays this much rent? Note quality of the apartments is pretty good. I hear you they would put the home as a single tenant to earn extra income from their partner and also pay council tax at a 25% discount.

I feel sorry for those in the private sector living in s*tty quality homes and dealing with rogue landlords. Housing crises are a mess in London, and those rich council tenants should pay in line with the private sector or move elsewhere to allow those in need to live there.

Also, they get a massive discount if they buy their council house.

I know it's fucking hilarious isn't it. By that logic maybe councils should charge everyone extra on houses whether they are rented or bought like a local land tax....think of all the extra revenue they are missing out on by not doing so.

Think what you want, in economic terms the council is missing out on revenue that could be collected - an opportunity cost. It is therefore subsidy in kind.

I think you are the one tying themselves in knots. It’s basic economics and logic.

FFS It is subsided, there is an opportunity cost to the council in terms of undervalued rent that could be collected as revenue, therefore it is a subsidy!

WRONG.

Social housing is termed as ring fenced which means all council housing rents must pay for themselves there is no subsidising from anywhere else. If it costs 1 million a year to maintain those council houses then rent will be charged on properties in order to meet that 1 million and no more. That's why council rents are lower than private as they are not to make a profit only charge the amount to maintain the properties.

Genuine question. How does social housing actually work? If the councils full monthly rent for a one bed flat is say £500 per month and the cheapest equivalent one bed flat in the same area that's not council or HA is £1000 then everyone would want to live in the council one surely so how do they decide who gets any that are available? I appreciate the price difference outside London may not be as stark as that. When we were in our 20's my DH (then boyfriend)and I rented a room in a house in London for just over £500 as that's what we could afford no shared living room or anything zone 3. It does seem like some kind of lottery that people with the same household income in the same area would be paying such different sums for equivalent accommodation?

Totally not comparable, and I think you know that unless very thick.

so how do they decide who gets any that are available?

Councils use a banding method. Some are letters A+ for example is the priority banding so will be offered a property ASAP or colours so gold band is the A equivalent.
They priorities based on health, children in the home, vulnerability, DV for example.
Everyone has a banding and each week they bid. Those with higher banding are offered first then in goes down the list as it were.

pickmypad.com/blog/how-is-social-housing-rent-calculated/#:~:text=It%20takes%20into%20consideration%20the,bedrooms%20can%20enjoy%20lower%20rents.

I understand they pay for themselves, my point is they are missing out on potential revenue that LA desperately need. They are not set at market rates which means the tenant is the one who benefits - in effect the tenant is being subsidised.

it’s really not that difficult to understand.

Oh god, I'm embarrassed for you, telling me about basic economics while thinking a fair price on rent is a subsidy.

Where would that even stop, they could charge £500, but that would mean they are missing out by not charging £600...

The rent I pay on my house is 100% profit for the council, the rent they have made on this house has probably paid for it 10 times over, therefore, by your stupid logic I am subsidising the council run swimming pool, I'm subsidising the local park maintenence etc.

Well you're the one insisting rents are subsidised when it's been said over and over again that they are not, as the rent income is only used for maintaining housing stock and not for profits which can be directed elsewhere. If you want councils to maximise profits then paying an extra tax to them on every home is comparable....but you know that unless very thick.

You clearly don’t have a clue about economics and it shows. Look up opportunity cost and free market pricing.

You clearly have a vested interest in justifying and protecting your cut price rent. It doesn’t make you right.

Private renters are being ripped off.

Anyone going into housing for profit should only be allowed to charge Housing Association rent on anything other than the first property. They want to charge people they can ask the accepted rent

Any thing over 5 houses and you have to take tenets off the housing resistant.

Council housing and housing association housing is not subsidised. I have done some work with a housing association in London. The houses were payed off years ago so the money that is paid in rent goes on maintaining the houses. Lots of the residents were relatively well off, though not rich enough to be able to afford to but their houses. Most had spent thousands of their own money on making their houses lovely. They are all on lifetime tenancies from what I remember.

I don't have a clue? Coming from the person who thinks council houses are subsidised because they could charge more but they don't?

Sure....

I guess my shopping is subsidised too because I get it from Aldi, who could charge more, but they don't 🤣

You'd hate my friend who has a Bankside council flat with an unrestricted view of St Paul's and the Thames. They pay £450 a month.

Affordable social housing isn't the issue. Unaffordable private housing is.
We need mass building of social housing. Until those houses are built, social rents should be means tested.
End right to buy entirely, cut stamp duty and incentivise downsizing.
Rent controls sorely needed in private sector.

It shouldn't be a race to the bottom. I dont want want London to be full of only the rich. There should be affordable housing for all. Lots of the people who lived in the housing association houses and flats were nurses, teachers, council worker, etc.

council rents are below market rents. The subsidy is the difference between the two.

Council housing used to be much more the norm but then we were introduced to right to buy which cut the stock available to councils. Councils were blocked from building new housing as it was considered hat the private sector could provide better housing at a lower cost.

There is no subsidy.

The houses have paid for themselves multiple times over.

No money comes from other sources to maintain them, that's what the rent is for.

They were built for the purpose of being secure and affordable, that is still the case.

Again, they aren't subsidised.

Our housing association is a social enterprise - which means any profit is ploughed back into the community - for care initiatives, to help fund case workers for escapees of domestic violence, to help people into the workforce, for gardening project initiatives to ease social isolation etc...

That is a proportion of the rent we pay.

My understanding is many many social housing provides are social enterprises too. Google it.

yes not a subsidy in the sense that the gov do not pay money to top up the rent (for those not on hb, they are self sufficient etc. Yes I accept that fully, you are correct. Not going to argue with that.

However, you cannot argue against my statement that there is a subsidy/opportunity cost or whatever you want to dress it up as in the fact that through those reduced rents the gov/local authority is missing out on potential revenue that by virtue of market forces is available to them should they price according to the market. It is the tenant only who benefits from this, so it is a subsidy in kind. Going round in circles with this…

Absolutely not the issue of council/housing associations it's the unfair private rental market with greedy landlords pushing rent prices up.
Not ALL landlords, but a large majority who use the housing needs of others to make some extra cash for themselves is where the problems lie. Rent control needed there rather than taking away peoples homes just because they got a bit extra at work.
Imagine! Big promotion at work but loads will refuse to take it because it would end up putting them in an unfortunate position of having to go to the private rental market, which is very unstable and no guarantee of how long you can even live in these places, all because you earn a bit more money than before

Then by your judgement those who don't work and claim benefits (when they can work), will stay in their nice secure low cost rental homes with no incentive to get to work because the house might end up being taken off them.

Yes it's an unfair society, but by god you need to look elsewhere to find the solutions because this is NOT it.

@mummybearcub2022 the Councils are missing out on that extra revenue that “they really need” only because the tories have cut the councils funding to almost nothing.
The shortfall of councils should be restored through proper government funding as should the UK’s social housing system

Thank you @CrossStichQueen and @Frequency.