Anonymous left this comment on Retraction Of The Week:
Why the hell should I, as a tax payer, and home owner, subsidise 'Social housing'? Council rents should be at the market rate.
*sigh*
This is is typical Tory/Home-Owner-Ist propaganda.
1. Average rents in the social sector, even after deducting Housing & Council Tax Benefit more or less cover the running costs, the cost (or net profit) to the taxpayer is negligible. In any event, it is far, far cheaper than paying Housing Benefit to private landlords (to which see 4. below).
2. By all means, allow the market to set rents, but the flipside of this must be to allow the market to set the quantity supplied as well.
3. If the NIMBYs allowed councils to get on with building more housing to rent out, then councils would continue increasing the quantity supplied until the rents had adjusted down to just above the actual marginal running costs (we can ignore interest on capital as the long-term capital gains cancel this out) - just like in any other free market. What we'd consider to be 'market' rents are actually far above the rents that would exist if the construction of new housing (whether social housing or for owner-occupation) were not kept way below the equilibrium by the NIMBYs.
4. Wasn't it the Tories who got the worst deal of all time for the taxpayer by flogging off the nicer council housing at a third of its market value (sure, Labour continued this policy with gusto, but the Tories started it)? Even worse, many of the original purchasers have long since moved out and are now letting it back to the very same council for 'market' rents.
5. I would turn the question round and ask 'Why the hell should I, as a taxpayer, and tenant, subsidise 'Homeownership'?' And I don't just mean direct subsidies via the banking system, I mean the far greater subsidy that results from the fact that taxes on income and production pay for all those things that the government does that enhance property values, like police, transport infrastructure etc, which result in tax-free windfall gains to homeowners (and enables landlords to put up the rents).
*/sigh*
Wednesday, 17 February 2010
More Council Housing Fun
Subscribe to:
Post Comments (Atom)
13 comments:
Mark, what do you think of the notion that the great council house sell off that Maggie started created the sink estates we see today?
Rab, of course. There was some shock-horror headline in The Daily Mailexpressgraph saying that the number of people in social housing with jobs had gone down from half to a quarter over the last twenty years.
Well of course - there used to be 6 million social homes and 3 million tenants had jobs (i.e. half of them). They sold off the nicest 2 million to 2 million tenants with jobs, hey presto, we now have 4 million social tenants, only 1 million of whom have jobs (i.e. a quarter).
Of course, Child tax credits for single mums, the couple penalty and poverty traps are more to blame for the relatively large size of our underclass, but flogging off council houses has made the problem worse.
Surely if a business is providing a service at less than the market rate.
Isn't it subsidising its clients?
Why shouldn't the council get the market rate for houses? Particulary since only some people are able to get council houses.
I can't say I follow the intricacies of your argument but my understanding is that the original intention of council housing was to provide cheap accommodation for the low-paid and vulnerable, particularly slum dwellers, so rents would deliberately be lower than the private sector.
But like so many well-meaning things it all got out of control, not least because people will naturally increase their demand for something being given away cheap. Thatcher then confused the issue with the sell-off.
Now we have a situation where middle class people are priced out of the housing market and being forced to live under the UK's grossly unfair tenancy laws, and they are now looking enviously at social housing.
It's all a bit of a mess to be honest.
"the UK's grossly unfair tenancy laws"
What tenancy laws and grossly unfair to whom?
I can remember when tenancy legislation was grossly unfair - to the landlords - and renting out a property was tantamount to giving it away. The result? precious little accommodation for rent. Just goes to show the stupidity of the government meddling in something that should be a purely commercial transaction.
Anon, in a free market, 'market value' is usually barely above 'cost' (supply and demand curves will converge at that price), so yes, in a truly free market, 'supplying below cost' can be seen as a subsidy or a tax.
But:
a) housing is not a free market - what we consider to be 'market rents' are much higher than what market rents would be if there were no artificial constraints on supply (aka NIMBYism), and
b) by and large, social housing is not provided below cost (if you average out council housing and Housing Association housing).
TM, it is a bit of a mess, so why not build more social housing for the priced-out-but-envious-middle classes? They might not be making the windfall capital gains they'd like to make by owning a home, but at least they are halving their rent bill.
B, yes, in the grander scheme of things, post-1988 Housing Act things seem a lot fairer to me, but we'll see whether Anon has any specific points.
"What tenancy laws and grossly unfair to whom?"
There is only one type of contract, the Assured Shorthold Tenancy. The tenant is very restricted in decorating or altering the property. Pets and children are often forbidden. It allows a landlord to tell you to leave at any time for any reason with two months notice, or shorter if you've "done something wrong". There are plenty of cases of people being asked to leave just for asking for repairs that are legally required.
Compare that to France where tenants can sign nine year contracts and are allowed to redecorate and alter properties (although they are also responsible for repairs) and they can't be asked to leave during the winter months.
This wasn't really a problem when people had a choice between renting and buying but now so many people can't buy.
The Assured Shorthold Tenancy is actually a good piece of legislation for short term renters eg. students, but some people want to sign longer contracts to gain more security of tenure and the UK just doesn't have the contract law in place.
I personally have no objection to the building of more social housing, Mark. I find myself increasingly agreeing with UKIP people and I've already decided to vote UKIP instead of Tory if I get the chance.
TM, sure there are nasty landlords (esp. those who fall behind on their own mortgage payments, so tenant gets evicted through no fault of their own) but there are nasty tenants as well, who wreck properties and don't pay rent.
And the AST is by no means compulsory - you can sign up for 12 months or anything you like.
It's the overall shortage of housing that tends to tip the balance in favour of landlords, not the terms of the actual rental agreement.
"Compare that to France where tenants can sign nine year contracts.."
Why do property owners not sell short leases for this type of situation, or do they and I don't know about it?
"It's the overall shortage of housing that tends to tip the balance in favour of landlords, not the terms of the actual rental agreement."
OTOH a plentiful supply of rented property, as we have ATM, will tend to redress the balance towards the tenant.
Do you have figures for historic rent-to-value ratios. I remember being quoted 9% before the 80's price boom.
B, the penny has dropped. ATM = at the moment.
The average rental yield from 1975 to 2000 appears to have been about nine per cent, based on average price-to-rent ratio eleven, taken from the third table here.
So they'd be down to about 5% now. Interesting that higher house prices make life more difficult for landlords rather than tenants and that variations in supply don't seem to have much effect.
I am very keen on housing benefit. I let my spare room to my house-sitter tax free and if he isn't working I get the money just the same, tax free, which more or less covers the cost of being away half the year and not being kept awake by all-night drunken rowdiness in the streets. And ICA, Willys, Konsum and Hemköp sell generally Waitrose quality at, usually, ASDA prices so that can't be bad.
P, I hope that was tongue in cheek :b
Post a Comment