Monday 26 September 2011

Welfare For The Wealthy

From the excerpt at the end of an article in The Daily Mail:

Simon Ashmore has five buy-to-let properties in Nottingham and Hull... He said 'It's a cracking market for landlords at the moment. Mortgages are cheap and rents are high'... The tennis coash, pictured right with his fiancée Sarah Norris in Nottingham, rents to people on housing benefit. He says that these tenants provide the highest yields - that is, rent as a proportion of the property's value.

19 comments:

QP said...

Yep, the cheaper properties in question are probably former council houses.

Later, I plan to stick up a plot of recent housing benefit expendenditure going to private landlords. It shows a lovely example of exponential growth.

Anonymous said...

So, from where does the housing benefit appear?
The man is a businessman, he bought his raw material, legally I hope, and has now put that business asset into the market place to see who buys it, like any other business in the whole wide world, he doesn't care too much about the status, religion, sexual orientation nor even the hair colour of the customer.
Big deal.

Mark Wadsworth said...

QP, I'll look forward to that. Up from £nil to about £7 billion over the last twenty years is my guess.

Anon: "from where does the housing benefit appear?"

Out of taxpayers' money.

QP said...

@ Anonymous
So that makes the "customer" (more specifically the purchaser) you and me, which should put the correct perspective on things.

Anonymous said...

Yep, in one, the tax-payer stumps up for social housing benefit (as ever), the businessman pays his taxes, hopefully, so everything is hunky dory, the world continues to spin.

Anonymous said...

until they get greedy and all tax (government earned revenue) goes towards a small group of organised lobbyist property owners. Then it just looks like the government taxing the populous on behalf of rich people. Which isnt really what the system is supposed ot be about. Holding anyone to ransom cannot, as you seem to be trying to do, equate to a free market.

Anonymous said...

d'oh. for clarification, anonymous at 13.54 is a different person to anonymous at 13.49.

chefdave said...

We need a landlord tax, 50% of any earnings after reasonable (and demonstratable) expenses.

Mark Wadsworth said...

CD, nope, tax the substance not the form, I see no reason why the tax payable on a home should differ whether it is owner-occupied or landlord/tenant, or maybe an owner-occupier with a lodger or two, what's the big difference?

chefdave said...

The difference? Politics. Most faux-libs and homeys would agree with a landlord tax (which is essentially a diluted form of LVT) whereas straight forward LVT is almost always rejected out of hand.

Baby steps, even die hard Georgists don't believe we should move to 100% land tax overnight.

Mark Wadsworth said...

CD, fair point.

Unlike Homeys or Faux Libs, I genuinely believe that owner-occupation is A Good Thing in and of itself, and the lessons of the UK up to the 1970s show quite clearly that a swingeing tax on landlords and quasi-Soclalist rent controls lead to an increase in owner-occupation.

QP said...

Up from £nil to about £7 billion over the last twenty years is my guess.

OK, the ONS shows it going from £5.8 billion to £14.5 billion in the last 10 years.

Mark Wadsworth said...

QP, crikey, I had always assumed about a third of HB goes to 'private' landlords, things are worse than I feared. Or better actually, because it gives the government a nice soft target for spending cuts.

I look forward to your post with links.

QP said...

No your suspicion was right Mark, I had mistakenly combined rent payments to both social and private landlords. I have now edited the post to separate the two. The number and perhaps more crucially the rate of increase in rent to private land lords is still pretty shocking though.

Bayard said...

Has anyone ever come up with any (sensible) argument why private landlords should be able to charge any more rent than social ones, when renting to those on HB?

QP said...

Has anyone ever come up with any (sensible) argument why private landlords should be able to charge any more rent than social ones, when renting to those on HB?

Because social landlords are prepared to take less than the market rate since they are not for profit? In which case the difference might be a measure of the monopoly profit? I would also assume that if demand did not outstrip supply then they wouldn't be able to charge anymore.

Mark Wadsworth said...

QP, ta.

B. nope.

QP, second comment. As your own post on the topic explains, this is just 'welfare for the wealthy'. They could take the £8 bn a year sprayed at BTLs (and owners of ex-council houses) and build more than enough new social housing instead.

In any event, HB is a subsidy to rent, hence pushes up the rent, hence HB has to be set higher to compensate for higher rent levels and so on in an ever upward spiral.

Bayard said...

"In any event, HB is a subsidy to rent, hence pushes up the rent, hence HB has to be set higher to compensate for higher rent levels and so on in an ever upward spiral."

Since this should be obvious to the meanest intelligence, it infers that HB has been hijacked as (or was always intended to be) a means of getting public money into the pockets of the friends of the rich and powerful. I still maintain that, should HB be pegged to social housing rents, there would still be no shortage of landlords willing to rent to HB claimants.

Mark Wadsworth said...

B, indeed, reining in HB for 'private' landlords is a Tory policy which I wholeheartedly support.