Wednesday, 8 July 2015

Reader's Letter Of The Day

Things have come to a sorry pass when a Green Party candidate shows a better understanding of basic economic concepts like "opportunity costs" or "cost to the taxpayer" than the Tories (and just about everybody else).

From The Evening Standard:

Describing council rents as "subsidised" brings to mind cash payments to keep them low. But they're only subsidised in the sense that they're paying lower than private rents. It's like saying your energy bill is "subsidised" because you fixed a cheap deal.

Council tenants pay enough to meet the cost of building and maintaining their homes. Any up-front subsidy to build the homes is paid off in the long run through rents and benefit savings. Private rents are so high because the tenants pay the equivalent costs many times over, as landlords profits from rip-off rents and house price rises.

The unfairness isn't well-off council tenants enjoying a low rent that meets landlords' costs, it's private tenants being ripped off. We need rent controls and more social housing, not George Osborne's politics of envy.

Toim Chance, prospective Green Party mayoral candidate.

I'm a land value taxer and see things the other way round. Clearly, social tenants aren't paying the government for the real value of what they 'enjoy', but at least they are paying something, unlike private landowners, be they owner-occupiers, private landlords or land speculators.


Lola said...

All bloody Osborne does is politics. Totally without scruple.

Francis said...

I find the argument that council rents aren't subsidised annoying when made by pro-social-housing people, since they often deny that there's any sense in which it's subsidised, which seems like pointless semantics when one is trying to point out that allocation of social housing is either a random lottery (and hence not much better than inheritance) or a reward for bad behaviour.

However, if you also say that freehold landownership is an entirely subsidised tenancy, then that is at least consistent.

Ben Jamin' said...

@ Francis

For the sake of consistency,

we all benefit from "subsidised" water, even though it is supplied at cost, and the water companies still make a profit.

Water prices, like Council rents, are capped at cost. Else the water companies like private landlords can turn their monopoly privileges into oodles of unearned income.

It's good to be "subsidised" by prudent State regulation isn't it?

Instead of being envious of others, why not argue for council housing for everyone? Or better still a Land Tax?

Mark Wadsworth said...

L, apart from caping tax relief for landlords. A tiny step in the right direction.

F, you are arguing backwards.

Do you agree that council housing is, overall, not subsidised?

Whether you are pro- or -anti-social housing should not make any difference to your answer to this specific point. Being pro- or anti- is the final conclusion you reach having looked at all the other factors, not your starting point.

You then change the topic and say it is allocated unfairly or badly.

Yes, it is allocated unfairly or badly. But the main reason for that is because there is not enough council housing.

If there were enough so that everybody who applied had a reasonable chance of getting a home within a few months or a year (like in the good old days) then this argument melts away. It would be an entirely fair waiting list only approach.

So this "badly and unfairly allocated" argument is actually an argument for MORE social housing not LESS. it is an argument IN FAVOUR and not AGAINST.

And freehold land titles are allocated just as unfairly and as reward for bad behaviour.

I bought more than 15 years ago and paying off the mortgage was a doddle. If it were still that easy, then younger people would not have anything to complain about. But it has deliberately been made a damn sight more difficult, which is manifestly unfair.

At least LVT (and higher council rents on the most desirable estates with the longest waiting lists) are entirely fair to everybody.

BJ, good example re water.