Home-Owner-Ists merrily jumbling legal and economic concepts

They'll pick and choose whatever suits them:

People who rent out their council homes to make money could be locked up for two years under new laws which come into force today. For the first time, sub-letting a council property is now a criminal offence with fraudsters also facing hefty fines.

OK, council and Housing Association tenancy agreements say that you are not allowed to sub-let; but so do most private tenancy agreements.

A private tenant has little incentive to sub-let because there's no money in it. If you are paying market rent and sub-let for market rent, there's no profit in it and a lot of hassle for you. Clearly, if a private tenant sub-lets, that is a civil offence and the landlord can terminate the agreement and evict the original tenant.

The Homeys then decide that council tenancies are a special case, and say that sub-letting is a criminal offence, which is a purely legal concept as there is no real crime involved, but hey, their gaff, their rules. The reason social tenants like sub-letting is because they can pocket the difference between the low social rent (about £80 a week) and the private rent (about £160 a week on average across the UK, call it £250 a week in London).

But the naughty social tenant's £170 a week (£9,000 a year) pure profit is no actual or legal cost to the taxpayer, he is getting the £80 a week official rent whatever happens, it is purely an economic or notional cost, i.e. in economic terms, you can view the £170 as a notional loss to the taxpayer of the rent he could be collecting.

Ministers are clamping down on the practice after discovering it costs the taxpayer £1.8 billion a year and clogs up desperately needed social housing.

When they say "it costs the taxpayer £1.8 billion a year", this is purely a notional cost, i.e. let's say that five percent of social housing is sub-let = 200,000 units @ £9,000 = £1.8 billion.

That notional cost is the same whether sub-letting is legal or illegal, it makes no difference. Notional costs are an economic concept, not a legal one.

But seeing as we have merrily segued from legal to economic concepts, what is the cost to the taxpayer of all the social housing which Thatcher and Blair sold off for cheap over the last thirty years? Average private rents across the UK are £160 a week and the taxpayer is losing all of that = £8,000 a year.

That's 1.5 million units @ £8,000 = £12 billion a year.

Hmmm, what's the larger cost to the taxpayer - £3.6 billion or £12 billion?

"Ah, but..." squeal the Homeys, "If you bought your council house, albeit at a huge discount, then it's yours to do with as you please. If people rent out their old ex-council house, that's not a cost to the taxpayer."

It's not necessarily an actual cost, no - but neither is [illegal] sub-letting of council housing, we established that.

But of course it is still a notional cost, and one four or five times as large.
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For a rich seam of Homey DoubleThink, I refer you to Bill Quango's post.

He makes the perfectly sensible point that the majority of the council houses which were sold off are still occupied by the family had always lived there and then bought it. Seeing as they would have stayed in the house either way, that sale has no net effect on availability of social housing.

Fair enough.

But then he merrily throws in a classic bit of Home-Owner-Ism:

The idea was not to give tenants a house and then build another one for some else. It was to remove people from state dependency for their property and, as a bonus, turn socialists into capitalists through asset transfers.

We've heard this crap so many times that many people actually believe it, but it crumbles apart under closer scrutiny.

How on earth does making people pay some rent every week, even if it only £80 mean "state dependency"? Why does it make them less dependent if you effectively give them that house for free?

In my simple world view, if the state gives people stuff for free then that is truly "state dependency". If the state charges market rates, or at least some sort of contribution towards costs, like social rents, prescription charges, or charging for dentists, then those people are forced to be a little more self-reliant i.e. less dependent on the state than people who get things for free.

Our successful right-to-buyer is in the happy position of paying no rent, having paid off the laughably small mortgage years ago. So he has to be slightly less self-reliant than the tenant next door who is paying £80 a week which at least covers the costs and maintenance etc.

And this does not turn people into "capitalists" it turns them into rent-seekers. If the government can afford to forego £80 a week from a social tenant, the best thing it can do is cut their PAYE deductions by £80 a week but continue to collect the rent. That's the carrot and stick to make sure that people go out to work, to the benefit of the tenant, wider society and the taxpayer as a whole.

And even if Bill is right, that building a council house, renting it to a family for a few years for a low rent and then allowing them to buy it for a fraction of its full market value turns people "into capitalists", then why aren't we doing more of it? Why don't we do it for everybody? Why don't we just build half a million of them every year and give them to every young couple who get married as a wedding present?