is social housing subsidised?

Wee_Willy_Harris

neverdespairgirl wrote: »

I agree. I just don't agree that £30 a week is insignificant.

I guess it's all relative.

FOURCANDLES_2

neverdespairgirl wrote: »

In the borough where i live, there is a massive subsidy for social housing that I don't think the OP mentions.

If you build anything above 15 units of housing, either in one development or in linked developments, half of them have to be social housing, and sold by the builder to the HA / Council at a knock-down price.

And the developer would not get permission to build make no money employ no workers etc etc etc

FOURCANDLES_2

I must admit I look forward to owning my own home and moaning about everything in the UK that is subsidised , I will probably be made a saint by the catholic church . I never knew so many in the UK subsidised so much .

ILW

neverdespairgirl wrote: »

I agree. I just don't agree that £30 a week is insignificant.

It is a mindset for some within the public sector that large sums of money are insignificant, because they do not have to earn it. I know in my case a pretty large effort is required to take home an extra £130 per month. I know it would pay for a very nice holiday once a year.
I would be very surprised if WWH did not work within the public sector, that is if he/she does actually work.

ILW

Wee_Willy_Harris wrote: »

That's the problem when rents mirror house prices as they do in the private sector, rather than being more closely linked to inflation, as they are in the social sector. Still hardly a good argument to increase social rents so that everybody is worse off. Far better to reduce private rents so that everybody is better off. And, if you do that by deflating house prices, everyone's a winner.

The extra revenue could be used to build more homes, thereby increasing supply which would reduce rents in the private sector as well.

Wee_Willy_Harris

ILW wrote: »

It is a mindset for some within the public sector that large sums of money are insignificant, because they do not have to earn it. I know in my case a pretty large effort is required to take home an extra £130 per month. I know it would pay for a very nice holiday once a year.
I would be very surprised if WWH did not work within the public sector.

The point being made was that, far from being double, or even triple, the social rents, median private rents in the area mentioned by the poster are just £30 higher than those social rents. Obviously, being a median figure, half the private rents will be available for less than the LHA figure, and some will be available for less than even social housing rents.

Whenever private rents are compared with social rents, we get the horror stories from (mainly) the south east and London. But those stories don't reflect the true picture for many other areas of the country where, in some cases, private rentals are freely available for similar (or even lower) rental costs than social housing. Just bringing a little balance to the table, that's all.

Of course, the reasons behind the rapid rise in private rental costs in many areas of the couintry are not the fault of social tenants and punishing them with higher rents will do nothing to ease the problem. Far better to look at the reasons why these rents are so high and attempt to address it, rather than rely on the politics of envy which say "If I'm paying far too much, so should you".

ILW

squinty wrote: »

There have been a number of threads recently where there have been different points of view on whether social housing is subsidised.

There is no simple answer to this, but I thought it could be helpful to explain the differences.

1. Council Housing.
   
   

Council housing finance is complex. Before the election all major parties committed to simplify this. However the current situation is that the government make a calculation for each local authority. This takes account of 2 factors:

Firstly, the income. This is the amount of income that the government expects the council to receive if they are receiving target rents (i.e. the rents set by following a government formula). It is worth noting that this is a notional figure.

Secondly, the costs. Another notional amount. This is based on the governments calculations based on the cost of management and maintenance of the properties. This is influence by the numbers of type of stock, where the council is located etc.

The government then work out the difference between the notional income and the notional costs. If the costs are more than income the council receive subsidy - if it is the other way round the council receive negative subsidy (ie they pay the government). More is paid in than paid out. The main `winners' are London Councils and large metropolitan councils.

Answer - most council housing is not subsidised by the taxpayer, but some council tenants subsidise tenants in other areas. Overall, council tenants subsidise tax payers.

1. ALMO's
   
   

ALMOs or Arms Length Management Companies manage the stock on behalf of councils. If they reach a good standard they may receive additional money from the government to ensure that homes meet the Decent Homes Standard.

It is very possible that at the same time as receiving funding that the council is in negative subsidy.

Answer - in the short term there probably is some subsidy. In the longer term see council housing.

1. Housing Associations.
   
   

Housing Associations are not-for profit organisations who own and/or manage homes. Some are involved in other activities, these may include market rent schemes or running care homes. They may cross subsidise housing from other activities.

Whilst housing associations do need to follow a similar formula to councils in order to calculate rents, they are not part of the national housing revenue account system and are able to retain any profit.

When looking at subsidy for housing associations it is simpler to make a distinction between existing stock (including the properties transferred from councils) and new build.

Existing Stock is not subsidised by the taxpayer.

New Build needs more explanation. If a HA are building new properties for rent, they need to know that the rents will be affordable and fit within the government calculations - i.e. to produce an affordable rent for a certain property type in an area there is a maximum value they can pay for the property - this is usually less than the market value or build cost of the property.

The gap between what is affordable to the association and the cost of the property can be filled in a number of ways:

• The local authority may give land to the association at little or no cost.

  
  
• The association may cross subsidise schemes from within their own costs and/or from commercial activities
  
• There may be grant available from the Homes and Communities Agency (previously the Housing Corporation).
  
  

It is very unlikely that the HCA will provide all the gap funding, unless the local council and housing association both also make contribution. Not all developments receive HCA funding.

Answer - Housing Association existing stock is not subsidised by the taxpayer. Housing Association new build may be subsidised.

There are, of course, a number of exceptions to the general rules above - for example last year a small number of local authorities received subsidy for some new build properties. This does, of course, not include Housing Benefit as a subsidy.

I hope this is useful for people to understand the funding of social housing. Apologies for the length of this

The bit that seems to be missing is that there appears to be no capital cost for the purchases of the properties in the first place. Unless they were bought at market value, then it would appear that there is a very large hidden subsidy.

Jowo_2

I haven't read through the entire thread so apologies if this has already been mentioned. I came across an article which suggested that the modernisation programme for social housing - the Decent Homes scheme - has cost the public purse around £37 billion.

Wee_Willy_Harris

Jowo wrote: »

I haven't read through the entire thread so apologies if this has already been mentioned. I came across an article which suggested that the modernisation programme for social housing - the Decent Homes scheme - has cost the public purse around £37 billion.

Considerably less than the benefit the public purse received (and continues to receive) from "right to buy". Local Authority run social houisng has been massively underfunded for decades, hence the need for such an investment just to bring the properties up to a basic minimum standard.

PasturesNew

Wee_Willy_Harris wrote: »

There you go. As I said earlier, approx £30 difference between social housing rents and the median private rental. Hardly the yawning chasm some would have you believe. Half the problem is that the horror stories are always taken from the South East, esp London, then "logically" projected on to the rest of the country. But they simply don't apply everywhere.

I'll bet, if the median is £111, that rightmove will have properties advertised for the same or less than social housing rents.

The difference to me right now is: I could afford a social rent, I can't afford to equal the LHA rate, so I don't have a place of my own at the moment.

If private rents were what social rents were, I'd have rented months ago, I would have known I could afford it. But not the cost of the LHA rate.

£30's a lot. £30 doesn't sound a lot .... but when you roll that into the monthly amount, then add bills on top, it's unaffordable for many. I don't know where they find these cheaper places to make the LHA in the middle so high, I reckon they must be people already in their place.

New places that come to market are on at LHA or more. None lower. Or, one lower, if you go into a converted 3-bed terrace and have a 1-bed flat where your neighbours are 20-something bongo-players and dope smokers.

Social: £75 = £325/month
Private/LHA: £112 = £480/month

BIG difference on £1000/month, or less. Especially if your income is variable.