Private landlords cash in on housing scandal

Loughton_Monkey

antrobus wrote: »

On a point of order; RTB wasn't "Thatcher's brain child"; it was Heath's brain child. Mrs T initially opposed the idea. Which is the realms of quite interesting.

Understood. It was originally a Labour Party initiative from 1959, but they lost that election. Horace Cutler [a previous incarnation of Boris] as GLC leader in 1977 was the one who "did" it in London on any scale. My understanding is that until 1980, all councils "could" sell the houses. Heseltine's 1980 Act made it compulsory for councils to sell at certain discounts if the tenant wished to buy.

I am not aware of Thatcher's initial views of the scheme, but she certainly 'saluted' very strongly once the flag was up the flagpole.

What would be "interesting" is if a future Labour Government extended RTB to private tenants with, say, 10 years tenure. Our friend Fergus would then be terminating every tenant with 9 years' tenure, even if they paid their rent on the nail!

JencParker

Loughton_Monkey wrote: »

Fergus has been debated to death on another thread.

Right to buy is a different debate, although I can't see why Thatcher's brain child is responsible for "ruthless landlords".

The biggest scandal exposed by the article (in my view) is the comparison of £121 a week rent to a council tenant, whereas the private rent for a similar property is £212.

That's a 43% subsidy! This is a criminal amount to burden the taxpayer with when many council tenants earn plenty of money and don't come within an inch of qualifying for HB. And all Cameron can do is some sort of limp-wristed so-called 'action' watered down by applying it only to £60K+ people like he did for child benefit.

By selling the house to the tenant at any reasonable price, it must be cost effective, since it puts an immediate end to this subsidy, although I'd much rather it be sold to the tenant at a price somewhat akin to its true market value. This doesn't raise the 'housing need' by a single unit of houing. It simply turns a renter into an owner. That must be good.

One of the thrusts of the article seems to be some form of disgust that of the houses sold in Thatcher days some 36% seem to have ended up in landlord's ownership and rented out to someone. Well this is a complete non-event. I suspect that a huge proportion of all cheap housing in private ownership at the time is (or was for a period) a BTL property. What's wrong with that? If you want to buy a BTL property, you need to be in an area where it is common to rent. What better than a council estate?

I mean.... have another debate on the right or wrongs of RTB when it was going like a bomb, but that's all over.

A more urgent thing is to claw back some of the massive subsidies still existing in the Council House or Socially Rented sector for people perfectly able to pay their own rent. A rise of, say, inflation plus 5% each year should do it - until they catch up with market values.

What I fear is some new massive building program of "social housing", if rents are going to be set at such derisorily low value for all. It is a complete contradiction to have (a) a clampdown on means tested benefit (like HB) through UC and other measures [perhaps rightly] with one hand, and (b) the creation, with the other hand, of such massive 40%+ subsidies for hundreds of thousands of other people that are not means tested (except, perhaps, at initial day 1, and then the subsidy exists for life).

Pure madness!

It's not necessarily a subsidy - what is the cost of that property that is rented at £121?

Renting or selling something at a price less than other similar items does not mean it is subsidised except to the narrow minded capitalists who are only concerned with making the maximum profit possible.

If that property costs £121 and is rented for £121 then how is that subsidising it? For a start, from reading this board, landlords expect a profit of around 7-8% on their property, so you can wipe that amount off the cost in the first place.

antrobus

Loughton_Monkey wrote: »

...I am not aware of Thatcher's initial views of the scheme, but she certainly 'saluted' very strongly once the flag was up the flagpole....

It's in Young's 'One of Us' - Thatcher was briefly shadow minister of housing (or whatever) in 1974, when Heath came up with idea of RTB as a 'vote winning' idea. She apparently argued against it on the grounds that it wasn't fair on those people who'd worked hard to save up their deposit to buy a Wates home. Of course, she later changed her tune when she discovered it was a 'vote winning' idea.:)

JencParker wrote: »

....If that property costs £121 and is rented for £121 then how is that subsidising it? .

Because you could have rented it out for £212. So the £91 forgone is an 'opportunity cost'. Which is a fairly basic economic concept.

JencParker

antrobus wrote: »

It's in Young's 'One of Us' - Thatcher was briefly shadow minister of housing (or whatever) in 1974, when Heath came up with idea of RTB as a 'vote winning' idea. She apparently argued against it on the grounds that it wasn't fair on those people who'd worked hard to save up their deposit to buy a Wates home. Of course, she later changed her tune when she discovered it was a 'vote winning' idea.:)



Because you could have rented it out for £212. So the £91 forgone is an 'opportunity cost'. Which is a fairly basic economic concept.

How terrible to lose the 'opportunity' to make money out of those who often cannot afford it!

While it may be a capitalist concept it is not a humanitarian or social one. It's a sad state of affairs that we live in a world where capitalism and profit take precedence over any other considerations. We may have made strides with technological progress but in humanitarian values, we are still very puny!

smartn

If I understand it correctly once you have your council house you are not then re-assessed based on your circumstances. If it is being offered at below market rates then your entitlement should be regularly reviewed. If at a point in time you get a council house whilst you are low wage or unemployed but go on to earn big money why should the state be subsidising your lifestyle. The rate should revert to market rate once a certain level of income is hit.

purch

antrobus wrote: »

Because you could have rented it out for £212. So the £91 forgone is an 'opportunity cost'. Which is a fairly basic economic concept.

That opportunity only exists because the rental market has been interfered with by Governments selling off the stock of social housing and not replacing it as promised.

Of course, there will be little support for social housing on this board, because any increase in the supply of housing will force rents lower, which will in turn make the BTL model uneconomic and unsustainable.

wotsthat

JencParker wrote: »

How terrible to lose the 'opportunity' to make money out of those who often cannot afford it!

While it may be a capitalist concept it is not a humanitarian or social one. It's a sad state of affairs that we live in a world where capitalism and profit take precedence over any other considerations. We may have made strides with technological progress but in humanitarian values, we are still very puny!

Someone living in a council house is receiving a subsidy. They may be paying the rent entirely off their own back without any support. However, because they're not paying market rent they may be under the mistaken view that they are paying their way - they're not and this might lead to a false sense of security.

I'd prefer a system where a full market rent is charged to all council tenants even if this means that tenants needed to claim more HB (that would even up anyway) to ensure the tenant understands they are receiving taxpayer support to maintain a roof over their heads.

An alternative would be for the rent statement to say in big block capitals something like "council rent = £100, market rent = £110 - YOU HAVE RECEIVED TAXPAYER SUPPORT OF £10).

It's nothing to do with humanitarian values - these people are grown ups - there's no need to protect them from the truth or treat them like children.

Unfortunately this problem won't be resolved by pointing out the moral frailties of capitalists - we're going to need some more houses.

mayonnaise

wotsthat wrote: »

An alternative would be for the rent statement to say in big block capitals something like "council rent = £100, market rent = £10 - YOU HAVE RECEIVED TAXPAYER SUPPORT OF £10).

You been attending the Devonian School of Economics, wotsthat?

CLAPTON

JencParker wrote: »

How terrible to lose the 'opportunity' to make money out of those who often cannot afford it!

While it may be a capitalist concept it is not a humanitarian or social one. It's a sad state of affairs that we live in a world where capitalism and profit take precedence over any other considerations. We may have made strides with technological progress but in humanitarian values, we are still very puny!

it is both humanitarian and social and fair on all the people

if the proper rent was charged then there would be money available to build more houses, improve the NHS and spend it on other social goods.
socialist subsidy makes a few people better off as the cost to everyone else

wotsthat

mayonnaise wrote: »

You been attending the Devonian School of Economics, wotsthat?

LOL - amend made.

I quite like it at the DSE - today we're working on suppressing our natural anger towards benefit claimants because our anger towards private landlords is higher. The enemy of my enemy and all that.

Tomorrow we're doing percentages - it's going to be a long day.