Private rentals cost the state less than council homes

CLAPTON

Graham_Devon wrote: »

The cost of monthly rent alone simply isn't the whole picture. Without stocks, the council is always at the mercy of landords, and therefore at the mercy of the market in general. No business would run this way.

all businesses are at the 'mercy - a loaded word' of the market
-why would you like it any other way?

cells

the_flying_pig wrote: »

the OP's example is a complete nonsense.

wanting to argue both that BTL is fantastic for society and that we're due rampant HPI is, well, it's just not internally consistent.

if [as per OP] housing costs double every decade then building council houses is the only way forward.

to keep it simple i'll ignore the fact that government can, right now, borrow absurdly cheaply & that a large housebuilding program would create jobs and therefore income tax/national insurance receipts [& also lead to loads of VAT receipts etc].

imagine that [today, i.e. in 2015] government needs to house someone in a £100k house. imagine that 'market' rents are £5k a year & that this is the same as as the cost of servicing £100k worth of debt.

in 2015, council house costs £5k p.a., simply paying HB costs £5k p.a..
if housing costs double within a decade
then in 2025, that same council house will be costing £5k p.a., whereas HB will be £10k p.a.
in 2035 it's £5k p.a. vs. £20k p.a.
in 2045 it's £5k vs. £40k p.a.

etc etc etc

the fact that some [not many] of the extra cost generated by HPI is clawed back through tax is relevant but only barely, it's a second order effect.

Council rents go up too

If you assume general inflation means a doubling of prices every 20 years

If a £100k house rents for £5k a year and a council house in that area also rents for 5k a year.

In twenty years the council rent is £10k a year the private rent is also probably £10k a year

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Regrading all the stuff about building a house thatvapplies to both cases and you can ignore it. Eg at the point a house is out uobfor sale an council or a BTL LL can buy it. The council pays no tax primarily as it charges below market rents whereas the landlord pays lots of tax

ukcarper

wotsthat wrote: »

If someone has the mindset that rent is dead money I don't see why they would've spent so much time renting they built up a decent RTB discount. You're projecting our mindset onto others.

If this was how they thought they would've stayed owners after buying but I'd wager a good proportion sold up and found their way back to social housing in due course.

I know many people who did buy their council houses none ended up back in social housing I also know people who didn't but that was because they were on low incomes.

Graham_Devon

CLAPTON wrote: »

all businesses are at the 'mercy - a loaded word' of the market
-why would you like it any other way?

Ahhh, you don't understand it seems.

Most business are not at the mercy of having individual suppliers (of the same product). Tesco's for instance, do not work with hundreds of farmers up and down the country all offering Tesco's, on an individual basis, what they have as supply this week.

Tesco's work instead with organisations which represent them. Take milk for example. Tesco don't work with every individual farmer. It would be a nightmare to do, with no real idea of what each farmer can offer that week in that very local area. It would also be a minefield of administration.

When it comes to suppliers, tesco and many other business want longer term commitments. A company delivering goods doesn't want a note from it's individual supplier that it want's it's HGV back next week as it wants to sell it, for example. They have specified long term leases as specified costs.

This though is exactly what the councils are doing when it comes to those families who otherwise would be housed in council housing. One individual supplier suddenly deciding he wants to sell his house and release gains causes the council work to re-house that householder.

The inability for the council to forward plan has huge potential costs associated to it. B&B costs to cover temporary accomodation. Admin costs. Grant costs for moving etc. Emergency living grants etc etc etc.

All I'm really saying is that simply looking at monthly rents to say "hey, look, its cheaper to go private" misses so much.

It would be cheaper for many business to order stuff on ebay to run their business. However, when that involves individually buying every single item and all the time associated with that, it proves to costly in terms of time, and it's easier to spend a little more and go to one place which will supply you with everything in one delivery, knowing it will all be with you the next day.

So a social housing system based on thousands of individual suppliers with extremely short term contract periods is hugely inefficient.