Council house entitlement!!!

enigmam

MrsE wrote: »

GREAT POST

When you say they are subsidised at two stages......

YOu say the grant is the first stage of the subsidisy, but the initial capital to buy the asset is not a benefit for the renter, but the owner.
The renter will have the pleasure of the property (which they may or may not pay for) BUT the real benefit at that stage is to the owner who has recieved a grant to buy the asset???

Second stage subsidy, this is for 60% of the tenants who recieve benefits. The ones who are paying full rent share no part of this subsidy???




Great post, I'm not trying to pick holes in it at all. Just trying to get to the crux of this council rent subsidy.
Going on your info, the person who pays their own rent has no subsidy - as I maintain the subsidy to buy the asset is to the benefit of the owner not the renter.
But of course the person on benefits is being subsidised, but I don't think that was ever in dispute.

''Going on your info, the person who pays their own rent has no subsidy - as I maintain the subsidy to buy the asset is to the benefit of the owner not the renter.''

See the post above yours. If there was no subsidy for tenants why is there a waiting list for council houses, why not just rent on the open market? Why would there be restrictions who could have a council/HA house if there was no subsidy for tenants?

MrsE_2

enigmam wrote: »

See the post above yours. If there was no subsidy for tenants why is there a waiting list for council houses, Because they do not make a huge profit for private landlords why not just rent on the open market?Because they do not make a huge profit for private landlords Why would there be restrictions who could have a council/HA house if there was no subsidy for tenants?Because they do not make a huge profit for private landlords

The difference is a private landlord is making a nice whack on top. Otherwise why would they do it.

enigmam

Exactly. So the council/HA is foregoing making a huge profit, they charge a much lower rent than they could achieve on a open market. Which is a opportunity cost. Which is a subsidy.

The different between an affordable housing rent and the going rate on the open market is the subsidy

squinty

The subsidy works a little like this - it would cost a housing association say £80k to build a house plus say £40k for the land - in order to make this worthwhile, to service the debt and to carry out repairs, and manage the property it would need to charge say £120 per week rent.

However, if in that area £120pw may not considered affordable - so they do a deal - the local council donates the land (in order to increase affordable housing in area)- and the Housing Association then gets grant from the Housing Corporation which means that total cost to them to build is, say £50k (typicaaly met from borrowing against stock value)- and this allows them to charge an affordable local rent. (say £80pw)

So whilst is plain economic terms MrsE is right - the housing association as owner has benefiited from the subsidy - in reality the tenant also benefits because the rents will be affordable in perpetuity.

Hope this makes sense

Air-Wolf_2

The subsidy does benefit both parties i.e. the RSL and the tenant. But logic says that the initial capital subsidy is only being attracted because of the end tenant i.e. someone in need of affordable housing - but yes we both benefit.

A couple of pints though on subsidy and the 'real' cost of this.

A private developer will have to build homes to exacting building control regulations - I as a RSL have to build them to:-

Building control;
- Code for Sustainable Homes Level 3 (a whole post on its own)
- Design quality Standards; and
- Housing Quality Standards

In addition some council's will stipulate Life Time Home standards also.

In financial terms this means where as a private developer could (theoretically and not counting plot value) build a home for circa £1,000 square meter - it costs me more in the region of £1,300 square meter. This isn't really any bad thing. The homes we build are bigger, more energy efficient and easier (supposedly) to maintain but it does mean a bigger 'hit' when we first build.

Finally - rents - ours are always affordable and are based on a formula that uses the open market value of the property as of 1999. Our rents are also capped and we are only allowed to raise them by inflation + 0.5% (bring on the flamers :-)). Squinty is right therefore - the rents are always affordable and considerably lower than those on the open market (private rented).

So Mrs E (and thank you for the thanks by the way) even when you pay your rent in full and on time - and boy we likes those customers :-) they are still benefiting from a low rent - and that's the point isn't it - it's affordable - and that's why we like living in this country because it has a welfare state that is second to non.

Sometimes we are riding on the crest of the waves and enjoying our lives - and one day we fall off the edge and we need a little help to get our selves back on track! I like to think that the company I work for is there when those people need some help in getting their housing needs back on track.

So to conclude - we do use public money (tax payers dosh) to subsidize or in other words artificially lower the rents we charge to make them affordable. Make no mistake though - all RSLs make a profit - however, we don't distribute i.e. we keep it in the business and use it to build more homes, maintain our housing stock, invest in the communities where we have homes and basically do good things.

I earn a good wage but there is no profit share, bonus, or huge junkets of any kind - so basically any surplus we have at the end of the financial year gets ploughed back in.

We did it / do it because back in 1960 someone watched Cathy Come Home and realized that there was a major issue just waiting to blow up in our faces. We've moved a long way since then and hopefully we'll be around for a long time to come.

HAPPY EASTER BY THE WAY!!

clutton_2

""Because they do not make a huge profit for private landlords""

As a LL, i do wish someone would tell me how to get a "huge" profit ..............

when you buy a small 2 bed house at market value, you will make a loss for the first 2-3 years (maybe more) whilst recouping the purchase costs (and lenders arrangements fees have now become draconian - so 2-3 is more likely to be 3-5) especially if there are refurbing costs before you get yoru first tenant in


you will be very lucky to make £100 a month Gross profit on a 2 bed - and that is if you bought a few years back when prices were sensible - out of that £100 comes your repairs, CORGI gas inspections, voids, insurance, letting agents fees, etc etc

so .... not much left in the pot ...... many landlords rely on capital growth for their profit in many years time ... and we don;t know what government policy will be then .... the whole thing is an investment - and all investments are a gamble

MrsE_2

clutton wrote: »

""Because they do not make a huge profit for private landlords""

As a LL, i do wish someone would tell me how to get a "huge" profit ..............

when you buy a small 2 bed house at market value, you will make a loss for the first 2-3 years (maybe more) whilst recouping the purchase costs (and lenders arrangements fees have now become draconian - so 2-3 is more likely to be 3-5)

you will be very lucky to make £100 a month Gross profit on a 2 bed - and that is if you bought a few years back when prices were sensible - out of that £100 comes your repairs, CORGI gas inspections, voids, insurance, letting agents fees, etc etc

so .... not much left in the pot ...... many landlords rely on capital growth for their profit in many years time ... and we don;t know what government policy will be then .... the whole thing is an investment - and all investments are a gamble

Come on now, a lot of people have made loads of money letting.
If I won the lotto, I think I would buy a loads of houses (after the crash) & let.

I'm not knocking private letting, just explaining why people try for council rather than private letting. Also with council, you can stay, with private letting there is not the same security.

BobProperty

MrsE wrote: »

Come on now, a lot of people have made loads of money letting.

Nothing like a good sweeping generalisation to get the debate going in the morning.

MrsE wrote: »

If I won the lotto, I think I would buy a loads of houses (after the crash) & let.

Give us the figures you would look for if you had, say, £2m to spend.

Air-Wolf_2

margaretclare wrote: »

I know some people like that. They'd brought up 4 sons successfully in a council house, she'd been a school cook, all 4 sons now have their own properties in different parts of the country and are doing well (one of them is my son-in-law, widower of my younger daughter who died).

They wanted to move to somewhere smaller and more manageable (stairs again!) but they wanted 2-bed because they wanted a spare bedroom so that family could come and stay. Sons are in Kent, Derbyshire and Cornwall, so reasonable enough, you'd think. No, said council. You're a couple, no sons now living at home, you're only entitled to a one-bedroom flat. That idea of entitlement again!!!

In the event, they did move to a one-bedroom flat adapted for the disabled. She's now living there alone since widowhood.

Margaret

Unfortunately because there is such an under supply of affordable housing many LAs and RSLs have to adhere to strict occupancy policies.

I think that many older people in affordable accommodation are put of downsizing within the affordable system because if they do their 'requirement' based on household size will mean that in many cases they would have to take a 1 bed property.

As a developing RSL we won't take one bed properties or very few for that very reason - and where we can we try to have a degree of under occupancy on large housing estates where if we were to maximize occupancy we'd create social issues because of the number of young people we'd house in a concentrated location.

Council and RSL homes are categorized as bed spaces not bedrooms - so you can have a 2 bed 3 person house or a 2 bed 4 person homes depending on the size of the home, and the same applies to 3 bed 5 person, 4 bed 6 person or 4 bed 7 person - we then get assessed on our occupancy rates according to actual capacity. So if your children do leave the nest and you want to downsize and your affordable landlord adopts the policy in a strict manner you may end up in a much smaller property.

Bungalows are also more expansive to build - yes they are smaller in height but normally take up the same if not more of the floorprint of a house - and we still have to pay the same plot value as a bungalow as a house - that's why flats are so popular - means you can pay way more for the land than if you were to just build houses.

Addy1

So then why are the council allowing people to stay in 3 bedders (could sleep 5 people)?
Seems like a family somewhere is probably missing out.