Man Who Lived 15 Years In 14Sq.ft. Flat Wins 8K Compensation

[davidg]

A man who spent 15 years in a Parisian apartment where the standing room measured 1.56m.sq has won 10,000 euros from the agency that rented him the flat. He paid over 300 euros/month for the "compact and bijoux pied a terre" which had neither shower nor toilet (something not untypical in Paris where rental controls give landlords little incentive to improve their properties)

The actual floor area was 4 m.sq but most of it was under a sloped roof. According to the rarely applied laws an apartment must measure 20 m3 with 9m2 floor area. The man had asked 19K compensation plus 5K damages.

The agency not the landlord was found guilty as the court considered it was responsible for making sure rental laws were complied with.

The compensation is just under 3 years rent. Trebles all round for the agency I would say.

http://www.leparisien.fr/societe/paris-il-vivait-dans-1-56-m2-ses-bailleurs-condamnes-24-03-2014-3704691.php

Edited March 24, 2014 by davidg

[Smyth]

Its worth emphasising (since a lot of people seem to favour them) that this is a direcet outcome of having rent-control.

[@contradevian]

Its worth emphasising (since a lot of people seem to favour them) that this is a direcet outcome of having rent-control.

We had rent controls during the WWII as there was a fear then that rentiers would jack up the prices and the elites wanted the Brits fighting Nazi's not insurrection against the rentier class.

But I love the propaganda. 'Rent controls = flats with no toilets'

Edited March 24, 2014 by aSecureTenant

[StainlessSteelCat]

Seems to me that you could have rent controls plus a minimum standard that rented accommodation has to meet.

Frankly, I've seen worse places for rent in this country.

[@contradevian]

Seems to me that you could have rent controls plus a minimum standard that rented accommodation has to meet.

Frankly, I've seen worse places for rent in this country.

That would be the simple solution yes.

Also this "due to rent controls little incentive to improve the property."

They don't anyway so it would make no difference!

[The Ayatollah Buggeri]

...where rental controls give landlords little incentive to improve their properties)

Whereas in the UK, runaway house price inflation, uncontrolled population growth, the consequent excess of demand over supply, the AST contract and an economy that has been rigged to protect landlords, price out FTBs and promote BTL since 1997 gives landlords next to no incentive to improve their properties.

Edited March 24, 2014 by The Ayatollah Buggeri

[tomandlu]

Its worth emphasising (since a lot of people seem to favour them) that this is a direcet outcome of having rent-control.

I'd have said it was worth emphasising that this is the direcet outcome of some idiot paying for that ridiculous 'flat' for 15 years...

[redwine]

What the link really says and its written twice is.....

The court of the 11th district of Paris has sentenced the OWNER and the estate agency to pay together 10,000 euros to the tenant who took them to court and a further 1,000 euros for moral compensation.

This is a classic case of a slumlord who hides behind an estate agency .

The agency collects the rent the renter does not know who the owner is .

[Smyth]

We had rent controls during the WWII as there was a fear then that rentiers would jack up the prices and the elites wanted the Brits fighting Nazi's not insurrection against the rentier class.

But I love the propaganda. 'Rent controls = flats with no toilets'

If the maximum you can charge for a flat is (eg) £500/month, then there is no point in landlords spending any money on a flat which would increase its market value beyond £500/month, as this would be pure loss. If the demand for rented accommodation is so high that someone is prepared to spend £500/month on an apartment with no toilet, then the landlord obviously isnt going to bother adding a toilet. Whereas without rent control they would have an incentive to add a toilet and then increase the rental price.

Some of these problems can be regulated away (eg building regulations which require all flats to have toilets) but there are others that cant, for example if landlords cant discriminate between potential clients based on price, then they instead discriminate based on risk and ability to pay. If you have huge amounts of demand for your flat (which you will, if the rent controlled price is substantially below the market rate) then it becomes a sellers market and landlords can choose only the absolute best tenants . From the little I know of the Paris rental market this is essentially what happened during rent control; if you didnt have an absolutely perfect credit score and pages of exemplary references then it was unlikely that any landlord would rent you a decent flat.

[Guest spp]

Someone would pay the best part of a quarter of a million for the opportunity to refurbish and rent that out!

edit - in London.

Edited March 24, 2014 by spp

[Cozza]

We had rent controls during the WWII as there was a fear then that rentiers would jack up the prices and the elites wanted the Brits fighting Nazi's not insurrection against the rentier class.

But I love the propaganda. 'Rent controls = flats with no toilets'

Maybe for some in Paris. Not across the board though. We rent a five bedroom house on the grounds of a listed castle in France. All for about £550.00 pcm. Only a couple of hours from Paris by train and Rennes a 40 min car journey away.

The rent didn't go up last year because the landlord wants to keep us here.

Rent controls = cheaper rent

[Smyth]

Whereas in the UK, runaway house price inflation, uncontrolled population growth, the consequent excess of demand over supply, the AST contract and an economy that has been rigged to protect landlords, price out FTBs and promote BTL since 1997 gives landlords next to no incentive to improve their properties.

This is wrong, even though property prices in the UK are absurd, a well-maintained property with good amenities still gets a higher market rent than a poorly maintained property. Noone is going to pay £x to live in a slum when they can get a decent place for the same price. Typically the 'slum' properties in the UK are those that (partially due to location) are aimed at people who dont have much money, and there is a fear that doing substantial improvements wouldnt increase the rent much because it would make it too expensive for the people who would live in that area. But if you look at more expensive areas, properties tend to be in better condition and a well-maintained property will fetch higher rent.

[The Ayatollah Buggeri]

Whereas without rent control they would have an incentive to add a toilet and then increase the rental price.

Not if demand for flats full stop is so great that they can still find a tenant for their flat without a toilet.

I'm not arguing that rent control is necessarily the way forward (at least, not in isolation), but the UK doesn't have it but yet still has a problem with substandard rental properties, and runaway rents. The only real answer is either to increase supply (i.e. build a lot more new properties that are not owned by private landlords) or reduce demand (e.g. refuse planning permission for new business/employment in areas where there is a housing shortage within commuting range, restrict immigration, etc. etc.).

[Smyth]

(Also at the lower ends of the market, there is more risk that tenants will damage the property so less incentive to spend money on good furniture/etc since the rent increases may not cover it - this is especially the case in properties aimed at LHA tenants . And even if a landlord is renting to 'good' tenants that they trust, there is still diminishing returns, so youre always going to get (eg) laminate rather than a solid wood floor, for obvious reasons).

[@contradevian]

If the maximum you can charge for a flat is (eg) £500/month, then there is no point in landlords spending any money on a flat which would increase its market value beyond £500/month, as this would be pure loss. If the demand for rented accommodation is so high that someone is prepared to spend £500/month on an apartment with no toilet, then the landlord obviously isnt going to bother adding a toilet. Whereas without rent control they would have an incentive to add a toilet and then increase the rental price.

Some of these problems can be regulated away (eg building regulations which require all flats to have toilets) but there are others that cant, for example if landlords cant discriminate between potential clients based on price, then they instead discriminate based on risk and ability to pay. If you have huge amounts of demand for your flat (which you will, if the rent controlled price is substantially below the market rate) then it becomes a sellers market and landlords can choose only the absolute best tenants . From the little I know of the Paris rental market this is essentially what happened during rent control; if you didnt have an absolutely perfect credit score and pages of exemplary references then it was unlikely that any landlord would rent you a decent flat.

Has it not occurred to you that running a property rental business, or being a landlord (I mean doing it properly) might not actually be profitable, like running a bus service or trains? Hence why Councils originally ended up doing the job.

Despite the lack of rent controls and being handed, capital gains on a plate by the government, a third of private rentals in the UK don't meet the 'decent home standard.'

[Smyth]

Not if demand for flats full stop is so great that they can still find a tenant for their flat without a toilet.

I'm not arguing that rent control is necessarily the way forward (at least, not in isolation), but the UK doesn't have it but yet still has a problem with substandard rental properties, and runaway rents. The only real answer is either to increase supply (i.e. build a lot more new properties that are not owned by private landlords) or reduce demand (e.g. refuse planning permission for new business/employment in areas where there is a housing shortage within commuting range, restrict immigration, etc. etc.).

Rents in the UK arent _that_ expensive outside London. In many places up north you can get a 3 bed place for £500/month or so. Its just London that is crazy due to insane demand and very restricted supply.

[Smyth]

Has it not occurred to you that running a property rental business, or being a landlord (I mean doing it properly) might not actually be profitable, like running a bus service or trains? Hence why Councils originally ended up doing the job.

If landlords (either private or council) arent allowed to charge market prices then whoever gets the property is just luck, and you get a lot of deadweight loss since some people are being 'given' more than they want/need, while others arent getting enough. In the case of council run properties (I assume you mean social housing) you have terrible incentives where properties get given to single mothers who dont work, while nice people who actually have jobs get pushed down the waiting list and have essentially zero chance of getting one. Then you have situations where once you get a council house you are in for life, so you can have people who earn £60k+ a year paying a tiny amount of rent. Its a very bad system, probably even worse than the private rental sector.

Of course, if you are one of the lucky ones that get a council flat then youre fine, and obviously these people have a 'f*ck you, got mine" attitude. But that doesnt make it a good system in general.

[19 year mortgage 8itch]

Has it not occurred to you that running a property rental business, or being a landlord (I mean doing it properly) might not actually be profitable, like running a bus service or trains? Hence why Councils originally ended up doing the job.

Despite the lack of rent controls and being handed, capital gains on a plate by the government, a third of private rentals in the UK don't meet the 'decent home standard.'

He's already said on the 5 family thread that he would sell off the social renting sector.

Man of the people

[Smyth]

He's already said on the 5 family thread that he would sell off the social renting sector.

Man of the people

I wouldnt sell it off, but being given a council house shouldnt be a reward for bad behaviour (eg single mothers) since it encourages it. It should be temporary accomodation for those who are down on their luck, eg families who have lost their jobs and so forth. Not as a permanent way for people to leech off society.

The real problem is the deadweight loss. Lets say the council owns 2 properties, one in central London and the other in Croydon. The market rent of the central London one is £2500/month, while the Croydon one is £1000. At the moment, the central one is being rented to an unemployed tenant paying no (or a very heavily subsised) rent. The value they are receiving from this is £2500x12 = £30 grand a year. It might be the case that that person doesnt really care about living in central London, and would be happy to move to the Croydon property fi you paid him £5k/year to do so. This would be strictly utility maximising and good for everyone - the tenant is happier because he has an extra £5k in his pocket and doesnt mind the location change, while the government/taxpayer is happier because now they are only spending £17k on the tenant each year rather than £30k, and the central london flat can go to someone who is able to pay a higher rent for it. So its a win-win situation.

Of course, nothing like that happens and what you actually have is people staying in social housing in central London and effectively getting £30k+ year in subsidised housing,, which is pure deadweight loss (since they would often prefer to move to a cheaper house in exchange for a cash payoff worth a lot less than £30k). The same applies to the 'bedroom tax' - you have people with rooms in their house that they dont need while others are struggling to get a council house at all, and any attempt to fix this problem is met with outcry. This is the basic problem with having the government allocate assets rather than just using a simple price mechanism, its hugely inefficient and results in loss all round.

[The Ayatollah Buggeri]

This is the basic problem with having the government allocate assets rather than just using a simple price mechanism, its hugely inefficient and results in loss all round.

I agree, and if if you believe that the government rigging the market is a bad thing, then help to buy needs to end, the scheme whereby the government pays your mortgage interest if you lose your job needs to end (if homeowners want to insure against this, they should buy that insurance themselves) and interest rates need to be allowed to rise to levels that actually reflect inflation.

[davidg]

I agree, and if if you believe that the government rigging the market is a bad thing, then help to buy needs to end, the scheme whereby the government pays your mortgage interest if you lose your job needs to end (if homeowners want to insure against this, they should buy that insurance themselves) and interest rates need to be allowed to rise to levels that actually reflect inflation.

Sounds like a start along with changing the tax treatment and supply of mortgages for BTL.

I would also privatize the council housing stock; I would prefer mutual companies to run the social rented sector.

[19 year mortgage 8itch]

I wouldnt sell it off, but being given a council house shouldnt be a reward for bad behaviour (eg single mothers) since it encourages it. It should be temporary accomodation for those who are down on their luck, eg families who have lost their jobs and so forth. Not as a permanent way for people to leech off society.

The real problem is the deadweight loss. Lets say the council owns 2 properties, one in central London and the other in Croydon. The market rent of the central London one is £2500/month, while the Croydon one is £1000. At the moment, the central one is being rented to an unemployed tenant paying no (or a very heavily subsised) rent. The value they are receiving from this is £2500x12 = £30 grand a year. It might be the case that that person doesnt really care about living in central London, and would be happy to move to the Croydon property fi you paid him £5k/year to do so. This would be strictly utility maximising and good for everyone - the tenant is happier because he has an extra £5k in his pocket and doesnt mind the location change, while the government/taxpayer is happier because now they are only spending £17k on the tenant each year rather than £30k, and the central london flat can go to someone who is able to pay a higher rent for it. So its a win-win situation.

Of course, nothing like that happens and what you actually have is people staying in social housing in central London and effectively getting £30k+ year in subsidised housing,, which is pure deadweight loss (since they would often prefer to move to a cheaper house in exchange for a cash payoff worth a lot less than £30k). The same applies to the 'bedroom tax' - you have people with rooms in their house that they dont need while others are struggling to get a council house at all, and any attempt to fix this problem is met with outcry. This is the basic problem with having the government allocate assets rather than just using a simple price mechanism, its hugely inefficient and results in loss all round.

I'm not sure how you can talk about governments picking winners with a straight face.

Let's move to price mechanisms,

And start from the top.

[The Knimbies who say No]

Rents in the UK arent _that_ expensive outside London. In many places up north you can get a 3 bed place for £500/month or so. Its just London that is crazy due to insane demand and very restricted supply.

The 'or so' being about £650 minimum, unless you want to live in a hole, and a fair bit more for a good area.

[bomberbrown]

If landlords (either private or council) arent allowed to charge market prices then whoever gets the property is just luck.....

<snip>

The assertion here is that 'council' can charge market prices, which is wrong in itself but this demonstrates precisely why there isn't enough council/social housing to go round and why there IS an element of luck involved. There's no comparable luck involved with landing a private rental so please don't conflate the two.

See my sig.

[@contradevian]

He's already said on the 5 family thread that he would sell off the social renting sector.

Man of the people

Always amuses me how people complain about 'subsidised housing' without giving a thought as to why housing needs subsidising. As if a tenant in a 'subsidised house' is in someway a scrounger. In fact social housing rents have gone up a lot in order to keep up with the crazy demands of the private rented sector!

I thought the market was supposed to bring down prices through increased competition, but as we all know supply has to be kept artificially scarce in order to keep up prices.

Edited March 24, 2014 by aSecureTenant