High Earners Living In Council Houses Will Be Forced To Pay Market Rates Rent Under New Plans

[SpectrumFX]

Why did you write that? I'm the one who's stuck to the question of whether social housing is subsidised and repeatedly asked you to define or justify what you mean. Where I made assumptions because you wouldn't say anything substantive I even blatantly said so.

There's little point continuing a one-way exchange, but if you're referring to the bit about costs vs costs + mark-up, what else does raising rents from near breakeven to breakeven + rentier profits amount to. You think forcing high earners to pay 'market' rates will lower overall costs and/or feed back into better provision for low earners? That's not how the property market works - theoretically or practically as should be evident by now. Pushing social tenants into the same scenario as private ones, where they cover cost + implied land rental is just backwards and will lead to less social housing and higher costs for tenants and the taxpayer.

And you've repeatedly ignored what I've said. You've even cut out my last attempt to explain from your quote, and then criticised me for not explaining.

[White Craw]

My understanding was that social housing was intended to be for the poor. Is that understanding wrong? Assuming that that understanding is correct is it not reasonable to start excluding higher earners so that the limited provison available can be allocated to those who earn less (and therefore presumably have a greater need).

Wasn't thought of like this before the (?) 1980s. We never heard of "social housing" in these days - council housing was perfectly normal for local young couples setting up home, for instance. Not now though with the "socially deserving", often with no local ties, taking priority.

[SpectrumFX]

Wasn't thought of like this before the (?) 1980s. We never heard of "social housing" in these days - council housing was perfectly normal for local young couples setting up home, for instance. Not now though with the "socially deserving", often with no local ties, taking priority.

That's interesting. I was born in the 70's so don't really remember much before the 80's.

[Assume The Opposite]

Any policies from a man who used to flip houses and snort coke should be taken with a pinch of salt.

[Guest_northshore_*]

And you've repeatedly ignored what I've said. You've even cut out my last attempt to explain from your quote, and then criticised me for not explaining.

Not at all. I repeatedly asked what you meant in order to try understanding it. I could have just ignored replies like most do when it doesn't suit their perspective, but didn't. And I cut out the quote to save space on the page, but still answered it in the 2nd paragraph. If I wasn't clear then I thought social housing was for society, not just the poor, because land is a resource nobody worked to create. As you implied earlier scarcity is artificial, so there's no reason beyond favouritism that we shouldn't all benefit from it. Applying Osborne economics to an already corrupt system, however just it may seem at first glance, won't help. Definitely not the poor. Anyhow this exchange has become pointless for both of us. Good luck with your thoughts.

[Rain'ard]

The Production Manager at my last job earning in the mid 40's (in the Midlands) with a company car (all fuel paid) lived in a council house. He would complain about being skint all the time, considering his rent was about £90/week makes you wonder what he spent his money on.

Made me pretty annoyed so I can't say I am too disappointed by this move. I am not a Osbourne aficionado but he is convincing me he knows where the p*ss is being taken in the welfare system and is finally doing something about it.

So have we got to put up with ill thought out Shi*te because of your boss. I had a boss in a similar circumstance that doesn't make me alter my opinion of housing charges or political interference. But you make a fair point, things seem senseless sometimes

[Peter Hun]

I dont think an income of £30,000 a year puts you anywhere near the top 10% of earners

http://www.theguardian.com/money/2014/mar/25/uk-incomes-how-salary-compare

Is this not just another disguised tax on middle income earners from a chancellor who already has form in this area from his gerrymandering of the 40% tax band in the last Parliament (incidentally an electoral open goal that Labour spectacularly managed to miss in 2015) ? Wont the effect just be to make many of those effected simply drop their hours so that they bring their earnings in just under the limit. As a consequence it is probable that very little housing will released and the states tax take will go down. Not that Osborne cares because his aim is to score a few political points, pacify those afflicted with 'social housing envy' and win plaudits from the media. It is certainly not going to tackle Britains housing problems or even to provide that many extra homes for the poor. .

£60/40/30k figure is not per person. Its the household income.

So two parents living in London earning £20k each would be considered rich and liable for full market rent.

£40k in London would not buy you even a tiny studio, so Right to Buy won't be an option either

The starting salary of a NHS nurse is nearly 23k in London.

Obviously the intention is to ensure that only tenants on benefits get social housing. Screw the working poor.

Edited July 5, 2015 by Peter Hun

[council dweller]

Old money for the win and new money for the loss.

Can anyone see a pattern here?

[Debbiebegood]

Not at all. I repeatedly asked what you meant in order to try understanding it. I could have just ignored replies like most do when it doesn't suit their perspective, but didn't. And I cut out the quote to save space on the page, but still answered it in the 2nd paragraph. If I wasn't clear then I thought social housing was for society, not just the poor, because land is a resource nobody worked to create. As you implied earlier scarcity is artificial, so there's no reason beyond favouritism that we shouldn't all benefit from it. Applying Osborne economics to an already corrupt system, however just it may seem at first glance, won't help. Definitely not the poor. Anyhow this exchange has become pointless for both of us. Good luck with your thoughts.

+1

[Debbiebegood]

its about doing away of the social housing in this country, get the people to hate those that have social housing get policy designed to hate those that live in social housing and little steps do away with it.

Spot on!

[Parkwell]

This is a spectacular argument about social housing. Are people actually saying that Housing Associations don't get any taxpayer money?

Not all HAs are run the same, so generalising about them can be difficult. However, a very large number are registered through The Homes and Communities Agency and receive government money.

http://www.theguardian.com/social-enterprise-network/2013/apr/03/housing-associations-social-enterprise-sleeping-giant

for the last three decades, some £40bn of public money in the form of grants has made it possible for housing associations to lever in £60bn of private finance creating a £15bn surplus. And because there are no dividends for shareholders, this sum has been reinvested, enabling them to grow.

How else do you think they can dictate rents?

Incidently, I'm quite neutral about Osborne's proposal. It's only making an already bad system more complicated. Waste of time more than anything.

[crash2006]

This is a spectacular argument about social housing. Are people actually saying that Housing Associations don't get any taxpayer money?

Not all HAs are run the same, so generalising about them can be difficult. However, a very large number are registered through The Homes and Communities Agency and receive government money.

http://www.theguardian.com/social-enterprise-network/2013/apr/03/housing-associations-social-enterprise-sleeping-giant

How else do you think they can dictate rents?

Incidently, I'm quite neutral about Osborne's proposal. It's only making an already bad system more complicated. Waste of time more than anything.

Grants just like the home owner gets grants for insulation etc... there's a big difference, £40 biilion sound a lot but its over 40 years divided by over 1000 HA turns out to be nothing really. they get the majority of there money from rents not government subsidies.

councils continue to simply give hundreds of thousands of taxpayers’ money away in the form of grants. Why should a housing association even want to borrow money from the council when it is being given to them?

Housing associations get part of £1bn private rent fund.

now why not give the council that money to build more homes.

Housing associations' day-to-day activities are funded by rent and service charges payments made by, or on behalf of, those living in its properties. In this sense, housing associations are run as commercial entities and the majority do not depend on donations for their general activities.

New housing generally receives economic subsidies, the source of which will depend on where the association is based:

The future financing of housing associations

http://www.publications.parliament.uk/pa/cm201012/cmselect/cmcomloc/1652/165208.htm

Edited July 6, 2015 by crash2006

[nome]

There's a thread on the MSE house buying forums titled ''What would you do in my situation'' (sorry I can't do links)...

They're currently living in a council house and have a real dilema... they can't decide whether to buy it with a £100k discount off market value or accept a £33k govt gift to leave the council house and buy privately... oh, and they have enough earnings to secure a £300k mortgage and they're currently managing to save £1,700 a month towards a deposit.

I'm starting to realise just how naive/stupid I am.

[Guest]

People lucky enough to live in a housing association or council property are paying less money for vastly better accommodation than I am.

Unquestionably they are getting subsidised. Where's my council house?

Saying that, why is the solution always the one that benefits landlords the most? Why isn't Osborne addressing this unfairness by taking measures to restrict private rents, instead of increasing council ones?

'Market' rents are a complete joke - anyone actually paying full rate is effectively a serf.

I do have social housing envy. The housing 'market' is an utter utter mess. But this is just throwing more people to the wolves.

[bomberbrown]

Saying that, why is the solution always the one that benefits landlords the most? Why isn't Osborne addressing this unfairness by taking measures to restrict private rents, instead of increasing council ones?

Ding! We have a winner.

Or better still, perish the thought of embarking on a whole new state national building programme for rent only rather than relying on the private sector to do it for us, whilst lining theirs and the banks pockets.

[cool_hand]

If you're trying to say that the positive effect of the subsidy isn't sufficient to counteract the negative effects of all the other ways that the market is rigged then I agree with you. But it's still a subsidy

Edit to add: The Housing Association is subsidising the living costs of their tenants, by offering them housing at lower than market rates. Whether the HA subsidising the rich is a problem depends upon the charter and mandate of the HA. I was under the impression that most were set up to help the poor. Is that not correct?

Sprectrum, you're wrong on this, for all the reasons that have already been pointed out.

[bomberbrown]

I'm hoping this might be the new Tories poll tax moment.

A couple living together in social housing on an income of £15k each will get hit by this rent tax (£20k in London). I think this is going to hit far more people than they imagined.

I also don't think it's a coincidence this has been 'leaked' days in advance of the budget. Test public reaction etc.

[council dweller]

Yes bomberbrown, how can this be right?

I get zero income (just a little tax free benefit) so that if my wife qualifies as a nurse in a couple of years time she`ll be right in it! (£30,000 per year.)

!50,000 it ain`t .

[iamnumerate]

How are they subsidised? explain? just because the the private market has pushed prices up does not mean they are subsidised. HA do not receive any money from the state, it comes from rents just like private landlords, the property has already been paid. HA are charities not for profit so which means any money going in must be spent.

Housing associations' day-to-day activities are funded by rent and service charges payments made by, or on behalf of, those living in its properties. In this sense, housing associations are run as commercial entities and the majority do not depend on donations for their general activities.

http://www.adamsmith.org/blog/welfare-pensions/social-housing-is-too-subsidised/

"Because we are not charging market rents for social housing there is some money left on the table there. It might be that £6.6 billion. This is thus £6.6 billion of government money that cannot be spent on something else: teaching children economics say. It might be that £600 billion as a capital value: if we were able to sell all of that off at true market prices then we'd have three times over the £200 billion we need to invest in renewables according to DECC."

Or if you don't like that it is state aid to some people and not others for companies this is illegal

http://ec.europa.eu/competition/state_aid/overview/index_en.html

[iamnumerate]

PS although I think that council housing is subsidised this massive cost when you earn more than £30k is a bit crazy.

[CunningPlan]

IIRC, the average renting family spend 40% of their net income on rent. Why not just charge any social tenants 40% of their income - will help the lower paid and the Bob Crow types will move out pretty sharpish once they earn so much that it makes economic sense for them to rent privately - or am I just a simplistic fool?

[crash2006]

People lucky enough to live in a housing association or council property are paying less money for vastly better accommodation than I am.

Unquestionably they are getting subsidised. Where's my council house?

Saying that, why is the solution always the one that benefits landlords the most? Why isn't Osborne addressing this unfairness by taking measures to restrict private rents, instead of increasing council ones?

'Market' rents are a complete joke - anyone actually paying full rate is effectively a serf.

I do have social housing envy. The housing 'market' is an utter utter mess. But this is just throwing more people to the wolves.

Explain how HA tenants being subsidised? So a can of coke costs less up north than in London I can assume they are being subsidised?

[crash2006]

http://www.adamsmith.org/blog/welfare-pensions/social-housing-is-too-subsidised/

"Because we are not charging market rents for social housing there is some money left on the table there. It might be that £6.6 billion. This is thus £6.6 billion of government money that cannot be spent on something else: teaching children economics say. It might be that £600 billion as a capital value: if we were able to sell all of that off at true market prices then we'd have three times over the £200 billion we need to invest in renewables according to DECC."

Or if you don't like that it is state aid to some people and not others for companies this is illegal

http://ec.europa.eu/competition/state_aid/overview/index_en.html

I know just imagine we didnt have to pay pensions, just think about what that money could be used for.

Everytime they hit me I cut back on my spending, I used to shop at the large supermarkets now I shop at aidi it cost me petrol but the saving out my the financial cost of me travel expenses.

Edited July 6, 2015 by crash2006

[crash2006]

IIRC, the average renting family spend 40% of their net income on rent. Why not just charge any social tenants 40% of their income - will help the lower paid and the Bob Crow types will move out pretty sharpish once they earn so much that it makes economic sense for them to rent privately - or am I just a simplistic fool?

It help justify private rents, if socials rent are market prices, its less headache for the government, so private renters are being hit more in rents, increasing social and HA rents is a bad idea, Having low rents in social housing puts pressure on the government to do something about the private rental market, and unsetting landlords, why not choose the easy route increase social rents to market level to justify private rents.

So everyone that rents is worse off while landlords are better off.

[crash2006]

Even if they are paying market or affordable rents they still have security of tenure and the choice to buy the property they live in with a massive discount, so I doubt many will move out.

Even if they are paying market or affordable rents they still have security of tenure and the choice to buy the property they live in with a massive discount, so I doubt many will move out.

Not anymore