Should council house rents be at normal market value?

[ricgem2002]

Just to add, I think the idea of a council house for life is daft, I fully believe it should be a temporary stop on the way to either buying or renting privatley. And i'm glad the govnmt see it this way now.

glad you like to see the government ruling more of your life than is necassary?granted everyone would like to buy their own house but who is going to lend them the money given the job situation at the moment (or in the near future) ? as i have said before a tenant who has say £1000 disposable after tax pays £500 on rent why should the government force him to now pay £600 on rent leaving him £100 a month less to pay for exactly the same things he was buying before the change ?hope your happy with that

[Cyclone]

You're tring to apply the rule of twelve to the current value with no reference to what the vendor actually paid. There roi may have been write acceptable on there 100k purchase price and why would they sell an appreciating assett?

[L00b]

Not quite sure if your post is in reply to mine, Cyclone, as it's a bit unclear

You're tring to apply the rule of twelve to the current value with no reference to what the vendor actually paid.

Erm... Did you miss that bit:

The question of whether the landlord was making anything at all, and how much, depended entirely on when had the landlord bought the rental property.

What the vendor actually paid should not matter, since the rule holds true when assets appreciate in line with their revenue (as they are supposed to, and indeed most often do, in a 'normal' market unbiased by a bubble effect).

 

The issue is when the distance between the asset value and the RoI grows faster than the tenants' revenue allocatable to rent, due to the property bubble effect. Effectively, the time at which RoI based on rental income (which is the only RoI a landlord should consider, as that is investing, not speculating) becomes disregarded for the paper gains of the rental property (which would only ever be realised if the asset is indeed sold, and at the right time/after the right period of course...that's speculating, not investing). Which is what happened in Ireland and the UK in the late 2000s.

 

In the context of my earlier post, our Irish landlord was quite happy with €1250: he'd bought the property on plans in the early 80s and was still getting shy of 15% RoI with our rent. The next-door-but-one 'fresh landlord' wasn't so happy with his €650k asset, which was returning precisely zero (save as to the low double-figure paper gains...while they lasted: about 2 years, before the market fell off the Eiger's north face).

[Vague_Boy]

Should council house rents be at normal market value?

 

If not, why not?

 

As already mentioned, social housing is intended for those in need, not to make a profit.

 

BTL landlords are in it for the money and so price their rents accordingly. This is not really the model social housing should be following.

 

What is the market.

 

Trust a leftie to ask a question like that.

 

A market is governed by supply and demand. I suspect you're the type to work for a local authority in some pointless non-job funded by the public, so I'll try and put it in terms that you can understand.

 

If you didn't have access to all that money extorted from the public via taxes, you'd have to bring in money by giving the public what they wanted, not by giving them what you think they should have.

 

Do you see?

[Conrod]

. . . . access to all that money extorted from the public via taxes, . . . .giving them what you think they should have.

 

Do you see?

Socialism at its best.

[Ms Macbeth]

Does that include people who are already in it but want to move for whatever reason?

 

It does, and it includes people who register as a safety precaution. They build up waiting time, but would only want social housing if their situation changed drastically.

 

There is also a difference in the way social housing providers manage their registers. Some will only accept people who are actively wanting to move. Others (like Sheffield) let anyone register who is eligible for social housing - hence the huge numbers. It would be a far more accurate estimate if we knew how many people are actively bidding on properties.

[Mecky]

Anyone interested in a JR?

[Ms Macbeth]

I have seen the tender returns for social housing and I know what it costs to build for the private market. Bear in mind that these are only the construction costs and that the public sector also has some extraordinary administration costs on top of this.

 

For interest, the public subsidy alone for the Park Hill refurbishment is about what the private sector could build brand new houses for.

This interesting aside is all a little off topic though so I'll leave it there.

 

Apart from repairs and maintenance to council properties (which costs a fortune in some cases) there is also the cost of estate wardens - a service that people in private housing don't have. Private tenants and homeowners don't have a team dedicated to dealing with anti social behaviour. Many tenants have an expectation that the council/housing association will sort out problems that private tenants/homeowners would be expected to deal with themselves. An additional cost is managing the housing register/waiting list and allocations. These services all cost money, which isn't necessarily reflected in the rent levels. However, I wouldn't want to see council rents pushed up to market levels.

 

What I would like is the removal or suspension of Right to Buy of family sized properties, so that struggling families can get decent housing at a reasonable price. If they eventually earn enough to buy, they can do so on the open market, which would give another family the opportunity for social housing.

[Tony]

As already mentioned, social housing is intended for those in need, not to make a profit.

 

BTL landlords are in it for the money and so price their rents accordingly. This is not really the model social housing should be following.

 

OK, so let's take that on board, and also some of Ms Macbeth's well made points and look at what sort of standards could be achieved if social housing was set at the market value.

 

Would a non-profit business model at market rent, administered for social good would enable profits to be returned into investment in further housing and improving existing stock?

 

Could you imagine social housing having a waiting list because of the demand to get into it because it is so good?

 

To paraphrase and stereotype - imagine solicitors rubbing shoulders with road diggers... and both being proud of where they live.

 

What happens to your social problems then?

[spudgun]

Ok so lets cut the crap. I live in a coucil house and if the rent was put up and i had to pay the same as privately rented property i`d be homeless as i couldn`t afford it. I work full time and the wife works part time. Even with 2 wages coming in we couldn`t afford £500 plus a month in rent.