Should council house rents be at normal market value?

[donkey]

Should council house rents be at normal market value?

 

If not, why not?

 

If so, why so?

 

No, because 'normal market value' is the artificial level which houses are pushed to by the wholesale encouraging of speculation on homes to the point that there primary function now seems to be a way for people to make ridiculous sums of money for a disproportionately small amount of work. The end result being the continuing cycle of boom and bust, which causes housing which is artificially expensive when the market is up, but when it is down, invariably brings the rest of the economy down with it.

 

What should be happening is that measures are put in place to keep housing at a value roughly proportionate to the labour and materials which went into it. Then we wouldn't need social housing. Buying a house would be available to anyone who wanted to work for it, and rents would remain reasonable. As long as the ability of millions of working people to own a house is left to the whims of the 'market' and the property sepculation which drives it, there will be people who - despite working hard - can not afford to buy, and will be unfairly expected to pay a disproportionate amount of their earning towards paying off someone elses mortgage through artificially high, 'market driven' rents. While things stay that way, there will be a need for cheaper social housing, It is not the best solution, but as they say, you can't have your cake....

[Gordonb]

So is (part of ) a problem that has been developed where social housing has been allowed to deteriorate and rents follow the deterioration down?

 

If so, is a partial solution to raise rents in social housing and raise the standards and the conditions that people live in? After all, don't people as a group behave according to the conditions that they inhabit?

 

Alas Tony the theory is true but the practicality is not quite so clear cut. When I was a teenager I worked for the Gas Board doing work in houses around Sheffield. I'll always remember the blind lady's terrace house on Queens Road which was absolutely spotless she was cleaning her brass fire guard when I arrived. A later job I had to do was visit one of the Vic Hallam houses on Batemoor which was probably about 3 months old. When the woman opened the door I was nearly sick. I went in and there were dirty nappies everywhere and the reason the cooker didn't work was the congealed fat surrounding the burner and ignitor. You can give SOME people everything but you will never change them.

[SHsheff]

No, because 'normal market value' is the artificial level which houses are pushed to by the wholesale encouraging of speculation on homes to the point that there primary function now seems to be a way for people to make ridiculous sums of money for a disproportionately small amount of work. The end result being the continuing cycle of boom and bust, which causes housing which is artificially expensive when the market is up, but when it is down, invariably brings the rest of the economy down with it.

 

What should be happening is that measures are put in place to keep housing at a value roughly proportionate to the labour and materials which went into it. Then we wouldn't need social housing. Buying a house would be available to anyone who wanted to work for it, and rents would remain reasonable. As long as the ability of millions of working people to own a house is left to the whims of the 'market' and the property sepculation which drives it, there will be people who - despite working hard - can not afford to buy, and will be unfairly expected to pay a disproportionate amount of their earning towards paying off someone elses mortgage through artificially high, 'market driven' rents. While things stay that way, there will be a need for cheaper social housing, It is not the best solution, but as they say, you can't have your cake....

 

You've missed out the land cost. People own land: fact. They have to be able to sell their land for a price that meets with their agreement (depending on what they want to do with that money) or they won't sell. That will just push land prices higher. Ahh. That's called a free market economy!

 

Your idea requires a state-owned monopoly on all land, so that it is freed at a set price to accommodate the need for it.

 

Why should the right to buy a home be available to all? It is as much available as any other market purchase is. I want to buy a new sofa? Only if I can afford it. I want to buy a new car? Ditto. Where housing is different is that in this country there is a safety net that provides (just about) a roof over everyone's head. For those who can't afford to buy, they can rent. And if they can't afford to rent at market prices, we have subsidised housing and housing benefit etc.

 

The Right to Own is not a right, it's a dream. No different to owning anything else that you have to pay for.

[donkey]

You've missed out the land cost. People own land: fact. They have to be able to sell their land for a price that meets with their agreement (depending on what they want to do with that money) or they won't sell. That will just push land prices higher. Ahh. That's called a free market economy!

 

Your idea requires a state-owned monopoly on all land, so that it is freed at a set price to accommodate the need for it.

 

.

 

Not so, I have considered this factor and there are a number of mechanisms which could be introduced to stabilise land prices. The most crude being an outright freeze, or a more subtle approach would be that a house sized plot of land should not exceed X% of the value of the average house prices in that area. There are loads of ways of doing it.

 

 

Why should the right to buy a home be available to all?

 

Why should the 'right' to profit by artidficially restricting the supply of essential resources be available to a minority?

 

 

Why should the right to buy a home be available to all? It is as much available as any other market purchase is. I want to buy a new sofa? Only if I can afford it. I want to buy a new car? .

 

 

Sofas and cars are not fundamental neccessities with limited supply, like water and housing is. Would you think it was OK for our resevoirs to be owned by private individuals who could sell the water to the highest bidder, causing speculation which made vast profits on the back of people paying artificially high prices for water? This is precisely what happens with housing.

 

 

 

 

The Right to Own is not a right, it's a dream. No different to owning anything else that you have to pay for.

 

I made it perfectly clear in my post that I was talking about the right for anyone who wanted to work for it to buy at a price representative of the real value of the house, rather than the price which speculators can push it to.

[Tony]

What's so special about land? It's only about a fifth or less of the price of a house.

 

Why not do something more effective and put a state controlled price on bricks, concrete, wood... or the biggie - labour?

 

State controlled wages would be a much better control. How about it?

[donkey]

What's so special about land? It's only about a fifth or less of the price of a house.

 

 

In that case, there is no reason to regulate it at the present time.

 

 

Why not do something more effective and put a state controlled price on bricks, concrete, wood... or the biggie - labour?

 

State controlled wages would be a much better control. How about it?

 

Explain why you think so.

It's not material and labour costs which cause housing bubbles and credit crunches.

[Tony]

Explain why you think so.

It's not material and labour costs which cause housing bubbles and credit crunches.

 

There were three questions in my last post and no statements of my opinion.

 

Developers gross profits before finance are around 15 - 20%. About a third of the mark up on a Mars Bar.

 

So with land, materials, labour, profit and finance costs as the ingredients what's so sacrosanct about labour when bricklayers were earning a couple of grand a week?

[donkey]

There were three questions in my last post and no statements of my opinion.

 

Developers gross profits before finance are around 15 - 20%. About a third of the mark up on a Mars Bar.

 

So with land, materials, labour, profit and finance costs as the ingredients what's so sacrosanct about labour when bricklayers were earning a couple of grand a week?

 

I'm not sure about your analogy or economics there Tony. How many mars bar sales constitute the equivalent of a 20% profit on a £300,000 house. Would one person sell all the mars bars involved? have you taken into account storage and distribution costs? Do people die and become ill from lack of sufficient mars bars?

[Tony]

That's a gross profit before you've paid any other business overheads but the economics are straight forward enough - the rewards represent the risks and a 20% profit soon becomes a 20% loss as we've seen recently. If you want to risk £240k you too can make £60k profit before paying the rent, wages and all the other stuff. There are many more profitable businesses that don't carry the same risks.

 

But are site wages so sacrosanct? Should bricklayers earn a hundred grand a year for a four and a half day week with no direct risk?

[donkey]

That's a gross profit before you've paid any other business overheads but the economics are straight forward enough - the rewards represent the risks and a 20% profit soon becomes a 20% loss as we've seen recently. If you want to risk £240k you too can make £60k profit before paying the rent, wages and all the other stuff. There are many more profitable businesses that don't carry the same risks.

 

But are site wages so sacrosanct? Should bricklayers earn a hundred grand a year for a four and a half day week with no direct risk?

 

All that aside, even allowing for administrators to make a 20% profit on new or refurbished housing, house prices could remain much more stable and affordable than they are now. It's when people start buying up houses they don't intend to live in, in the expectation of them increasing in value, that the problems start. This could be easily remedied.

 

Building labour costs only go therough the roof in periods of frenzied housing market activity. By controlling speculation, you would be controlling the pressures which cause these frenzies. I know it is not possible to have a perfectly stable housing market, but it could be a lot better than it is now. However, this would involve keeping prices down, not pushing them up. So what do you think? Is it a good idea, or do you prerfer boom and bust? Perhaps there's a third alternative?