Yes, you can argue that social housing tenants who are paying below market rents are getting an implied subsidy from the rest of society. However, as I pointed out in a comment on an earlier article, this doesn’t just apply to social housing tenants, does it? We don’t have a 100% Land Value Tax in this country. We allow people to occupy land without paying the full rental value of that land. Therefore anyone who owns a property is getting an implied subsidy from the rest of society (although if you’ve got a mortgage, much of the benefit of that subsidy is going to the bank). Why should we only be concerned with the subsidy given to social housing tenants?
If you really are going to kick people out of social housing, the fiscally and economically rational thing to do is not to sell off the properties, but to rent them out at market rates!
Ive been given to understand that when a Local Authority undertakes to directly build New-Houses themselves, the build-costs are always around 3 X times more than what it costs a Private developer
I’m not sure who your question is directed at, Miff, but I have made the claim that taxpayers are subsidising homeowners so I will try to answer it.
The article claims that “a state asset rented out below its market rate is logically an asset given with a subsidy”. The land mass of the United Kingdom is a state asset. The state rents out that land at below the market rate. If you own your own home, the only rent you have to pay to the state is council tax.
Yes, it seems unfair that people should get the advantages of living in central London without paying the full costs of living in central London. The answer to this is a national property tax or Land Value Tax. Such a tax would substantially increase the cost of living in central London, forcing economically inactive or underactive social housing tenants to move out and make way for more economically productive people. The revenue the government gets from such a tax could then be used to decrease income tax or national insurance or VAT. But the article does not advocate this simple solution. Instead, it advocates selling off social housing altogether! Selling off social housing doesn’t eliminate the “implied subsidy” that the article complains about, it just means that that subsidy will go to private landlords, owner occupiers and mortgage lenders instead of social housing tenants.
Can you please provide evidence to support your claim that the tax payers is subsidising homeowners please?
This article is very detailed with its figures and I would love to see the methodology, or even clear cut tables comparing like with like. However, it's a fact that rents are more expensive in city centres than most rural or suburban areas for like for like properties. It's crazy to be subsidising rents for recent arrivals in city centres. Whether those subsidies are in housing benefit, hotel accommodation or social housing. The tax payer should not be funding recent arrivals accommodationat all, but definitely not funding them in expensive city centres, when the people who work there can't afford to rent or buy.
If there was a "reckoning"in the south east's rental property market where would the current batch of tenants end up living?In towns that are currently majority white that's the where ,using a windfall tax and subsidy combination I'd wager.
>it is only the most recent arrivals who receive lower subsidies per working age person than those born here, reflecting that there are still some effects of NRPF conditions in limiting access to social housing.
This is a bit of a hand-wave really - 'only the most recent arrivals'.
Since 2010 according to the data presented above is not merely 'only the most recent arrivals'.
That's 15 years of policy. If social housing is indeed sticky, ignoring 15 years of recent policy in favor of policies nearly two decades ago seems strange.
And surely having half the subsidy per working age person despite being disproportionately based in London is also something that needs to be taken into account?
And the argument about not paying market rent being a subsidy strikes a little hollow. Everyone who doesn't pay market rent is theory getting a subsidy - someone paying a mortgage is getting a subsidy as most mortgages tend to be lower than market rent.
In addition, there is a methodology in this data that I'd be curious to hear more about. The article talks about the household head being foreign-born - is that the same as a foreign household?!
For example, if a wife was born in the UK and the husband is foreign-born but they claim social housing as the wife is a citizen, would they count as a foreign-household in this data that this article is presenting or as a native household?
This would surely over-estimate costs if you're assigning all of those costs to the 'foreign' head as opposed to the spouse/partner who is not foreign-born? If this is the case, one would expect any reasonable piece to separate out this or account for this?
Some good questions from Ro re methodology, however comparing people who pay mortgages ( where the tax payer contributes nothing) with social housing where the tax payer either contributes with benefits and or subsidised rent is not a fair comparison. We have housing associations and council housing here,,but we also have PRS houses rented out to large rental companies like Serco, who are now housing those on local authority social housing waiting lists. We also have landlords who are renting directly to those arriving in the country. Its a very complicated situation, good effort to Pimlico for attempting to get a grip on this fast moving picture!
>however comparing people who pay mortgages ( where the tax payer contributes nothing)
The government forces banks to lend out instead of becoming rentiers themselves. Banks can't hold REITs on their balance sheet and call it a day. Government is thereby forgoing extra tax income from riskier banking activities in order to promote the social benefit of homeownership. If renting at lower than market rents is a subsidy, there's easily an argument to be made that mortgages are being subsidized by the government.
I've got to say, it's a wildly misleading piece because it literally shows the opposite of what the article is claiming. The data for the past 15 years completely contradicts what they're saying.
Great as always.
Fascinating read. Thank you!
Good to see this noted by Stian Westlake chair of the ESRC
How is the fact that social housing tenancies can be inherited any worse than the fact that freehold and leasehold tenancies can be inherited?
Yes, you can argue that social housing tenants who are paying below market rents are getting an implied subsidy from the rest of society. However, as I pointed out in a comment on an earlier article, this doesn’t just apply to social housing tenants, does it? We don’t have a 100% Land Value Tax in this country. We allow people to occupy land without paying the full rental value of that land. Therefore anyone who owns a property is getting an implied subsidy from the rest of society (although if you’ve got a mortgage, much of the benefit of that subsidy is going to the bank). Why should we only be concerned with the subsidy given to social housing tenants?
If you really are going to kick people out of social housing, the fiscally and economically rational thing to do is not to sell off the properties, but to rent them out at market rates!
It;d be better for the UK, to give the Properties away for-free to the Tenants
It;d be better for the UK, to give the Properties away for-free to the Tenants
Ive been given to understand that when a Local Authority undertakes to directly build New-Houses themselves, the build-costs are always around 3 X times more than what it costs a Private developer
I’m not sure who your question is directed at, Miff, but I have made the claim that taxpayers are subsidising homeowners so I will try to answer it.
The article claims that “a state asset rented out below its market rate is logically an asset given with a subsidy”. The land mass of the United Kingdom is a state asset. The state rents out that land at below the market rate. If you own your own home, the only rent you have to pay to the state is council tax.
Yes, it seems unfair that people should get the advantages of living in central London without paying the full costs of living in central London. The answer to this is a national property tax or Land Value Tax. Such a tax would substantially increase the cost of living in central London, forcing economically inactive or underactive social housing tenants to move out and make way for more economically productive people. The revenue the government gets from such a tax could then be used to decrease income tax or national insurance or VAT. But the article does not advocate this simple solution. Instead, it advocates selling off social housing altogether! Selling off social housing doesn’t eliminate the “implied subsidy” that the article complains about, it just means that that subsidy will go to private landlords, owner occupiers and mortgage lenders instead of social housing tenants.
Can you please provide evidence to support your claim that the tax payers is subsidising homeowners please?
This article is very detailed with its figures and I would love to see the methodology, or even clear cut tables comparing like with like. However, it's a fact that rents are more expensive in city centres than most rural or suburban areas for like for like properties. It's crazy to be subsidising rents for recent arrivals in city centres. Whether those subsidies are in housing benefit, hotel accommodation or social housing. The tax payer should not be funding recent arrivals accommodationat all, but definitely not funding them in expensive city centres, when the people who work there can't afford to rent or buy.
If there was a "reckoning"in the south east's rental property market where would the current batch of tenants end up living?In towns that are currently majority white that's the where ,using a windfall tax and subsidy combination I'd wager.
>it is only the most recent arrivals who receive lower subsidies per working age person than those born here, reflecting that there are still some effects of NRPF conditions in limiting access to social housing.
This is a bit of a hand-wave really - 'only the most recent arrivals'.
Since 2010 according to the data presented above is not merely 'only the most recent arrivals'.
That's 15 years of policy. If social housing is indeed sticky, ignoring 15 years of recent policy in favor of policies nearly two decades ago seems strange.
And surely having half the subsidy per working age person despite being disproportionately based in London is also something that needs to be taken into account?
And the argument about not paying market rent being a subsidy strikes a little hollow. Everyone who doesn't pay market rent is theory getting a subsidy - someone paying a mortgage is getting a subsidy as most mortgages tend to be lower than market rent.
In addition, there is a methodology in this data that I'd be curious to hear more about. The article talks about the household head being foreign-born - is that the same as a foreign household?!
For example, if a wife was born in the UK and the husband is foreign-born but they claim social housing as the wife is a citizen, would they count as a foreign-household in this data that this article is presenting or as a native household?
This would surely over-estimate costs if you're assigning all of those costs to the 'foreign' head as opposed to the spouse/partner who is not foreign-born? If this is the case, one would expect any reasonable piece to separate out this or account for this?
Some good questions from Ro re methodology, however comparing people who pay mortgages ( where the tax payer contributes nothing) with social housing where the tax payer either contributes with benefits and or subsidised rent is not a fair comparison. We have housing associations and council housing here,,but we also have PRS houses rented out to large rental companies like Serco, who are now housing those on local authority social housing waiting lists. We also have landlords who are renting directly to those arriving in the country. Its a very complicated situation, good effort to Pimlico for attempting to get a grip on this fast moving picture!
>however comparing people who pay mortgages ( where the tax payer contributes nothing)
The government forces banks to lend out instead of becoming rentiers themselves. Banks can't hold REITs on their balance sheet and call it a day. Government is thereby forgoing extra tax income from riskier banking activities in order to promote the social benefit of homeownership. If renting at lower than market rents is a subsidy, there's easily an argument to be made that mortgages are being subsidized by the government.
I've got to say, it's a wildly misleading piece because it literally shows the opposite of what the article is claiming. The data for the past 15 years completely contradicts what they're saying.