Should affordable housing be affordable?
22/08/2011 11:27 pm
And what is affordable when it is at home?
I got a letter through today, rents shall rise above inflation. I'm going to take a £5 hit (I'm on minimum wage). Currently working 40 hours leads me to being £40 better off than dole. So I'm going to end up with £35 NET better off for working 40 hours, but bus fares are up £3 a weeek, so I'm down to £32 for 40 hours, and I can't do no overtime.
I'm becoming disillusioned by the system, I do like working, but there is no monetary reward. I actually felt better in myself when unemployed. I had time to see friends and family, cooking my own food was cheaper than having to eat at work. I had time to go walking and read books. I could still volunteer, but would be rightfully classed as unemployed, I get dole wages.
Think I might have to jack in my job and go back onto the dole, I can't afford to live, all my money goes on rent, and the housing benefit would pay it anyway.
And I'm the lucky one, I have security of tenure, most of my friends do not, the same low paid job and expensive housing, shared houses, shared rooms, the obligatory mattres behind the settee.
What is affordable?
Please enlighten me!
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23/08/2011 10:32 am
If the minimum wage is an acceptable income, and by definition the lowest someone may be paid; and is 40% is seen as a reasonable amount of income to spend on housing costs and still be able to afford to live, then affordable rents should be 40% of the minimum wage - maximum.
The supply of such properties at such rents must equal to numbers of people having to live on the minimum wage as a minimum, so that everyone can afford a home without benefit dependency.
23/08/2011 3:30 pm
Its worthwhile stating what the National Minimum Wage (NMW) is. The following is from direct.gov.uk
"Current NMW rates
There are different levels of NMW, depending on your age and whether you are an apprentice. The current rates are:
- £5.93 - the main rate for workers aged 21 and over
- £4.92 - the 18-20 rate
- £3.64 - the 16-17 rate for workers above school leaving age but under 18
- £2.50 - the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship
The age at which you become entitled to the main rate was reduced from 22 to 21 on 1 October 2010. The apprentice rate was introduced on the same date.
So you can be 50 years of age and in the first year of an apprenticeship and the NMW is £2.50 per hour
Hence working 40 hours per week you can get a whopping £100 per week at age 50 which couldnt afford a shared room in the capital and so the percentage of your income paying just rent alone would be 125%
Can anyone tell me where you can get any property for £40 per week rental to equal 40% of the NMW income for an apprentice? Didnt think so!
23/08/2011 3:36 pm
An argument for a wage for the job rather than a wage for the age - ageism is as hideous as any other discrimination, and this situation is yet another fudge given to us by weakling Blair.
Hopefully stronger leadership will correct this and we can all move towards being free of benefit dependency as an outcome from working. Fair pay, affordable rents, civilised society - is that too much to ask for?
23/08/2011 4:06 pm
Stick out the job.Become great at it and then use the experiance to get a better job/ promotion. You won't be on minimum wage forever, you just have to earn a better place.
Or you could jack it and be on benefits for the rest of your life, or until the Government decide to hit people harder and reduce the benefits. Better to earn your way in life I say.
23/08/2011 7:08 pm
I'm on a temporary contract, got until January till it ends, it will not be renewed. Once the work is done, the work is done. I'm looking for other jobs, and weekend and evening work, but its hard out there at the minute.
I'm not the only person on minimum wage, so even if I can better myself, what about everyone else? Surely affordable housing is supposed to be affordable for all, not just the rich? Hence the 'affordable'.
For the record I'm 24, I get £5.93/hour, but am ineligible for working tax credits due to being under the age of 25, unfortunately I cannot change my DOB.
23/08/2011 8:09 pm
SHAPPS! - CAMERON! can you hear this youth?
They have got off of their backside and looked to improve their position. They have accepted poverty pay, but all they get is your derision. Instead of the hand up they get the bums' rush. Instead of praise they get, stigmatised, greater exclusion and cuts.
CLEGG! - HUGHES! this youth was who you promised to help.
Where is that promise now when all you are saying is 'sod off sonny - no cash for you, lower wages beckon and no housing either, not till you are 35, and even then only if you can afford 80%MR - you only have yourself to blame for being poor.
Where is your shame Coalition - this youth was our future. Where is the reward for self improvement when all that is gained is taken away.
Broken glass, charred wood, blood and grime - all on your hands dear Leaders. What did Cameron pronounce about Leaders who turn on their own people - killing them slowly is still death!
23/08/2011 8:11 pm
Formerly Homeless Youth - I salute you!
23/08/2011 9:22 pm
Listen to Housing Manager - their advice is sound.
Benefits may seem a convenient alternative to work (you get to stay where you are living with the rent paid for you, with little hit on your disposable income but lots more free time) - but remember and respect where that money comes from - say no to it unless there is no other choice.
It will always be better for your self-esteem in the long run if you are doing something productive, than being a bum. Best of luck and I hope you find something when your contract runs out, and I hope your career takes off.
23/08/2011 10:11 pm
I'm a youth worker in a supported housing project and I hear this night in, night out from young people who come back from work shattered and dirty. They then have to listen to me nagging them about their rent money whilst those around them who are 'NEET' or on disability benefits enjoy kebabs and a few beers.
I will say to you what others have said on here, and what I say to the young people I work with: It sucks. It sucks that the minimum wage is set at so low a level that the government have to give people some of their tax back in tax credits. It sucks that as a young person you don't get them.
However, there is a choice to be made: sure, you can doss about on the dole for a few weeks, then perhaps a few months, leave it for more than that and you'd be skint and bored silly, leave it for a year you'll be skint, depressed, the telly will have broken and you can't afford a new one. Employers will hesitate to take you on. Leave it two years and you'll find it hard to get an interview. Leave it 5 years and your CV will go in the bin.
Suffer now for the chance of better things later, or accept a lifetime of earning £65 a week with no prospects.
It sucks but its life!
23/08/2011 10:47 pm
But Housing Manager, some people are on the minimum wage forever, or in and out of minimum wage work forever. Some people have to work two jobs, over a seven days working week, to pay the rent and barely support their children. I got trapped in low waged jobs because I had no education or training after school, having married and had children too young. When my husband left and refused to work full-time to help support his children, I had to work and look after the children but could not earn enough to pay rent and childcare costs. I tried to also study, to raise my earning power, but after a year on three hours sleep a night my health collapsed. So my advice is while you have no children, acquire more skills or education. Or both. And as for affordable housing? It is certainly not 80% of market rents of similar properties in the area. HAs I think can charge up to this percentage, but how many will charge, say, 50% of market rent? Not many I bet.
23/08/2011 10:52 pm
Actually going by Chris's estimation, which sounds very fair and reasonable to me, where I live an affordable rent for someone on the minimum wage would be just a little less than the social housing rent. But then the minimum wage is not enough to live on where I live in London.
24/08/2011 8:55 am
It might sound reasonable but unfortunately the proposal to cap rents at 40% of the minimum wage belongs in fantasy land.
There are very few providers that could afford to supply on these terms. It would lead to a collapse in the supply of homes for rent.
24/08/2011 9:15 am
Surely that would depend on the value of the Minimum Wage Jono - indeed, if such an essential 'product' is not so linked then there will always be an excessive demand that will not be met, making all of us the poorer; first from having higher housing costs than we could have; second from having to support the excessive housing costs of those to lowly paid.
If you collapse in the supply of homes to rent actually happened, what would you propose is done with all the empty houses that would result - how about renting them out at 40% minimum wage? Or do you expect the landlords to demolish them out of spite!
24/08/2011 9:50 am
Jono its not fantasy land if you look at the national figures you will see that many can provide at 40% of the current NMW and do so.
£5.93 x 40 hours is £237 pw and 40% of this is £94.88.
Nationally the average HB in-payment figure for social housing is just over £79pw. Hence 40% of NMW is the current national social housing in-payment figure plus 20%. and is therefore both affordable and leaves plenty of scope
24/08/2011 1:13 pm
From a non-housing prospect I would keep at it, there is more chance of your current position improving over the coming years than jacking it in.
Imagine your next interview "So why did you leave your last job?" You "I was better off on the dole".....doesn't look good does it? And that's assuming you can find a job to get interviewd for.
No one ever improved their life chances by opting not to work.
24/08/2011 1:20 pm
Joe - you may have overlooked tax. Someone on minimum wage will pay the rent out of their net income, not their gross income. Your figure of £95 is actually 46% of net income - 40% is around £83 pw. In social housing that will afford up to the average 2 bed, but will not stretch to average rent of three beds plus. So are you going to set the rents for all sizes of properties at the same rent? That sounds a bit disastrous to me.
What about the private sector - if they let to claimants should PSL rents be limited to what is considered affordable under the proposal? Chris has separately called for caps on private sector rents - so I suspect he would. Say goodbye to supply if ever such an absurd proposal was given serious thought.
24/08/2011 1:32 pm
Chris - it is unclear if you are suggesting minimum wages should be linked to rents.
Lets look at this in London, where the average market rent is probably around the £1,000 per month mark. This would mean a net income of £2,500 per month. In terms of gross income, this would mean a minimum wage in London of £14.38 per hour - or £40.5k per annum.
Please introduce this policy Chris, and see how much social movement and unemployment it causes.
24/08/2011 1:38 pm
Actually Jono you forgot the tax allowance that we are all entitled to, no matter how poor, so the figure is 43% and £87pw respectively.
You ask what about the private sector? - What about the private sector Jono - must they be further subsidised and feathered to sustain their private business or left to follow market forces and adapt their business accordingly.
Again - if they cease to trade, what would you do with all the empty homes Jono - they would be available to be bought back into use as social lets of course, especially if their owners abandon them.
What is your logic that larger properties would incur the same rents Jono - that is not the case now, nor would it be if 40%MW was the rental charge - more space infers more people which infers more earning capacity and so higher affordability - just as now Jono.
So, not so absurd as you would wish.
24/08/2011 2:29 pm
Jono - true - but your post said simply that setting rents at 40% of NMW was not practical and not 40% of net income after tax. Both yours and Chris's point also fail to include working tax credit which the poster mentioned which is not available to him but is if over 25. So any suggestion along those lines - not that Im advocating it - would need to highlight this blatant age discrimination which is one the issues that comes out of this post.
Its time age discrimination in the benefit system was looked at and eliminated and obvious other examples include the single room rent for the under 25s and soon to be under 35s. That is age discrimination as its rationale was this reflects norms in society and this means its not ok for a person older than 35 to have to share but is for someon under 35. Why? That is a preposterous basis and is de facto age discrimination (and not forrgeting that until recently most sheltered housing was bedsits!)
The NMW has always been a maximum national wage for young people - If NMW is £5.93 per hour why should I pay more is the employer attitude. That is superficiality writ large - surely the worth of a job is not the same for every job? Yet that is what the NMW does: It sets a maximum wage based on age grounds and however unwittingly is age discrimination and a failed policy.
The consequence of this failed policy is here for all to see in this young persons case and it reveals the reality of the dependency trap that is never addressed - that working needs to be an incentive as well as benefit being a disincentive and these are not the same thing. Politicians bang a big drum about the latter and do nothing about the former and as they cant lower benefit levels any more they need to look at ways to make work pay (in a less sinister and acceptable way than IDS's soundbites.)
Some form of tapering off HB payments for example over a 12 month period? Even if they still pay 100% HB the cost is reduced due to the tax take - or maybe they should do this for just the under 35s? Now theres a thought - If we are going to have age discrimination being acceptable then perhaps we need some positive discrimiantion to give young people a hand up for a change?