Joe Halewood's posts
Posted in: Rent increase for 2011/12
Rick - what you were just saying I will comment on:
You said above "
A three bed PRP house is currently around £93 a week (48 week year, semi-detached, small garden at front and darned big one at back). Terraced P[RP house round the corner, small garden at front and back -- AR at £125 (48 weeks), Private rent close to the first property, terraced, no gardens -- £650 every 4 weeks.
£93pw on a 48 week cycle is £85.85 on a 52 week cycle and this is needed for comparison.
The £650 every 4 weeks for the smaller private property is £162.50pw or if its a monthly figure £150.01pw.
So if the private rent is £150.01 pw its 74% more than the social home and all will be paid by LHA which is currently £160.38 in CE (Macc) for a 3 bed property.
If its £162.50pw then its an 87% increase of which nearly all (98.7%) will be covered by LHA
Jono, I fundamentally disagree that HB (and subsidy as you errantly call it) is a significant reason or factor in private landlord rent setting policy.
35% of PSLs accept benefit claimaantss according to Rightmove and Property Week meaning that 65% or the vast majority dont. There are 1.563m PSL tenants claiming LHA and this suggests about 4.5m private tenancies of hich 44840 are regulated tenancies. Hence 99% are free to set rent levels are whatever they choose and I would call that laissez-faire with good reason.
LHA as a national average pays only 69% of the overall rent and also cant be a significant factor in rent level setting as even maximum LHA can hardly be decsribedd as an incentive on that basis to a tenant. In fact there is more eveidence that this statistic is used as a deterrent rather than an incentive by PSLs. The average tenant in receipt of full LHA needs to make up about £51 per week out of their other benefits and how you see that as an incentive I cannot fathom.
As for your grand plan to get rid of HB/LHA wouldnt that mean the 1.56m LHA claimanst who couldnt pay would be evicted by PSLs? You seem to think some benevolent charity would appear out of the ether and find 1.56m homes which they would charge nothing for. Anyone know what Paul Daniels is doing this weekend or would this plan need the grandeur of David Copperfield to pull off such a grand illusion?
Jono, with respect, what you term 'market rent' is not the applicable issue: The "Affordable Rent" Model has an explicit definition and this is 'gross market rent' (GMR). This iss detailed in the Affordable Homes Programme Framework (AHPF) document released by central government
The current GMR on a national basis is £713pcm (and rising weekly) and gives a GMR weekly rent of £164.55.
The national average unregulated private tenancy HB in-payment figure is £113.78 or 69% of GMR
The national average regulated private tenancy HB in-payment figure is £79.45 or 48% of GMR
The national average in-payment for all social housing figure is £76.17 (46% of GMR
The national average HB in payment for council properties is £71.14 (43% of GMR)
The national average HB in-payment figure for housing associations is £80.11pw (49% of GMR)
The above figures from SBHE official HB statistics
These reveal that regulated private tenancies attract less HB income than housing associations. We have to assume that regulated private lets break even or make a small profit as they would be withdrawn from the market. Yes they may well have been bought many years ago and mortgage paid off, but this just shows that private letting is a long-term investment that can provide profit to the owner.
The unregulated private housing rental market (at £113.78) charges the public purse 43% more than the regulated private rental properties at £79.45.
The much vaunted private market that is so much more effcient than the wasteful and poorly managed public sector (or so we are told) is on a short-term gravy train that becomes a long-term one and all at the public purse expense. Extrapolating the statistics reveals that if the vast majority of unregulated PSL tenancies were paid at the same rate as the regulated ones then the public purse would save £2.59 billion pounds each year.
Yet instead due to PSL tenancies attracting benefit rising by 50% over the past couple of years from 1m to over 1.5m the overall HB bill has rocketed (both Labour and now the coalition) have done nothing about this and HB bill now stands at £22.345 billion and rising by £3.8 million per day.
The question of "affordability" is therefore misframed. Its not whether tenants can afford the current or proposed system, its whether UK plc can afford it.
Even the coalitions HB reforms announced in June 2010 expected onlly a "near;y £2bn per year saving" from reforms and already the current bill is £1.87bn higher than they inherited and will be £5.3 billion above their £18 billion target figure when the first HB reforms come into play in January 2012.
UK plc cant afford to not regulate PSLs and the laissez faire free market approach to them that shapps announced in June 2010 (ie non-regulation) sees UK plc paying £3.27bn more per annum to them for mostly inferior properties and inferior service levels than the same number of council properties.
Its not a free market its an unregulated one and those are chalk and cheese and the unregulated private market is on a massive gravy train at the tax payers expense.
Regardless of which political party created it or its conditionss, it needs to change and the current official policy of inaction cannot be sustained.
Posted in: Should affordable housing be affordable?
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?
Posted in: Should affordable housing be affordable?
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
Posted in: Should affordable housing be affordable?
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!
Posted in: Impact of the riots on housing
Tom, may I formally ask you remove this discussion as it is clearly ill-conceived.
It cannot be the case that a discussion entitled "The Impact of the riots on Housing" can have any credibility whatsoever when it is clearly the Impact of Social Housing on Riots.
The oficial line coming out of government - see www.bovineanalsecretions.gov.uk is that social housing is the root cause and chief perpetrator of these riots
Posted in: Impact of the riots on housing
Chris - has the fact escaped your notice that the Metro is a Daily Mail publication?
The DM would of course want to portray such a ridiculous view so it can rail against it and more specifically use this ignorant view (assuming it is real and not just made up) as some form of typical view
Posted in: Council Housing is not subsidised
As there are now more PSL HB claims in payment than council house tenants is the real subsidy (or opportunity cost?) the additional £3.5bn per year the public pays to PSLs for the same properties as council houses?
The £3.5bn per year figiure is calculated by the added cost we pay to PSL claimants over what would be paid if the tenants were in council houses.
Why couldnt the government simply stop the additional cost and build 50000 - 60000 new council homes with this additional cost. After all they are wedded to ownership and not rental and to value for money - or at least that is what they claim. An additional 300000 or so new social houses (and state assets) over the life of every parliamen built rather than pay this profit premium to PSLs.
The impact on welfare benefit payments and on reduced dependency would be highly significant too, as well as the increased tax take from those employed.
While these payments to PSLs may not fit the term 'subsidy' accurately, they do accurately reflect the true opportunity cost of continuing with this nonsensical policy of let the PSLs deliver the supply. This is the real issue that this discussion is aoiding. As has been said council housing is not subsidised and provides a net income to central government - in stark contrast to PSLs which is simply a huge outlay to central government and the public purse - and equivalent to 24m taxpayers paying an additional £128 per year in tax just to pay this difference. That is the true context of this debate yet it is never related that way.
All those apologists for this governments dogma that constantly blame social housing tenants and berate the cost of social housing need to take a step back and look at the facts. 71% of the new Hb claimants since the election are in PSL stock. An additional 318,720 of them since May 2010 (and council house claimants have reduced in that time.)
The trend is alarming for any government irrespective of political persuasion and that trend has accelerated massively since the election. There has been a 26% increase in PSL claimants since the election while council house claimants have decreased. RSL claimants have increased 9% in that time.
If we wish to discuss subsidy in lay terms we need to look at PSL properties and not council housing
Chris, I appreciate the sentiment but the stable door has bolted a few years ago. Support funding is dead in the water thanks to the ringfence removal and by and large local councils only make decisions based on the immediate term.
Yet the blame also has to go to central government too as the original 2002/2003 budget of £1.81bn is now some 9 years on about £1.6bn. If this had kept pace with inflation at just 3% it is some £500,000,000 less this year in real terms.
Successive governments laud invest to save type programmes and SP saves the public purse £2.68 per £1 invested (at the last very conservative estimate) and so diverting preventative support monies into immediate other places is why this huge cost is waiting to happen. Add to this that care costs are significantly higher than (preventative) support costs and in a few years time the public purse cost becomes a massive financial problem.
Throw in the demographic time bomb and a few other known knowns and the deferred cost becomes unamanageable.
Just keeping this argument on financial costs to the public purse (and ignoring the offensive nature of vulnerable people not being supported) still falls on deaf ears. Every taxpayer will need to pay more in the future to see vulnerable people get help (support and/or care) and todays decisions by local government are very costly indeed. Councils such as Cornwall are imposing a 40% reduction while getting a real term increase this year and we begin to see the incompetence of local government decision making.
The same view was put forward by the Audit Commission in its national report on SP in 2006 - that councils are storing up huge increases in future costs by their short-term decision-making yet that too is falling on deaf (and financially incompetent) ears.
IH to their credit have run articles on this and much discussion has been on this site and especially so after the spkweb discussion site was closed. So the deaf ears and financial incompetency has won out - as local government lobbied long and hard for it must be said.
Give us the flexibility and remove the ring fence was their cry and they got it after the all-party select committee agreed with their view. So in summary its central governments lack of political will as well as local government financial incompetence that sees vulnerable people being shafted and leaves a huge public purse bill that is far higher than it need to have been to future generations of taxpayers.