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  • Property-a-holics

    Council rents closing in on PRS rents?

    Also interesting to look at the 1980s data showing a big slow down from 1984/85 until 1988 ish which I guess reflects the initial £35k nominal discount cap - which set against rapidly rising prices meant a progressive fall in overall percentage discount.

    I did read somewhere that average discount across all sales was around 50%.

    For NI my guess would be "The Troubles" may have dissuaded people from buying - and having less than 3% of UK pop the numbers would be small. Again low prices in relation to discount cap would have given higher overall percentage discounts.

    EHS  also shows some anomalies in that both SRS/PRS tenants indicate significant plans to buy property - despite in both cases having far lower household incomes than existing owner occupiers.

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    1982/83 were pretty busy with LA sales at 167123 or over 3200 weekly.

    Many people will be unaware of the rapid rent increases for Council tenants in the 1980s onwards - a doubling of rents 1979 to 1983 inclusive and there after on long term average a 6% cagr increase.

    Any tenant in 1983 who had seen rent double in 4 yrs would have been practically forced to use RTB (if they had the means) to avoid ongoing increase in housing costs - noting also that in 1980 only 10% were claiming HB.

    Average rent was £6.40 weekly in 1979 and about 50% higher in SE.

    In Home Counties a 3 bed Council house would have a market value of c.£25k in 1980 with an RTB sale price as little as £10k with full discount.

    Assuming say a 100% Repayment Mortgage at a net 9% interest the mortgage cost would be £19 weekly - about identical to the Council rent in 1983 in SE. Thereafter the mortgage cost was progressively lower than rent - esp if they opted for an IOM

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    @LandyLordy has it about right.

    In addition to the Thatcher stuff, it has recently been Govt policy by both parties to push like-for-like Social Sector rents up faster than inflation.

    eg here is a policy document from 2001 under Blair / Brown establishing a "target" to increase them by General INflation + 0.5%-1% until the rents had met their calculated value (basically creating a market-like model).

    https://assets.publishing.service.gov.uk...chived.pdf

    Section 2.8:

    "each year, the target rent for each property will go up in line with the guideline for its sector2 (LA or RSL). For instance, in 2002/03 the target rent of an LA property will increase by 1% more than the general rate of inflation and the target rent of an RSL property will increase by 1 ⁄2% more than the general rate of inflation. Restructuring is the process by which the actual rent for each property moves from its current level to its target level over the ten-year implementation period."

    Then there were VERY serious increases across the Social Sector during the coalition. Between 2008-1014 by double the rate of inflation. PRS increases were less than inflation as we all know.

    English Housing Survey 2015:

    "In the social rented sector, average rent increased from £71 in 2008-09 to £99 per week in 2014-15, an increase of 39% while average private rents increased from £153 to £179 per week, an increase of 17%"

    https://assets.publishing.service.gov.uk...Report.pdf Section 2.4

    (obvs PRS average distorted by London as per)

    Then in 2015 Mr Osborne established a new policy of limiting social sector rent increases to inflation - 1%, mirroring the Housing Benefit squeeze.

    Plus there has been a general move to 80% rents not social rents, which skew the whole profile.

    >This aspect of renting has never been reported
    >I am sure shelter would like to see the results and the general public too

    Actually it has been reported - just not perhaps where you read (sensible person with a life, you!). Anyone who reads the headline reports of the EHS would be aware, as would anyone reading for example Inside Housing. Here is a piece from the Indy from 2016, you'll probably find simlilar in the Guardian.
    https://www.independent.co.uk/news/uk/ho...47421.html

    I think Shelter do lobby on that; it is just that they and the related media are far more interested in demonisation campaigns against the PRS.

    >I really think the NLA RLA should do some fact finding and report whats going on here
    Should the LL bodies be more combative? Hell, yeah. But they won't, and no one will listen. And the Golden Goose of the PRS which has restored perhaps 3 million homes to Decent Home standard has been killed, anyway.

    ML

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    I have lost count of the number of media comments which imply that only PRS receives any kind of housing benefit

    EHS flags that some 75% in SRS are HB claimants - across the UK that is some 3.2 million HB tenants - with the residue of 1.5 million LHA claimants in PRS.

    SRS in nominal terms gets some £17.27 billion HB pa - on which nil tax is paid.

    In contrast PRS gets c.£9.3 bn pa LHA - but the sector as a whole pays around £8 bn pa in taxes per HMRC making PRS almost cost neutral for taxpayers.

    It is a shame that Inside Housing is now on subscription but last time I looked around 98% of tenancies remained on the lifelong tenancy basis at social rents - but new builds are far more likely to be paying closer to 80% MR on a short fixed term.

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    I’ve tried the tax argument with my mp, the response was that, in the prs the taxes paid are largely personal income tax  resulting from the profits the landlord makes, the srs in his view also makes considerable income tax AND national insurance payments as a result of the salaries that they pay their staff, he did accept that there were additional cgt payments and vat payments made by the prs but that as far as he knew they have not been quantified , nor had the overall tax position of each sector.
    So whilst my gut feeling is that the prs pays more tax overall putting a figure on it is difficult, as is trying to work out the overall subsidy the srs receives at central and local government level, the figures are further skewed by the “social work” the srs effectively carries out over and above its core housing role and which , again my mp, pointed out has a value. 

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    Yes the £8 bn pa PRS tax derives from circa 2 million individual landlords' personal taxes - but SRS itself is far from being one homogeneous entity - with 300 LAs who own social housing directly and over 1100 HAs/RPs.

    Staff costs across SRS could certainly do with some scrutiny - with top paid HA CEO now having base salary of c.£550k pa plus FS pension etc - and dozens of others being paid more than the Prime Minister. Be interesting to know who will be picking up the tab for all those FS pensions.

    SRS has around 4.3 million units and with rents at an overall average of over £5000 pa - that is over £21 billion of rental income which if taxed at even 20% rate would generate over £4 bn pa in tax to offset the £17.27 bn pa HB funded by taxpayers.

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