5 comments on “There’s No Such Thing as a Free House

  1. I suspect you’re overlooking something. The cost of a house can be broken down into three elements:
    (i) The cost of the land
    (ii) The cost of having the house built (Bricks and mortar, plus labour, etc)
    (iii) The cost of planning permission.

    The private landlord may get a better deal on items (i) and (ii), although I doubt that he’d do much better if the council were at all competent (Oh well, never mind then), but item (iii) is effectively free to the council and is a big cost to the private landlord. I’d be very surprised if that didn’t tilt the balance in favour of the council. Add in the fact that the landlord wants to make profit and that the council pays less for debt and I think council building should be a considerable amount cheaper.

    “With the system as it now is, with private landlords creaming the housing benefit system, Mark is probably right that it would be cheaper to build council houses. But if the system were changed to remove that abuse, that difference could well be overcome. In fact, I strongly suspect the private option might be cheaper.”

    I’m not sure it can really be counted as abuse. The government says “We think it’s worth paying up to £xxx for a 2 bedroom house, per month” and the landlord takes them at their word. It is monumentally stupid to set £xxx at a rate that’s higher than market rates, but it’s currently working as intended so far as I can see. I think they should pay far less, and they’re making a start, but the rates now are still way way too high. With a household income of over £40k before tax, my wife and I are currently paying £550 a month rent. It’s true that we’d like to get a slightly bigger place, but we’d still be looking at a rent of under £1,000 a month – and that would get us a nice big 2 bedroom house with a fast link to both of our places of work. My wife works in central london and I work in Croydon, so it’s not like we’re out in the sticks.

    • “Item (iii) is effectively free to the council and is a big cost to the private landlord” – only because the council (i.e. the State) imposes those costs.

      I wasn’t trying to prove which is cheaper one way or the other. I was just trying to point out that providing council housing is NOT free to the taxpayer.

      • I concur, which is why I’d really like to see an analysis of who gets housing benefit at present, and the reasoning behind it. I reckon we could save a fair bit if we made it so that it was a safety net, rather than a hammock…

  2. It just goes to show that however lovingly I explain things, there will always be people who put Home-Owner-Ist Tory dogma over the interests of the taxpayer*, or indeed above the interests of low income people and/or people who don’t want to join the housing pyramid scheme.

    In any event, you haven’t answered the simple question at mine – what should Mr A do?

    Z makes excellent further points, especially cost item iii).

    * It may surprise you to learn that I am a taxpayer.

    • Fine. I’ll answer it (again) in a mo.

      It doesn’t surprise me at all to learn that you’re a taxpayer!

      This is not home-owner-ist dogma anyway. Whether social housing should be provided by the State or contracted out to private providers has nothing to do with “home-owner-ism”, LVT, or deliberate government creation of house price inflation.

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