agreed Allison not all housing benefit tenants are bad tenants, buts what wrong with the system is not whether they are bad tenants or not, it’s about the abuse that is culturally created between the housing benefit claiming class and the speculative buy to let landlord set, between them they are screwing over all the taxpayers who can’t afford homes.
1 housing benefit is a direct transfer of wealth by taxation from people who may not be able to afford a home but pay taxes, to people who use property as a capital growth investment or income stream rather than working, and can’t actually afford to directly pay the mortgages themselves from their own finances, without the taxpayer or other non home owning private renter paying the mortgage of this speculative investment for them. And better than private tenants, council tenant’s means the council will pay for the upkeep of your property for you ? win win ?
2 enclosing more of the available property up into the buy to let market, into fewer wealthy people’s hands pushes the price of property further away from those wishing to get on the ladder, so not only are those who pay taxes but can’t afford a home subsidising those wealthy who own many homes which they rent as an investment, they are also inadvertently by that aid helping to increase the value of those homes the landlords let to the council at the taxpayers expense making them wealthier still and able to afford more buy to let mortgages, as the inevitable increases due to limited supply and extreme demand occur, like a ratchet buy to let landlords have been better positioned to swallow up a higher proportion of the available homes in the country away from those not yet on the property ladder but paying taxes.
3 Being that the council pays housing benefit on the basis of property values in a given area, and they have a european based obligation to house people in the areas they claim, with little regard to the expense in the area or the cost to the taxpayer this system has also increased council tax most in the areas where more people claim benefits making private poorer owners heavier burdened than areas in which a higher proportion of house ownership exist, usually wealthier areas and wealthier people who also proportionally have an ability to afford more council tax, the council has enabled landlords to charge near the maximum potential, because they already know the cap up to which, the council is prepared to pay, thereby defeating the idea of the free market, creating further heat in the buy to let market as the maximum rewards are known in advance of a buy to let property purchase for speculative gain, and the length of council house waiting lists are so large and demand so high, and it is also known that a tenant who can find a private landlord below the cap willing to rent to them can effectively force the council to enable them to live in that property at the maximum of the cap ? effectively a rent guarantee which prevents the rental price from floating in a free market.
4 The selling of council houses at discount by Thatcher, generous and well-intentioned though it was, created an unforseen increase in the quantity of people perceiving renting and being a landlord and renting property, as the ultimate way to attain money in life, secondarily debilitating and diminishing the belief in reward through working at a job, because through property the rewards were much greater, and the increased diminishment of council owned housing stock has exacerbated this situation even further.
All these things served to create an upward ratchet like increase in property values over the last 30 years.
This process artificially diminishes the supply of available quality homes for poor and first time buyers to live in as homes, as speculative rental investment landlords who have more monetary resource and potential and ready access to the mortgage system to buy said available homes at a higher price, than the first time buyer can afford ? this serves to leverage the market further out of reach of those who do not own homes. In this country you could have not have created a more perfect storm heated version of a real life monopoly games than this through the confluence of the following circumstances ?
1: a guaranteed rental market created by a never-ending social housing list 5 million and growing
2: a european directed council obligation to house people relatively regardless of cost, even without citizenship if claiming asylum, no matter what … in whichever area they wish to live.
3: a council backed rental potential that can be used to sell buy to let mortgages, which is a known value based on and relative to yet even better also tracking in sync with property values in a given area.
4: banks who had nothing to gain from increasing requirements on borrowers, due to that limiting their potential lend and charge interest, hence 100% mortgages occurring, greedily perceiving the property market as having more growth potential than standard stocks and shares.
5: The bank of england … bouyed by the banks growth inadvertently creating a further economic bubble by creating a lending boom by holding bank of england base rates at artificially and unrealistically low levels 0.5% etc because of the perceived economic property based boom they themselves were helping to create.
6: Hiding the true inflationary cost of existence by not including the most expensive item in the basket … “a roof over your head” ? yet at the same time positively encouraging the culture of home ownership.
7: This hidden inflation devaluing savings and investment of most kinds, leaving property as the only perceivably worth while investment to be made ?
8: Rental income perceived as a cleaner faster way to make money, than create genuine economically tangible valuable stable industrial activity through entrepreneurialism with potential for export.
9: The property boom fuelled an influx of border migrating wealthy Europeans to get in on the perceivably guaranteed growth potential of the british property market increasing heat further.
10:Open borders economic migrational policy and expansion in foreign student based higher education due to academical institutional monetary greed, also created further heat in the rental market, further hardening the buy to let market
11:The value of the council maintaining private landlords property’s for them who rented to council tenants, further hardened the value proposition for buy to let landlords
No correction in house prices will occur, until :
(A) Inflation has been adjusted to take account of the ignored mega growth of value hidden in property values, that the house owning has secreted away from financial scrutiny and stolen from the rest of the functional economy.
(B) Interest rates will due to this inflational correction (A) , need to be set at realistic levels in line with where banks are currently placing their interest rate levels to consumers (up to 30% on credit cards) whilst ? simultaneously receiving free credit from the bank of england at 0.5%!), so as to steal back value from the saver being offered 0.5% interest on savings, to cover their own profligate asses from the loss they created by running so fiscally and devastatingly and imprudently for so long whilst driving various institutions into the ground and thirdly over this entire period shovelling money out of the backdoor into their own private wealth buckets through bonuses culture, whilst lying about their own effective performance during this bubble creation.
(C) all property ratchet drivers 1-11 will need to be examined to detach their influence on the market so that true value can be assessed ( unlikely to occur to much vested interest )
(D) best multiple strike solution on this problem :
• financial penalties on multiple property ownership for those who have not paid off a certain proportion of their mortgages
• no solid council rent maximums the rent cap 25% below market value
• no free maintenance of private rental property by the council
• no guarantee to be housed in a specific area
• capped maximum benefits per annum at least 25% below average annual wage at maximum
• rigorous and proper checks on the ability of potential borrowers to pay off a mortgage
• no interest only mortgages
• no buy to let mortgages for people who do not have the income to pay for them
• ban 100% mortgages have minimum deposit values
• cap all immigration
• limit asylum seekers access to free housing
• increasing financial penalty for multiple home ownership per extra unrented home, non linearly increasing in cost beyond two homes.
• make bank of england base interest, inter bank lending rate track offset below overage bank consumer credit interest rates, thereby limiting profiteering of savers backs. reduce this disparity
This has also created a system where the aged home owning disenfranchise the young none home owning, and those people whose parents own homes and who will act as the bank of mum and dad, have much greater chance of entering the property market thereby creating and further entrenching system of limited mobility property wise, which disenfranchises and further divides our culture so that a few already wealthy, and not necessarily a very productive set, may flourish further with less actual entrepreneurial labour within out culture and pass the benefits of the stability of a family home down to their children.