In response to the government's reduction in housing benefits, London councils are trying to move families to other parts of the country where private rents are more affordable. The selling off of council houses and the drastic fall in new social housing supply is part of this. But it's not enough to say the solution is building more council or social housing. That takes time and investment. Moreover, the problem is actually a massively disfunctional private housing market. Remember, it was the housing bubble in America that led to the financial crash. Rising house prices in the UK, combined with the buy to let market, led to a massive transfer of wealth to home owners and landlords over the last 30 years.
Where mortgages used to be difficult to obtain, in the late 90s they become easily available at 100% of house price and no questions asked. The result was a massive housing bubble. However because of migration and growing population in the UK, the housing market has not collapsed as in the US.
It is worth repeating that housing benefit is a subsidy to landlords, not tenants. Tenants do not get to keep the money, landlords do. Rents have been rising at 10% a year during this great recession. Yet somehow, the government and media are not outraged and taking action to stop these rises. Landlords today are like the nobility in the middle ages - no one dare criticise the way they fleece the peasants.
The solution is to re-introduce rent controls, which were abolished by Margaret Thatcher in 1980. Rents should not be allowed to rise higher than inflation nor to more than a reasonable proportion of the median (not average) wage, say 25%, allowing for house size and region. For each extra bedroom, this could be raised by 50%. So to rent in an area with median wages of £20,000 would mean a maximum average rent of £416 per month for a one bedroom house, £624 for 2 bedroom, £832 for three bedroom. Personally, even this sounds too high to me. The system could impose a freeze on all above average rents to gradually bring rents down to these levels. House prices would follow, as market speculation would be sucked out of the system. Tenants would be guaranteed the right to ask for a rent review based on the local rent guidance.
I have been a landlord and it is quite simply the easiest way of making money - with the possible exception of banking. The best way to reduce the cost of housing for the majority of working people is to take the wind out of the housing market through land value tax. It works very well in Germany and other countries. They never had a housing bubble and rents are vastly more affordable. The tax system should be used to divert capital into useful productive activity - diverting capital from landlords to workers will boost spending in the economy by increasing disposable income, and will also force capitalists to invest in productive activity rather than just buying property and sweating tenants.
So a combination of rent control and land value tax, plus investment in new social housing, should cure most of the evils of our exploitative housing market. Put that in your manifesto and you will get elected even if the Daily Mail calls you Stalin.
Where mortgages used to be difficult to obtain, in the late 90s they become easily available at 100% of house price and no questions asked. The result was a massive housing bubble. However because of migration and growing population in the UK, the housing market has not collapsed as in the US.
It is worth repeating that housing benefit is a subsidy to landlords, not tenants. Tenants do not get to keep the money, landlords do. Rents have been rising at 10% a year during this great recession. Yet somehow, the government and media are not outraged and taking action to stop these rises. Landlords today are like the nobility in the middle ages - no one dare criticise the way they fleece the peasants.
The solution is to re-introduce rent controls, which were abolished by Margaret Thatcher in 1980. Rents should not be allowed to rise higher than inflation nor to more than a reasonable proportion of the median (not average) wage, say 25%, allowing for house size and region. For each extra bedroom, this could be raised by 50%. So to rent in an area with median wages of £20,000 would mean a maximum average rent of £416 per month for a one bedroom house, £624 for 2 bedroom, £832 for three bedroom. Personally, even this sounds too high to me. The system could impose a freeze on all above average rents to gradually bring rents down to these levels. House prices would follow, as market speculation would be sucked out of the system. Tenants would be guaranteed the right to ask for a rent review based on the local rent guidance.
I have been a landlord and it is quite simply the easiest way of making money - with the possible exception of banking. The best way to reduce the cost of housing for the majority of working people is to take the wind out of the housing market through land value tax. It works very well in Germany and other countries. They never had a housing bubble and rents are vastly more affordable. The tax system should be used to divert capital into useful productive activity - diverting capital from landlords to workers will boost spending in the economy by increasing disposable income, and will also force capitalists to invest in productive activity rather than just buying property and sweating tenants.
So a combination of rent control and land value tax, plus investment in new social housing, should cure most of the evils of our exploitative housing market. Put that in your manifesto and you will get elected even if the Daily Mail calls you Stalin.
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