Well it seems they got away with it....

[????]

It will stop....imminently

[Mick Mac]

You said that 4 years ago.

[????]

I said that 2 years ago before we had billions of QE and interest rates at didley squat...that's a temporary plaster....there isn't anyone left with any money who hasn't already bought a place apart from the very wise. There's no movement, real incomes will fall for 5 years or so, there's going to be an increase in unemployment and the banks have no money....go figure. We are going to be a poorer country going forward as the rest of the world starts to come up against the west or unless we find something new, so inflation or a Japanese situation...it's still an assett buble that's also what's happened to the stockmarket although that's now seeing it as it is a bit more.In real terms prices will fall.

[Jeremy]

DJKillaQueen Wrote:

-------------------------------------------------------

> capping rents in the private sector would

> be a better option for reducing the HB bill.

This would result in properties in desirable areas being owner-occupied, while those in less desirable areas would be rented. It wouldn't really be a step forward.

[Mick Mac]

???? Wrote:

-------------------------------------------------------

> I said that 2 years ago before we had billions of

> QE and interest rates at didley squat...that's a

> temporary plaster....there isn't anyone left with

> any money who hasn't already bought a place apart

> from the very wise. There's no movement, real

> incomes will fall for 5 years or so, there's going

> to be an increase in unemployment and the banks

> have no money....go figure. We are going to be a

> poorer country going forward as the rest of the

> world starts to come up against the west or unless

> we find something new, so inflation or a Japanese

> situation...it's still an assett buble that's also

> what's happened to the stockmarket although that's

> now seeing it as it is a bit more.In real terms

> prices will fall.

Thta all sounds very sensible and can't say I disagree with any aspect of that. But the property market has proven to be extremely robust and as the FTSE has not been a profitable place for money for 10 years, it seems to be that people are investing huge sums in their family home rather than risking it elsewhere. A shortage of supply of the right homes remains. East Dulwich remains significantly less expensive than Clapham/Wimbledon etc. I still think ED property is a good bet.

[frierntastic]

The country appears to have gone crazy if we believe that paying HB of up to ?1000 a week is necessary - welfare should be a safety net, not a way of life or a path to housing that only the richest could afford.

Let's take Jeremy's 80 families with rents of circa ?1000 per week. Thats ?80,000 per week total or ?4MILLION pa!!!! on 80 families! That is about the operating budget of a small to medium size secondary school.

No-one wants "poor ghettos", but it is just not right that the vast majority of working families would be unable to afford the housing offered to recipients. I could not afford a rent of ?400 per week - I have two jobs (totalling about 50 hours a week) and my wife works full-time also.

DJKQs comparison of HB to average rents in particular areas is misguided - there are (obviously) many working families who rent properties for less than the average market value - are you really saying that those on HB should be provided with better accommodation than many working families?

We need to keep the reasoning for welfare clear - assisting those in society who, through no fault of their own, need financial help. It should protect people, not propel them to Pimlico.

[????]

don't be so beastly with your economic reality

[katie1997]

...and there was me thinking they've managed to do that perfectly well all by themselves.

In answer to the original (good) question, I agree with Hal's interpretation on the first post of this thread.

[DJKillaQueen]

Mick Mac Wrote:

-------------------------------------------------------

But the property

> market has proven to be extremely robust and as

> the FTSE has not been a profitable place for money

> for 10 years,

But it has been artificially kept so and not exposed to the same market factors that other investments are. No other investment has seen anything like that level of sustained growth. But it can't go on.

DJKQs comparison of HB to average rents in particular areas is misguided - there are (obviously) many working families who rent properties for less than the average market value - are you really saying that those on HB should be provided with better accommodation than many working families?

We can not have a country where one third of the workforce can't afford to pay all of their rent and where generations of people have no hope of ever buying property. This a nationwide problem. And no, most people are not in housing with rents anywhere near ?1000 per week. It's a red herring. The massive HB bill is due to other overwhelmig factors. Excessively high rents are only a drop in the ocean.

The average private sector rent in all areas of the country is too high for 33% of those working and the cost to the country is over 20bn in Housing Benefit every year - a bill that is set to rise when half a million public sector workers lose their jobs. That's how big the gap between property values and wages is. That's what it means in REAL terms. Not misguided at all.... Even the smallest family home costs more than ?100 a week to rent in the private sector EVERYWHERE in the country.

If you are on minumum wage or earning less that ?7 an hour as 33% of the workforce are you will need taxpayers money to top up your rent...(the majority of recipients of HB... ARE WORKING)....the taxpayers ARE paying the mortgages of some landlords. And why does no government want to do something about this? Because they are sh*t scared of the housing market falling in marked value. It is so out of control and too many people are too heavily sucked into it. It will take decades of regulation aimed at slowing the market to let wages catch up.

[DaveR]

"The average private sector rent in all areas of the country is too high for 33% of those working"

Still no reference for that stat, I notice. Have you read 'Bad Science'? I'd recommend it.

On another thread (here) I posted a link to some real stats about the affordability of rented property, which you (DJKQ) rubbished on the basis that the authors had (quite properly) put in caveats about the difficulties of obtaining accurate and timely data. But at least they had some data. At the moment all you have is polemic. Are you surprised that some sensible people don't buy it?

[DJKillaQueen]

Er no Dave i gave the reference for that in another thread. It is not plucked out of thin air it comes from the department for national statistics and is backed up by a report in 2009 on the labourforce market. It is further backed up by several studies into poverty in the UK by various bodies, both independent and government funded.

I'll get the links for you again and then maybe you can tell me if you really think that is some thing should be allowed to continue.

[Jeremy]

"The average private sector rent in all areas of the country is too high for 33% of those working"

This is rather a pointless statistic. The cheaper-than-average properties have to be inhabited by someone - presumably by those people on lower salaries. Or should all property be the same price?

[frierntastic]

DJKQ's obsession with average rent is misguided, unhelpful and completely misses the point. The point of HB (and other benefits) is not to bring people up to an average standard of living!

I'd take DaveR's point a bit further; even if average private sector rent is too high for 33% of those working, it is still not a useful measure to assess who needs HB. There will always be some people who cannot afford the average, and some who can. This kind of relative measure is really unhelpful - we should be looking at what proportion of families can afford to live at a safe, healthy, adequate level - the state should assist people that fall below this line, not an average.

There is no way on earth I could afford the average rent in Dulwich. But I can certainly afford rent of a place adequate for my family's needs - and that is what matters.

[Brendan]

If housing in a country is so prohibitively expensive that vast swathes of the population have to rely on government money to afford it is it in anyway justifiable that the government money should be paying for private rents?

[DJKillaQueen]

The point is that low wages mean tax payers have to give HB to a third of the workforce...what is so difficult to understand about that? I do not want my taxes paying the mortgages of landlords. A working person should be able to find a rent they can afford to pay in full. A third of them can't.

Plenty of info on low pay (being less than ?7 per hour) and the numbers involved

Here

Good overall article

Here

Just a case example here, my cousin works full time for ?13000 a year (in the public sector). She has three children and no husband. Her rent (and this is in a working class area of Liverpool) for a 3 bedroomed property is ?450 per month and that's the bottom end but you'll get something ok for that. After tax and deductions she is left with around ?750 a month (around ?180 a week). She can not makes ends meet without the housing benefit and child tax credits she gets. She is very typical of many people in work and recieving Housing Benefit.

There is a very clear debate to be had I think about that. The article above touches on the point that some employers can get away with low wages because they know that benefits will cover the shortfalls, but we all want cheap food and goods and that means low wages. On property, the only people that don't see anything wrong with any of this are those doing very nicely renting out properties. I don't pretend to have all the answers, part of the problem is that we don't want to throw those invested in it into negative equity and financial ruin (I would suggest outlawing Part Buy Part Rent as a starting point). But at the same time, long term we have to find some way of slowing the market so that salaries at the lower end can begin to catch up. That is the only real way to cut the HB bill.

[Jeremy]

That makes more sense than your original statement (that one third of working people couldn't afford the average rent).

I think most of us realise that the cost of housing vs the average income is a problem.

[Loz]

Musing out loud: Could HB be actually raising the average rent, thus clawing more people into needing it and creating a never ending cycle? Rents, almost by definition, can only be at a level where people can pay them. Does HB give that ability an artificial boost?

Would therefore lowering/capping HB actually cause a drop in rents (causing, admittedly a few landlords to go bust)?

[DJKillaQueen]

Jeremy Wrote:

-------------------------------------------------------

> I think most of us realise that the cost of

> housing vs the average income is a problem.

Exactly but why are none of the main political parties addressing this? They seem determined to let the private housing market go on as it has done. It just leaves me speechless. I suspect some of it has to do with the looming pensions crisis and because for some, property investment IS their pension (have no idea what the figures on that are though).

On jobs and wages we have another problem. We are essentially subsidisng jobs. Of course it's better to do that then have even higher unemployment but again given that we know that getting the umemployment figures down requires investment not only in the unemployed themselves but also in job creation, it's hard to see how any real savings are going to be made over the next five years in welfare. If anything the bill will have to rise. And I think Duncan Smith knows that, but he also knows that he's going to have a fight on his hands with the treasury.

He's going to have to do better than suggesting people move. In Sheffield for example, there are 8 unemployed for every available vacancy (unemployment is around 10k which makes the coalitions decision to drop the grant at Sheffield forge that would have created 3000 jobs mystifying). Interestigly in 2000 unemployment stood at 15K but the overall poulation of sheffield since then has contracted by 320K so people do already move (including the unemployed). Figures sourced from Here

One other point worth making too is that it's widely accepted that the majority of the 1.3 million jobs created under labour were public sector jobs and no surprise many of them will go as they are the easiest thing to cut. Cameron's plan for recovery is that the private sector will magically create the new jobs needed. If under 13 years of economic boom the private sector didn't create sunstantial numbers of jobs how on earth is that going to happen in a period of economic low and recession? It's so niaive.

[Brendan]

Loz Wrote:

-------------------------------------------------------

> Musing out loud: Could HB be actually raising the

> average rent, thus clawing more people into

> needing it and creating a never ending cycle?

> Rents, almost by definition, can only be at a

> level where people can pay them. Does HB give

> that ability an artificial boost?

>

> Would therefore lowering/capping HB actually cause

> a drop in rents (causing, admittedly a few

> landlords to go bust)?

That?s precisely one of the implications I was considering with my earlier question about HB being used to pay private rents.

[DaveR]

DJKQ, mean household income in Liverpool in 2008 was ?28,991. See here

I'm not sure that your cousin is typical. The plural of anecdote is not 'data'.

I'd be grateful if you could post those links again, because I must have missed them last time.

[DJKillaQueen]

Loz Wrote:

-------------------------------------------------------

> Musing out loud: Could HB be actually raising the

> average rent, thus clawing more people into

> needing it and creating a never ending cycle?

> Rents, almost by definition, can only be at a

> level where people can pay them. Does HB give

> that ability an artificial boost?

>

> Would therefore lowering/capping HB actually cause

> a drop in rents (causing, admittedly a few

> landlords to go bust)?

It's a very good question? It would need to be capped much further to have that kind of impact and I suspect the outcome would be back to whole families renting a single room rather than sending Landlords bust (so currently grey areas of legislation on overcrowding would need to be overhualed too). In some European countries rents are capped by the local authority (and any increases also decided by the LA)...so if you are a landlord buying a property they will only pay for it what they can get in rent.

The result is that property becomes a long term investment and there are no shortage of rentable properties either. I think that is probably the way to go on this. Controlling rentable values should help in some part to slow the market. At present we have fair rent committees. But they are only useful in settling rent disputes and advising local benefits agencies on the average rent for properties in any particular area, who then use that info to decide what is the maximum HB they will pay - and yes that means that there was already some form of capping in place on HB before the coalitions announcement.

In reality we currently have a system where the welfare system is at the mercy of the free market. We need to changed that in some way, but not so drastically the we end up with the opposite. It's going to require some careful balancing, but sonmeone in power needs to at least have the balls to start addressing it.

[DJKillaQueen]

Dave I did post a link above.....33% of workers do not earn mean average income...look up to the first link in my posts above.

You know as well as I do the 'mean' figures are only an average. When you break down the labour force and see what percentage of workers are earing in which wage brackets the picture looks very different. There are lots of bodies that have researched the labour market in the uk and they all report the same thind, be it the DWP, office of national stats, and so on.

My cousin is typical. In fact I'd say 33% or workers earning leass than ?7 an hour is extremely typical.

[Brendan]

I remember looking at this a while ago: http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom#Taxable_Income

I?m not going to do the sums now but if I remember correctly from the table even though the mean average income (in 2005) was ?22K more than half the population actually earn under ?20K.

So you average man on the street actually earns less than the average wage.

[DJKillaQueen]

Brenden we've been here with Dave before....he refuses to acknowledge there's any problem with the housing market if I recall earlier on the thread and I can't be bothered going through it all with him again. We'll get nowhere.

And am I right in thinking Dave, you are a buy-to-let investor? I might be wrong but if I recall rightly that you are then of course you are never going to accept any kind of regulation on the return from your investment. It stands to reason.

However the overall issue here is costing the welfare bill far too much to justfiy the continued subsidisation of wages and private landlords mortgages. Property investors can still make money on their investments but it just can't double in a decade like it has previously.

[DJKillaQueen]

Brendan Wrote:

-------------------------------------------------------

> I remember looking at this a while ago:

> http://en.wikipedia.org/wiki/Income_in_the_United_

> Kingdom#Taxable_Income

>

Thank you for that very useful link Brendan...that completely backs up what all the other reports and offices for statistcs are saying. There's also something called the Labour Force Survey and that surveys wages and the Labour market every few months to keep infomation up to date should Dave want to continue to question just how many people are on less than average to low incomes. Similarly the DWP publish spreadsheets of benefits data regularly too including area by area data.