Owning or renting?

A couple of weeks ago I took part in a debate on the housing opportunities for young people hosted by BBC Radio Leicester. The young people there were very aware of the issues of affordability and shortage and, quite naturally, wanted answers from the assembled experts.

Many of the young people prefaced their questions with phrases such as “When I buy…” or “How can I buy…”, and I must admit I didn’t particularly notice this until it was pointed out by one of the panel. From that moment on, however, the discussion was turned into a series of declarations on the virtues of social renting and the evils of owner occupation.

The audience of young people was told in no uncertain terms that they should not expect to buy their own home, but that rather they should live in social housing. They should be demanding that the government builds more rented housing rather than merely thinking about how they can afford to buy.

What struck me was the almost complete disjuncture between the aspirations of young people to own – even in a recession – and the attitude of housing professionals who saw their role as promoting social renting. Indeed, there was a sense of triumphalism from some of the adults in the audience that the housing market was in a state of collapse, and that finally people might stop “deluding” themselves that owning was a better option than social renting.

In normal circumstances one might be tempted just to ignore this view and see it as irrelevant. For the last 30 years academics have been barking on about the evils of owner occupation, and no one had taken any notice. But it struck me that, for the first time in a generation, this critique of owning might actually be listened to.

It is therefore very important for those who believe in the virtues of free markets and property rights to stand up and argue strongly for them and not give free run to those who see state intervention as the answer to our current problems. I found it immensely encouraging that these young people in Leicester assumed that they would buy, but in times like these they need to be told that they are right and not being selfish and unrealistic.

Can one properly assert that buying accommodation outright is somehow ‘better’ than renting it? (Any more than one can say that buying a car outright is ‘better’ than hiring (renting) it when you need a car.)Having said that, why should the government be involved at all in building houses for people to rent? (This is called ’social’ housing for some unknown reason — we don’t talk about ’social’ food). If some people are thought to be ‘too poor’ to be able to afford to rent housing, maybe those people need financial help (although providing it may be a disincentive for them to try to earn it). But subsidising the housing is a bad idea, both in theory and practice.

Just a thought – how many of these assembled experts actually live in social housing themselves?

Woah! Let’s take a step back here – government interference in the housing market is massive. You can’t just look at ’social housing’ let’s not forget the artificially low interest rates to stoke the boom (to create the illusion of wealth); the ridiculous planning restrictions (to win the NIMBY vote); subsidies to mortgage borrowers (paid for by robbing savers) to try and maintain the bubble; the very light taxation of property income and gains (relative to employment income and business income) etc etc. But the bubble has burst, I sold-to-rent in late 2007 and am happy to continue renting until prices bottom out. Any young person thinking of buying really needs his or her head examining.

Mark, you’re right about subsidies to other tenures and my advice to people when they ask me about buying a house is currently ‘Don’t’. But the issue with social housing is that it not just an alternative form of tenure, but a political project based on a particular understanding of housing that is collectivist. Social housing is seen as morally superior to owning because it supposedly demonstrates solidarity. Accordingly many supporters of social housing would also love to place further restrictions on private renting because it represents private interests and the profit motive.

Perhaps the government should first try to stop people subletting their council house at “private rates”. Also called dole-doubling, this is where people are “registered” at a 2nd council house (each half of a couple take a house each claiming they are seperated ) to claim duplicate benefits, yet instead rent out their second council house at normal value.This is costing the government £3BN a year because they have to put people who they cant house into private accomodation…

I have recently discussed this issue with a friend of mine who proposed introduction of quite unusual index: the “gold+housing” – to be invented as similar to MMF (mutual money funds). He argued that gold is rising when the comes turmoil times subsequently causing a fall of real estate, and vice versa. I asked him how would attract money in and what is in it for people: amazing reply is in the point to sell the stock of the “GH” MMF in square footage, and when one will have enough sq. footage, he will have his apartment! Proposed split between gold and real estate was 50-50, with several mlns as start-up (depending on state). Being premature, it saves private ownership in principle.

Finally, going back to issue of ownership, anyone deserves a house, private property as estate, as place to live, to have personal economic freedom from society. There is plenty of land on earth still, which allows anyone to build a house or to have apartment, with wonderful sites still underdeveloped. Rent makes people run for profit, for income, without any protection during illness period. Will any of us, any of critics arguing for renting – want this for themselves? I feel the answer is rather obvious.

The issue David Jones raises about fraud in social housing is an important one. However, this type of behaviour is inevitable in a system that allocates housing for life according to a one-off means test. The remedy for this is not more efficient management – what incentives are there for this? – but to shift towards a subsidy system based on household income rather than housing circumstances, as Professor Myddleton suggests.

Can one properly assert that buying accommodation outright is somehow ‘better’ than renting it? (Any more than one can say that buying a car outright is ‘better’ than hiring (renting) it when you need a car.)Having said that, why should the government be involved at all in building houses for people to rent? (This is called ’social’ housing for some unknown reason — we don’t talk about ’social’ food). If some people are thought to be ‘too poor’ to be able to afford to rent housing, maybe those people need financial help (although providing it may be a disincentive for them to try to earn it). But subsidising the housing is a bad idea, both in theory and practice.

Just a thought – how many of these assembled experts actually live in social housing themselves?

Woah! Let’s take a step back here – government interference in the housing market is massive. You can’t just look at ’social housing’ let’s not forget the artificially low interest rates to stoke the boom (to create the illusion of wealth); the ridiculous planning restrictions (to win the NIMBY vote); subsidies to mortgage borrowers (paid for by robbing savers) to try and maintain the bubble; the very light taxation of property income and gains (relative to employment income and business income) etc etc. But the bubble has burst, I sold-to-rent in late 2007 and am happy to continue renting until prices bottom out. Any young person thinking of buying really needs his or her head examining.

Mark, you’re right about subsidies to other tenures and my advice to people when they ask me about buying a house is currently ‘Don’t’. But the issue with social housing is that it not just an alternative form of tenure, but a political project based on a particular understanding of housing that is collectivist. Social housing is seen as morally superior to owning because it supposedly demonstrates solidarity. Accordingly many supporters of social housing would also love to place further restrictions on private renting because it represents private interests and the profit motive.

Perhaps the government should first try to stop people subletting their council house at “private rates”. Also called dole-doubling, this is where people are “registered” at a 2nd council house (each half of a couple take a house each claiming they are seperated ) to claim duplicate benefits, yet instead rent out their second council house at normal value.This is costing the government £3BN a year because they have to put people who they cant house into private accomodation…

I have recently discussed this issue with a friend of mine who proposed introduction of quite unusual index: the “gold+housing” – to be invented as similar to MMF (mutual money funds). He argued that gold is rising when the comes turmoil times subsequently causing a fall of real estate, and vice versa. I asked him how would attract money in and what is in it for people: amazing reply is in the point to sell the stock of the “GH” MMF in square footage, and when one will have enough sq. footage, he will have his apartment! Proposed split between gold and real estate was 50-50, with several mlns as start-up (depending on state). Being premature, it saves private ownership in principle.

Finally, going back to issue of ownership, anyone deserves a house, private property as estate, as place to live, to have personal economic freedom from society. There is plenty of land on earth still, which allows anyone to build a house or to have apartment, with wonderful sites still underdeveloped. Rent makes people run for profit, for income, without any protection during illness period. Will any of us, any of critics arguing for renting – want this for themselves? I feel the answer is rather obvious.

The issue David Jones raises about fraud in social housing is an important one. However, this type of behaviour is inevitable in a system that allocates housing for life according to a one-off means test. The remedy for this is not more efficient management – what incentives are there for this? – but to shift towards a subsidy system based on household income rather than housing circumstances, as Professor Myddleton suggests.

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