How long before riots in the UK?

[vtsnowedin]

Sympathies.

Meanwhile, here we go: Where (the feck) can I afford to live?

Funny thing is all those places that are too expensive to live in are full of people living there.

[RenewableCandy]

They're not actual people though. Some of them are holidaymakers and some of them are property tycoons from overseas. And trust-funds and stuff.

The only real people who live in those places are the ones who bought before property prices went ape. Most of them are pensioners now.

[kenneal - lagger]

This video from Positive Money tells things how they really are. Most of the money goes to the banks who have engineered high house prices to increase their profits. Yes, some of it may go to people who have bought outright for buy to let but most of the people with this sort of money will leverage their money by borrowing from banks to buy even more or better houses to let.

This video confirms the assertions in another thread that banks create money out of thin air.

[JavaScriptDonkey]

You're kidding right, JSD?

biffvernon spelled it out really quite simply above and yet you suggest the subsidy seems to be going from house owners to rent payers?

Nope, not kidding at all.

Council tax is collected locally and the majority of it is paid by house owners. Housing Benefit is paid by councils to tenants who earn below about £20k and who would otherwise struggle with their rent.

The level of rent in a given area is roughly proportional to the price of houses in the area.

Most private rentals are small time BTL landlords or those renting out property inherited/owned within the family, frequently in the same locale as their own house.

If you qualify for Housing Benefit I'd lay a £1 to a rotten egg that you also qualify for Council Tax Benefit.

So we have the Council Tax Payers who are landlords contributing to the fund that their own tenants use to pay rent.

The rent payers get the benefit of the Housing Benefit on it's loop from the pocket of Council Tax payers to the pocket of property owners.

Of course high rents favour land-lords but without someone to pay that rent it becomes futile. And in this case the CT payers (usually other house owners) are paying it.

The money ends up with the landlords but it should be a simple matter to tax property ownership to death without impacting the benefits that accrue to renters from Housing Benefit.

[clv101]

Or more informatively:
High prices mean a large number of people can't afford the rent (let alone to buy).
They have to have a roof over their heads so their rent gets subsidised by taxation.
The (shrinking number of) property owners receive this transfer payment from taxation to themselves.

It's just a simple example of the state supporting a process that makes the rich richer and the poor poorer.

[biffvernon]

...which is the purpose of the Tory Party.

[JavaScriptDonkey]

Or more informatively:
High prices mean a large number of people can't afford the rent (let alone to buy).
They have to have a roof over their heads so their rent gets subsidised by taxation.
The (shrinking number of) property owners receive this transfer payment from taxation to themselves.

It's just a simple example of the state supporting a process that makes the rich richer and the poor poorer.

Housing Benefit only increases rents IF its inclusion has an impact on the rent charged.

I argue that the rent charged is in fact a function of the desirability of the area, the cost of housing in the area and the available supply. Housing Benefit at most can make a minor impact on one of those items.

HB is only paid if the housing is deemed appropriate. Leaving aside London were other factors have far greater influence then we can see that HB can only possibly drive up rents on properties deemed appropriate and which are rented to people who receive HB. I'd say that is the minority of properties in private rental.

What drives rents up is too many people chasing too few houses and that is a function of an artificially restricted housing supply following decades of NIBMY planning restrictions.

Build a few million more houses and the problems will go away for a while.

[woodburner]

What drives rents up is too many people chasing too few houses and that is a function of an artificially restricted housing supply following decades of NIBMY planning restrictions.

Build a few million more houses and the problems will go away for a while.

What drives up everything is too much money available, which the banks have ensured so as to drive the price up. There are a few million houses already in existence but which are unoccupied. These should be brought back into use first, also all the "holiday homes" which remain unoccupied for much of the year. If people need accomodation for holidays a tent would do.

[clv101]

I argue that the rent charged is in fact a function of the desirability of the area, the cost of housing in the area and the available supply. Housing Benefit at most can make a minor impact on one of those items.

Urm, you've left out the most important factor. Sure your points have an influence, but the most significant factor is the money available. Here we have an example of a big slug of public money entering the market - the only thing that can happen is for prices to rise and the public money to find its way into the pockets of the already relatively wealthy.

[Little John]

Or more informatively:
High prices mean a large number of people can't afford the rent (let alone to buy).
They have to have a roof over their heads so their rent gets subsidised by taxation.
The (shrinking number of) property owners receive this transfer payment from taxation to themselves.

It's just a simple example of the state supporting a process that makes the rich richer and the poor poorer.

Housing Benefit only increases rents IF its inclusion has an impact on the rent charged.

I argue that the rent charged is in fact a function of the desirability of the area, the cost of housing in the area and the available supply. Housing Benefit at most can make a minor impact on one of those items.

HB is only paid if the housing is deemed appropriate. Leaving aside London were other factors have far greater influence then we can see that HB can only possibly drive up rents on properties deemed appropriate and which are rented to people who receive HB. I'd say that is the minority of properties in private rental.

What drives rents up is too many people chasing too few houses and that is a function of an artificially restricted housing supply following decades of NIBMY planning restrictions.

Build a few million more houses and the problems will go away for a while.

No.

What drives rents up is house prices. Rents closely correlate with house prices. in which case, if you want to know why rents go up or down in a given area, you need to ask why house prices are rising or falling in a given area.

Given that house prices have, overall gone massively up across all areas, the next question you need to ask is what central reason could there be for this. The primary answer is not a fall in supply or a rise in demand, though there has, of course, been some. The answer is a wall of credit chasing real estate.

Rents have risen because banks have lent too much funny money into the the housing market and the mechanics of the process are simple.

* People have to borrow money to buy a house. This includes buy to let landlords.

* Banks make more debt at cheap interest rates available for borrowing against houses.

*If you increase the supply of something in the absence of an underlying increase in demand for it, its exchange value will fall. Thus, the exchange value of mortgage debt falls and so you must exchange more of it for the same size and quality of house. In short, we get a house price boom.

*Buy to let landlords must now take on more debt to obtain a house. This, in turn, is passed onto tenants as higher rents.

Building more houses may indeed make the problem go away for a short while. But not for the reasons you argue; namely that it will meet real demand for houses. But, rather, because it will bring the supply of houses up to match the supply of credit. The reason it will only bring temporary respite, though, is because whilst the supply of houses can only be manipulated slowly and finitely, the supply of credit is potentially infinite and so will always race unsustainablly ahead of the thing it is being exchanged for, in this case houses. That is, unless, laws are passed to stop it.

It is not, primarily, the supply of houses that needs to be increased. It is the supply of credit that needs to be reduced.