The government has announced plans to make it a criminal offence to sub-let a council house and to increase council rents for those tenants with incomes in excess of £100,000 a year. http://www.bbc.co.uk/news/uk-16376455
The fact that this is a problem shows not that council tenants are criminals, but that the state has so distorted the housing market that opportunities for arbitrage now exist.
Council housing is supposed to provide homes for people who are unable to provide for themselves on the open market, a welfare state “safety net”.
Why should such housing be so desirable that those earning over £100,000 a year would gladly chose to live there, or that people would pay enough on the open market to allow the council tenant to find alternative acceptable accommodation and still turn a good profit ?
This clearly demonstrates that the housing provided as a safety net is far too good for the task!
As usual the state’s answer is not to correct the core problem, but to add layers of regulation and unjust laws to attempt to try and hold back the logic of the marketplace.
The idea that breaking the terms of a lease agreement with the state is a crime (with a prison sentence) while breaking an identical contract with a private landlord is not a crime but a civil dispute shows, once again, that the state’s understanding of what a “crime” is comes straight out of Alice in Wonderland:
“When I use a word,” Humpty Dumpty said in a rather a scornful tone,”it means just what I choose it to mean — neither more nor less.”
So let’s consider what the proposed “solutions” will actually achieve:
If we outlaw sub-letting, then the original tenant will lose the additional income from letting and will move back to a luxury home that was more than they needed. The new tenant will be forced to move out of a home that was worth more to them than the rent it cost and spend more on an equivalent home.
Both parties involved will be worse off, and who exactly benefits ? There is no reduction in the burden on the taxpayer. There are no additional homeless people housed.
Even the injustice of the tenant making a cash windfall at the taxpayer’s expense has not been eliminated. It has just been replaced by the injustice of the tenant making a “quality of housing” windfall at the taxpayer’s expense. We even know the value of this “quality of housing windfall” on the open market, it is exactly the cash amount it was previously sold for!
If we increase rents for those earning over £100,000 to market levels then these tenants will move out. (If you are paying market rent then it is unlikely that this property will be your first choice.) This will certainly free up accommodation for someone else.
But if the objection to the first tenant is “Why should taxpayer’s pay for something that somebody doesn’t need?” Then the objection still exists. Why should taxpayers pay for accommodation of a standard acceptable to someone earning £100,000 a year for somebody to use as a safety net, surely they can’t need such a high quality of accommodation.
Taxpayer’s are quite happy for their own children (when they are students, or starting work) to share homes to reduce housing costs, or live in cheaper areas. Why is it not acceptable to provide a similar standard of housing to people requiring the taxpayer’s safety net ?
Surely a better answer to both problems is to sell these luxury properties and buy (or build) 2 (or 3 or 4 or 5) smaller properties with the money, in less desirable areas. This would provide additional safety nets, helping more people who need them ?
As a Libertarian I am, of course, against all state housing provision on principle, but if as a country we are going to provide it then we should at least try and get the best return on the taxpayer’s money. This is achieved by listening to what the market is telling us, rather than adding more humpty dumpty laws to the statute book.