Govt Doubling council house subsidy AND Underwriting FTBs
Discussion
http://www.telegraph.co.uk/news/politics/8903125/T...
I understand that the housing market has stalled. But it stall for reasons - housing in some areas is overpriced relative to earnings, there is not enough social housing stock.
I wish I could have my house discounted by £56k.....
Not sure this initiative is going to help much - though I hope I'm wrong.
I understand that the housing market has stalled. But it stall for reasons - housing in some areas is overpriced relative to earnings, there is not enough social housing stock.
I wish I could have my house discounted by £56k.....
Not sure this initiative is going to help much - though I hope I'm wrong.
I know it's tough for first time buyers on low incomes, but i'm not sure that the government getting involved is going to help, it could make things worse if vendors think they can keep the asking price high and hope that it will sell because the buyer is getting help from the government. Unfortunately in this day and age people just need to learn to live within their means and be patient enough to save a good deposit. The problem is that too many years of easy credit have given people the attitude that they should automatically be able to afford to buy a house.
It is a rather peculiar decision. It would appear to be costly in a number of ways and the benefits are rather ephemeral. Now, I would suggest, is not the time to try such expensive experiments.
It didn't earn Thatcher all that many votes. The sale of council houses ended up costing councils, and therefore tax payes, a considerable amount of money over the years.
What benefits do the general public get from this?
It didn't earn Thatcher all that many votes. The sale of council houses ended up costing councils, and therefore tax payes, a considerable amount of money over the years.
What benefits do the general public get from this?
Derek
Most policy is not aimed at benefitting the general public.
I could ask what benefit the general public get from child benefit, or generous pensions to NHS dentists, or any number of policies.
Just heard the minister on R5 - these are two parts of a 120+ policy , including 1:1 building of new houses to replace any sold.
BUT it still makes little sense - prices artificiall inflated by government intervention
What they need to do is cut benefits elsewhere and spend the money building social housing, generating work in the construction sector and easing pressure on housing stock.
Most policy is not aimed at benefitting the general public.
I could ask what benefit the general public get from child benefit, or generous pensions to NHS dentists, or any number of policies.
Just heard the minister on R5 - these are two parts of a 120+ policy , including 1:1 building of new houses to replace any sold.
BUT it still makes little sense - prices artificiall inflated by government intervention
What they need to do is cut benefits elsewhere and spend the money building social housing, generating work in the construction sector and easing pressure on housing stock.
Derek Smith said:
The sale of council houses ended up costing councils, and therefore tax payes, a considerable amount of money over the years.
What benefits do the general public get from this?
In theory the benefit is that Owner Occupiers become more responsible citizens, take more care in maintaining their properties and their neighbourhoods and there is less of a demand on Repairs & Maintenance Depts.What benefits do the general public get from this?
In practice the benefit is to greedy relatives and certain property developers. They front up the money for the Tenant to buy the property. After the discount period has ended the Tenant sells/transfers the house to the property developer and starts claiming HB all over again. The taxpayer stands the cost of the subsidy which benefits the Tenant and the Property Developer.
Complete p1sstake.
Derek Smith said:
It would appear to be costly in a number of ways and the benefits are rather ephemeral.
It's only £400m which is a fair chunk of money but f
k all when measured against the scale of the problems of a lack of housebuilding and the very severe construction industry recession.Leaving aside the question of whether the government should decide to effectively subsidise any industry - and from my log-in name you may correctly surmise this is me speaking for a broader interest than merely lining my own pockets (and no I don't wish to be a politican!) - if we assume the shortage of houseing is around 100,000 homes each year (which are not being built this year and have not been built in recent years) then he's allocating £4k per home. Peanuts which will only work if the private sector buys into the idea.
Digga said:
t's only £400m which is a fair chunk of money but fk all when measured against the scale of the problems of a lack of housebuilding and the very severe construction industry recession.
Leaving aside the question of whether the government should decide to effectively subsidise any industry - and from my log-in name you may correctly surmise this is me speaking for a broader interest than merely lining my own pockets (and no I don't wish to be a politican!) - if we assume the shortage of houseing is around 100,000 homes each year (which are not being built this year and have not been built in recent years) then he's allocating £4k per home. Peanuts which will only work if the private sector buys into the idea.
If this country is indeed on the breadline then £400m is a lot of money. I would have thought that only necessities should be bought. This would appear to be a political move, as was Thatcher's original, but we had more money in those days. Further, this is not putting extra houses on the market.k all when measured against the scale of the problems of a lack of housebuilding and the very severe construction industry recession.Leaving aside the question of whether the government should decide to effectively subsidise any industry - and from my log-in name you may correctly surmise this is me speaking for a broader interest than merely lining my own pockets (and no I don't wish to be a politican!) - if we assume the shortage of houseing is around 100,000 homes each year (which are not being built this year and have not been built in recent years) then he's allocating £4k per home. Peanuts which will only work if the private sector buys into the idea.
There is, one would think, a need to get house prices down. The only way of doing this is to build more, and most would have to be at the cheaper end of the market to get FTB in. I can't see how this will help. Why not build a three sotry block of flats somewhere and give them away? That would do more for the prices (not serious suggestion).
I took a massive drop in wages when I left a well paid job and joined the police. We had to cut back and rather strongly. The one thing I learned was that there is no such word as 'only'. If it is not needed, it don't get bought even if it is a bargain.
Derek
You seem to think that building more houses will reduce their pricing.
House pricing is less determined by supply and demand of housing and more by supply and demand of mortgage credit.
There seems to be an idea that people on less than £20k a year can afford to buy a house. Not a lot of £60k housing about anywhere where there are jobs.
Renting seems to be anathema in the UK - and this is probably because rents are way too high and offer only short term security of tenure.
The Europeans don't seem so hung up on ownership - but then they're not paying £800/month for a shoebox in zone 4...
You seem to think that building more houses will reduce their pricing.
House pricing is less determined by supply and demand of housing and more by supply and demand of mortgage credit.
There seems to be an idea that people on less than £20k a year can afford to buy a house. Not a lot of £60k housing about anywhere where there are jobs.
Renting seems to be anathema in the UK - and this is probably because rents are way too high and offer only short term security of tenure.
The Europeans don't seem so hung up on ownership - but then they're not paying £800/month for a shoebox in zone 4...
As I understand the idea (although as its coming from Grant Shapps then by definition there's got to be something wrong with it 
)is that at present lenders won't lend unless (as in the old days when I got my first mortgage) you can more or less convince them that you don't need the money.
The mortgage market is not something that I have recent experience of (took out my last one in 1987 and its paid off now) but, as I understand the situation, lenders are wanting to see deposits of 25% or so. If you are trying to buy, lets say, a £160k house (a sum of money you won't get much for in the housing market these days), then you've got to find £40k. £40k is a lot of money for most young people to have in the bank and, in recent years when house prices were going up in leaps and bounds, quite a pointless place to put your cash. Far better (in those days) to get it into a house and watch the value of it appreciate.
The reasons lenders are doing this is twofold. Firstly, because they've had their fingers burned in the boom lending to people who shouldn't really have been given the money, and secondly to guard against negative equity - if house pries drop by, say, 25%, then there is still enough equity left in the property to cover the loan if it all goes tits up.
But there is a growing problem now between what people can actually afford to pay back and what they are being offered in terms of a mortgage. Lets look at some figures (back of fag packet calculations to please don't expect precision - this is just to illustrate a point):
House worth £200k, maximum mortgage offered £160k. At 4% interest, payments are going to kick off somewhere around £575 a month. That same house could be up for rental (in my neck of the woods) for about £700 per month. FTB could afford the £700 rent but would not be given a mortgage that had monthly repayments anywehere near that figure.
As I understand it (and we should be hearing the details of the scheme later today) the govt is going to offer some sort of indemnity scheme to allow lenders to advance a higher percentage of the selling price that they currently feel they can and, if it all goes tits up in individul cases, the indemnity fund picks up the bill, allowing the lenders to come away with their full equity returned.
Edited to correct my back of fag packet calculations
)is that at present lenders won't lend unless (as in the old days when I got my first mortgage) you can more or less convince them that you don't need the money.The mortgage market is not something that I have recent experience of (took out my last one in 1987 and its paid off now) but, as I understand the situation, lenders are wanting to see deposits of 25% or so. If you are trying to buy, lets say, a £160k house (a sum of money you won't get much for in the housing market these days), then you've got to find £40k. £40k is a lot of money for most young people to have in the bank and, in recent years when house prices were going up in leaps and bounds, quite a pointless place to put your cash. Far better (in those days) to get it into a house and watch the value of it appreciate.
The reasons lenders are doing this is twofold. Firstly, because they've had their fingers burned in the boom lending to people who shouldn't really have been given the money, and secondly to guard against negative equity - if house pries drop by, say, 25%, then there is still enough equity left in the property to cover the loan if it all goes tits up.
But there is a growing problem now between what people can actually afford to pay back and what they are being offered in terms of a mortgage. Lets look at some figures (back of fag packet calculations to please don't expect precision - this is just to illustrate a point):
House worth £200k, maximum mortgage offered £160k. At 4% interest, payments are going to kick off somewhere around £575 a month. That same house could be up for rental (in my neck of the woods) for about £700 per month. FTB could afford the £700 rent but would not be given a mortgage that had monthly repayments anywehere near that figure.
As I understand it (and we should be hearing the details of the scheme later today) the govt is going to offer some sort of indemnity scheme to allow lenders to advance a higher percentage of the selling price that they currently feel they can and, if it all goes tits up in individul cases, the indemnity fund picks up the bill, allowing the lenders to come away with their full equity returned.
Edited to correct my back of fag packet calculations
Edited by rs1952 on Monday 21st November 09:47
Derek Smith said:
If this country is indeed on the breadline then £400m is a lot of money
I agree that any government spending should be measured and my point is that in the scale of the problem, it's going to be lucky to have any meaningful effect anyway.Derek Smith said:
Why not build a three sotry block of flats somewhere and give them away?
Ptrice of flats is not the problem; it's the price and supply of affordable houses.Digga said:
t's only £400m which is a fair chunk of money but fk all when measured against the scale of the problems of a lack of housebuilding and the very severe construction industry recession.
It's still £0.4bn which could have gone into raising the tax threshold - directly helping the low paid and stimulating the economy.k all when measured against the scale of the problems of a lack of housebuilding and the very severe construction industry recession.Between 20m households it's 0.4E9 / 20E6 = £20 per household. Hardly f
k all.Then you add interest payments on top (the government are borrowing this money) it becomes bigger.
What I don't get is this:
Tens of thousands paying rent - say £600pcm. When they could be paying that in mortgage repayments instead.
But they don't qualify for loans.
But in tough times they don't just stop paying rent - thy find it, cut back elsewhere, make do. Which they would also do with mortgage payments.
It is an odd state of affairs. Private landlords doing very very well out of housing benefit payments.
Interested to see how it will all end in 10-20 years.
Tens of thousands paying rent - say £600pcm. When they could be paying that in mortgage repayments instead.
But they don't qualify for loans.
But in tough times they don't just stop paying rent - thy find it, cut back elsewhere, make do. Which they would also do with mortgage payments.
It is an odd state of affairs. Private landlords doing very very well out of housing benefit payments.
Interested to see how it will all end in 10-20 years.
Globs said:
Digga said:
t's only £400m which is a fair chunk of money but fk all when measured against the scale of the problems of a lack of housebuilding and the very severe construction industry recession.
It's still £0.4bn which could have gone into raising the tax threshold - directly helping the low paid and stimulating the economy.k all when measured against the scale of the problems of a lack of housebuilding and the very severe construction industry recession.Digga said:
Globs said:
Digga said:
t's only £400m which is a fair chunk of money but fk all when measured against the scale of the problems of a lack of housebuilding and the very severe construction industry recession.
It's still £0.4bn which could have gone into raising the tax threshold - directly helping the low paid and stimulating the economy.k all when measured against the scale of the problems of a lack of housebuilding and the very severe construction industry recession.Shame all their new houses will be s
t, cramped boxes with inadequate windows.I would have spent my £20 more wisely.
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