Will the plan work to turn generation rent into buy?
Discussion
skinnyman said:
Loading people up with 95% mortgages is fine whilst the interest rate is so low, but what happens if/when it climbs back up to 5-6%? So many households are walking a fine line between survival and bankruptcy with historical low rates, I'd imagine a sudden jump up to 5% would cripple a hell of alot of people.
It's a pretty good assumption that IRs will remain below 3% for the foreseeable future. I'm talking 15+ years here.Look into how quantitative easing, interest rates and the economy are related. The old pre-2008 monetary policies is pretty much null and void now they use QE, as this allows the central banks to control macro conditions by controlling the liquidity in the economy.
Also keep in mind the entire financial system is based on future values set by discount rates, and even a signal of a minor rate increase causes market tantrums and crashes. Mortgages are just a small part of this overall system. A signal of a return to 2005 IRs would be catastrophic, hence it's not even a valid risk in my view.
Tango13 said:
I've posted this before in the 'how far will house prices fall' thread but what we need is a clear, long term strategy to take the heat out of the housing market over the next 20~25 years
To do that we need to 'boil the frog' on interest rates, ie slowly raise them to somewhere around 5~7% whilst also returning to the days of proper affordability checks and not lending more than 3x salary for singles/2x combined salary for couples.
I would also tighten up on 'Bank of Mum and Dad' equity release with some stiff taxation to reduce money flowing into the housing market from that direction.
Implemented carefully this could cause price stagnation in the housing market but create inflation in the wider economy to reduce the cost of property in real terms. The government also needs to accept that inflation is not the devil incarnate but a useful tool to reduce the cost of long term debt.
I would also have Gordon Brown publicly hanged, drawn and quartered for what he did to the pension industry which is partly what caused this current situation.
See my previous post on interest rates increases. Mortgages is just one of the many debt products in the financial system. The central bank categorically won't increase rates just to control the property market, as this is frankly an idiotic way to cool down prices.To do that we need to 'boil the frog' on interest rates, ie slowly raise them to somewhere around 5~7% whilst also returning to the days of proper affordability checks and not lending more than 3x salary for singles/2x combined salary for couples.
I would also tighten up on 'Bank of Mum and Dad' equity release with some stiff taxation to reduce money flowing into the housing market from that direction.
Implemented carefully this could cause price stagnation in the housing market but create inflation in the wider economy to reduce the cost of property in real terms. The government also needs to accept that inflation is not the devil incarnate but a useful tool to reduce the cost of long term debt.
I would also have Gordon Brown publicly hanged, drawn and quartered for what he did to the pension industry which is partly what caused this current situation.
The housing market can be cooled down by heavily penalising second homes, investment property and foreign investment. They could go so much further with this than they have done - think 300% stamp duty, yearly £4000 council tax premium etc.
The government could force developers to stop land banking. They could encourage smaller developers to build to increase competition, as its currently just 7 or so big players with a high level of consortia.
If I can think of these options, as a layman, you can be the experts who are in charge have. The reason I suspect they won't make these changes is because it would be unpopular with the core voters. The voters don't want houses to stop inflating, because it makes them feel wealthy by not having to work for it.
Jiebo said:
See my previous post on interest rates increases. Mortgages is just one of the many debt products in the financial system. The central bank categorically won't increase rates just to control the property market, as this is frankly an idiotic way to cool down prices.
The housing market can be cooled down by heavily penalising second homes, investment property and foreign investment. They could go so much further with this than they have done - think 300% stamp duty, yearly £4000 council tax premium etc.
The government could force developers to stop land banking. They could encourage smaller developers to build to increase competition, as its currently just 7 or so big players with a high level of consortia.
If I can think of these options, as a layman, you can be the experts who are in charge have. The reason I suspect they won't make these changes is because it would be unpopular with the core voters. The voters don't want houses to stop inflating, because it makes them feel wealthy by not having to work for it.
I'd go even further. Make BTL very unattractive by taxing the gross income from rental at the higher rate - no allowances for expenses. The whole lot at 40%.The housing market can be cooled down by heavily penalising second homes, investment property and foreign investment. They could go so much further with this than they have done - think 300% stamp duty, yearly £4000 council tax premium etc.
The government could force developers to stop land banking. They could encourage smaller developers to build to increase competition, as its currently just 7 or so big players with a high level of consortia.
If I can think of these options, as a layman, you can be the experts who are in charge have. The reason I suspect they won't make these changes is because it would be unpopular with the core voters. The voters don't want houses to stop inflating, because it makes them feel wealthy by not having to work for it.
Give every tenant in a private rented property the right to buy it at a discounted rate, maybe discounted back to the price the landlord paid for it, plus any refurb costs incurred before it was first rented out. Alternatively, a 50% tax on any capital increase when it gets sold, with the money ring-fenced for social housing.
Land-banking developers forced to pay the relevant council tax or business rates as if the development had gone ahead and been completed. Charges to start within (say) 2 years of purchasing the site. If they sell the site on to someone else before building on it, they still carry the council tax liability, with the new owner paying it as well.
Compulsory purchase at below market value of properties that remain empty for more than 5 years.
Business rates payable by the landlord on empty properties, with a grace period of, say, 6 months.
Council tax etc. on second homes at increased rates, rising in inverse proportion to the length of time that the owner is in residence. The same would apply to their primary residence - leave it empty for more than a month, council tax goes up.
Relocate more government departments to areas with cheap and abundant housing stock. Incentives to businesses to relocate to such areas from the south east, much like they did with the greenfield new towns.
clockworks said:
I'd go even further. Make BTL very unattractive by taxing the gross income from rental at the higher rate - no allowances for expenses. The whole lot at 40%.
Give every tenant in a private rented property the right to buy it at a discounted rate, maybe discounted back to the price the landlord paid for it, plus any refurb costs incurred before it was first rented out. Alternatively, a 50% tax on any capital increase when it gets sold, with the money ring-fenced for social housing.
So you want to restrict the number of rental properties available. To what end?Give every tenant in a private rented property the right to buy it at a discounted rate, maybe discounted back to the price the landlord paid for it, plus any refurb costs incurred before it was first rented out. Alternatively, a 50% tax on any capital increase when it gets sold, with the money ring-fenced for social housing.
I’ve recently had tenants leave a house that I rent out and because I’m already taxed at 45% on the income (not profit), I’ve decided to leave it empty and just use it myself sometimes.
Net result is that one house is no longer available to a family.
Your plans will mainly affect skilled immigrants who prefer to rent while working here. Is that the reason?
Tango13 said:
I've posted this before in the 'how far will house prices fall' thread but what we need is a clear, long term strategy to take the heat out of the housing market over the next 20~25 years
To do that we need to 'boil the frog' on interest rates, ie slowly raise them to somewhere around 5~7% whilst also returning to the days of proper affordability checks and not lending more than 3x salary for singles/2x combined salary for couples.
I would also tighten up on 'Bank of Mum and Dad' equity release with some stiff taxation to reduce money flowing into the housing market from that direction.
Implemented carefully this could cause price stagnation in the housing market but create inflation in the wider economy to reduce the cost of property in real terms. The government also needs to accept that inflation is not the devil incarnate but a useful tool to reduce the cost of long term debt.
I would also have Gordon Brown publicly hanged, drawn and quartered for what he did to the pension industry which is partly what caused this current situation.
2x salaries for couples? To do that we are going to have to stick a hell of a lot of people in negative equity surely? To do that we need to 'boil the frog' on interest rates, ie slowly raise them to somewhere around 5~7% whilst also returning to the days of proper affordability checks and not lending more than 3x salary for singles/2x combined salary for couples.
I would also tighten up on 'Bank of Mum and Dad' equity release with some stiff taxation to reduce money flowing into the housing market from that direction.
Implemented carefully this could cause price stagnation in the housing market but create inflation in the wider economy to reduce the cost of property in real terms. The government also needs to accept that inflation is not the devil incarnate but a useful tool to reduce the cost of long term debt.
I would also have Gordon Brown publicly hanged, drawn and quartered for what he did to the pension industry which is partly what caused this current situation.
garagewidow said:
Buying a house is one part,people tend to forget or just don't realise how much it costs to keep it going,bills,repairs unforseen emergencies etc unless it's a newbuild,but i've seen some shoddy work there too.
It needs to get back to 3-4x a single average wage or 2x as a couple before we can have anything like a housed nation with any stability.
Rents are astronomical for young people,basically paying a mortgage for someone else while trying to save for a deposit.
Rents are astronomical full stop. I'm 58, reasonable pay but in London, it's a struggle. It needs to get back to 3-4x a single average wage or 2x as a couple before we can have anything like a housed nation with any stability.
Rents are astronomical for young people,basically paying a mortgage for someone else while trying to save for a deposit.
I pay 1200 a month for a tiny one bed, but it does have a garage. Add bills and council tax and it's more than half my take home. I then pay child maintenance.
At least the youngsters can put up with sharing.
The ex wife and kids live in the house we bought in '98. Mortgage interest only and is less than my food bill but it's Victorian and the cost per year in fixing and repairing makes me think that renting ain't so bad..............
As long as you have a good landlord that realises that renting is a service and doesn't make you wait 3 months when the hot water stops.
Some positive disruption in the housing market wouldn’t be a bad thing. A national development corporation specialising in high quality market and affordable housing built on sites including key regeneration sites that are otherwise difficult to develop / redevelop.
Aims are:
- Increase the supply of housing otherwise being held back through land banking;
- Raise the bar in design quality - no more faux heritage “anywhere” crap that typifies most new builds;
- More efficient from fabric to power and heat;
- Use a proportion of value gained from sites to fund negative value sites = more regeneration and supply.
This should give volume house builders the competition they need to build better. It would be a better use of funding that could eventually reap returns. Surely it’s better than the zero sum game of Help to Buy that just stokes demand and pushes prices further.
I know of some LAs that have become property developers to make regeneration happen and generate a source of revenue income to offset government funding cuts - Spelthorne is one - the irony is the govt have wrapped their knuckles for it!
Finally we need a national spatial planning system that is able to funnel more economic growth to those parts of the UK that need it. Not just the north but even the towns that suffer from being in the commuting shadows of London - lots of nice housing areas but where town centres lack any wide mix of business because it’s all sucked into London along the rail corridors.
Aims are:
- Increase the supply of housing otherwise being held back through land banking;
- Raise the bar in design quality - no more faux heritage “anywhere” crap that typifies most new builds;
- More efficient from fabric to power and heat;
- Use a proportion of value gained from sites to fund negative value sites = more regeneration and supply.
This should give volume house builders the competition they need to build better. It would be a better use of funding that could eventually reap returns. Surely it’s better than the zero sum game of Help to Buy that just stokes demand and pushes prices further.
I know of some LAs that have become property developers to make regeneration happen and generate a source of revenue income to offset government funding cuts - Spelthorne is one - the irony is the govt have wrapped their knuckles for it!
Finally we need a national spatial planning system that is able to funnel more economic growth to those parts of the UK that need it. Not just the north but even the towns that suffer from being in the commuting shadows of London - lots of nice housing areas but where town centres lack any wide mix of business because it’s all sucked into London along the rail corridors.
clockworks said:
I'd go even further. Make BTL very unattractive by taxing the gross income from rental at the higher rate - no allowances for expenses. The whole lot at 40%.
Give every tenant in a private rented property the right to buy it at a discounted rate, maybe discounted back to the price the landlord paid for it, plus any refurb costs incurred before it was first rented out. Alternatively, a 50% tax on any capital increase when it gets sold, with the money ring-fenced for social housing.
Just out of curiosity, where will all the tenants live now that you've completely killed the rental market?Give every tenant in a private rented property the right to buy it at a discounted rate, maybe discounted back to the price the landlord paid for it, plus any refurb costs incurred before it was first rented out. Alternatively, a 50% tax on any capital increase when it gets sold, with the money ring-fenced for social housing.
Also you've destroyed all remaining trust in the UK government regarding business investment. You might wish to consider the unintended consequences of your suggestion.
clockworks said:
Jiebo said:
See my previous post on interest rates increases. Mortgages is just one of the many debt products in the financial system. The central bank categorically won't increase rates just to control the property market, as this is frankly an idiotic way to cool down prices.
The housing market can be cooled down by heavily penalising second homes, investment property and foreign investment. They could go so much further with this than they have done - think 300% stamp duty, yearly £4000 council tax premium etc.
The government could force developers to stop land banking. They could encourage smaller developers to build to increase competition, as its currently just 7 or so big players with a high level of consortia.
If I can think of these options, as a layman, you can be the experts who are in charge have. The reason I suspect they won't make these changes is because it would be unpopular with the core voters. The voters don't want houses to stop inflating, because it makes them feel wealthy by not having to work for it.
I'd go even further. Make BTL very unattractive by taxing the gross income from rental at the higher rate - no allowances for expenses. The whole lot at 40%.The housing market can be cooled down by heavily penalising second homes, investment property and foreign investment. They could go so much further with this than they have done - think 300% stamp duty, yearly £4000 council tax premium etc.
The government could force developers to stop land banking. They could encourage smaller developers to build to increase competition, as its currently just 7 or so big players with a high level of consortia.
If I can think of these options, as a layman, you can be the experts who are in charge have. The reason I suspect they won't make these changes is because it would be unpopular with the core voters. The voters don't want houses to stop inflating, because it makes them feel wealthy by not having to work for it.
Give every tenant in a private rented property the right to buy it at a discounted rate, maybe discounted back to the price the landlord paid for it, plus any refurb costs incurred before it was first rented out. Alternatively, a 50% tax on any capital increase when it gets sold, with the money ring-fenced for social housing.
Land-banking developers forced to pay the relevant council tax or business rates as if the development had gone ahead and been completed. Charges to start within (say) 2 years of purchasing the site. If they sell the site on to someone else before building on it, they still carry the council tax liability, with the new owner paying it as well.
Compulsory purchase at below market value of properties that remain empty for more than 5 years.
Business rates payable by the landlord on empty properties, with a grace period of, say, 6 months.
Council tax etc. on second homes at increased rates, rising in inverse proportion to the length of time that the owner is in residence. The same would apply to their primary residence - leave it empty for more than a month, council tax goes up.
Relocate more government departments to areas with cheap and abundant housing stock. Incentives to businesses to relocate to such areas from the south east, much like they did with the greenfield new towns.
What you two are suggesting is tantamount to t
tting the frog with a big hammer which is very messy and if your aim is off then you've got a bigger mess to clean up.ARHarh said:
That I think explains it, if you make the sacrifice you can afford houses.
Exactly. If you are serious about getting on the hoisting market and are well guided by adults then you can afford to get on the ladder. No takeaways, latest iPhone, pcp Audi, expensive nights out, expensive personal items like haircuts, fillers etc etc... allied to not getting stuck in the rental trap means you can get a deposit together and buy.
Cue all the renters throwing their hands up in horror...
The reason all those 80k terraces are 80k is that there are no good jobs within a reasonable commuting distance of the godforsaken pit village said 80k terraces are found in, so anyone who has the means to buy them, won't have the means to pay the mortgage off.
I'd love to move to Accrington and have my own 3 bed semi for 150k,I just don't want to spend the rest of my working life stacking shelves for a living because the nearest lab is three hours away.
I'd love to move to Accrington and have my own 3 bed semi for 150k,I just don't want to spend the rest of my working life stacking shelves for a living because the nearest lab is three hours away.
Greg_D said:
ARHarh said:
That I think explains it, if you make the sacrifice you can afford houses.
Exactly. If you are serious about getting on the hoisting market and are well guided by adults then you can afford to get on the ladder. No takeaways, latest iPhone, pcp Audi, expensive nights out, expensive personal items like haircuts, fillers etc etc... allied to not getting stuck in the rental trap means you can get a deposit together and buy.
Cue all the renters throwing their hands up in horror...
Blame the Banks, Government (of all flavours) the media and most of all Kirsty & Phil! A monster has been created
Until the old system of 2.5x salary or similar is the norm, the youngsters won't be able to afford.
BritishBlitz87 said:
The reason all those 80k terraces are 80k is that there are no good jobs within a reasonable commuting distance of the godforsaken pit village said 80k terraces are found in, so anyone who has the means to buy them, won't have the means to pay the mortgage off.
I'd love to move to Accrington and have my own 3 bed semi for 150k,I just don't want to spend the rest of my working life stacking shelves for a living because the nearest lab is three hours away.
Don’t be daft. Looking only in my county there are old pit villages with very cheap housing 20 minutes from the centre of Newcastle, where there are plenty of good jobs. An awful lot of the villages themselves now have New Towns built around the old centre, with plenty of jobs in the industrial estates adjacent to them.I'd love to move to Accrington and have my own 3 bed semi for 150k,I just don't want to spend the rest of my working life stacking shelves for a living because the nearest lab is three hours away.
Merck develop and produce medicines in Cramlington, an old pit town. There’s a new Gigafactory being built where the power station once stood at Blyth. Coutts have an office in Newcastle, the old Armstrong factory is employing engineers again to reconfigure main battle tanks.
Sage Group is based in Newcastle, the National Institute of health has a biomedical research lab there, there’s a very good university, and until recently my tenant in Newcastle was was the CEO of an oil company.
That said, are you actually earning much more in your current job than a supermarket worker?
Edited by Northernboy on Monday 5th April 18:46
A500leroy said:
If we REALLY want it levelling out, we need to introduce a national wage no matter what job your doing, ie doctor £16p/h,Nurse £16p/h, shelf stacker £16 p/h, That way everyone has the same income, everyone has roughly the same outgoings for necessities and we become this great level nation the g/ment want us to be.
Come on you don't believe that .People who've put the time in to train as doctors , vets etc should be paid more , however shelf stackers , posties etc should earn a decent wage that allows them to buy a modest house , pay into a pension etc rather than live paycheck to paycheck.
Northernboy said:
So you want to restrict the number of rental properties available. To what end?
I’ve recently had tenants leave a house that I rent out and because I’m already taxed at 45% on the income (not profit), I’ve decided to leave it empty and just use it myself sometimes.
Net result is that one house is no longer available to a family.
Your plans will mainly affect skilled immigrants who prefer to rent while working here. Is that the reason?
The idea is to get the houses back on the market so that people can buy them to live in as owners rather than renters. Added bonus of a large influx of property would be to lower prices a little.I’ve recently had tenants leave a house that I rent out and because I’m already taxed at 45% on the income (not profit), I’ve decided to leave it empty and just use it myself sometimes.
Net result is that one house is no longer available to a family.
Your plans will mainly affect skilled immigrants who prefer to rent while working here. Is that the reason?
I had no idea that short-term lets by private landlords to skilled migrant labour was a thing. Maybe leave that kind of market to the big players - business landlords, rather than private individuals with one or two BTLs.
Fastpedeller said:
Greg_D said:
ARHarh said:
That I think explains it, if you make the sacrifice you can afford houses.
Exactly. If you are serious about getting on the hoisting market and are well guided by adults then you can afford to get on the ladder. No takeaways, latest iPhone, pcp Audi, expensive nights out, expensive personal items like haircuts, fillers etc etc... allied to not getting stuck in the rental trap means you can get a deposit together and buy.
Cue all the renters throwing their hands up in horror...
Blame the Banks, Government (of all flavours) the media and most of all Kirsty & Phil! A monster has been created
Until the old system of 2.5x salary or similar is the norm, the youngsters won't be able to afford.
3-3.5x household income has always been the metric. In the ‘60’s it was typically one income, so 3.5x the average wage would buy the average house, now it is 3.5x combined salary.
Outside of the superheated bubble that is London and the SE, 3.5x combined still works...
https://www.rightmove.co.uk/properties/76813125#/
Won't some poor downtrodden millenial buy me?? Pleeeeeease!!!!!
Won't some poor downtrodden millenial buy me?? Pleeeeeease!!!!!
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