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Mister E
05 Aug 16 12:54
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Date Joined: 20 Oct 07
| Topic/replies: 7,888 | Blogger: Mister E's blog
Rents sky high, prices sky high, ownership own.
Mrs Thatcher/Norman Tebbitt's dream of a property owning democracy has been shattered by the Blair/Cameron govts.

Many people working are on housing benefit, what happens when they retire?

£250k> for one room in London.
Shared ownerships a rip off, "Help to Buy" designed by somebody who assesses "affordable" housing at £400k.

Build more social housing, get to grips with population, give tenants long term security backed by rent control. Encourage people to move out of South east/London/ major cities. Public investment in transport.

It is all a retrograde step, but the selfish generation are leaving another tickng time bomb for the young.

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Replies: 153
By:
frog2
When: 05 Aug 16 14:06
The 'crisis' has been caused by a number of factors:

1. Liar loans pre the financial crisis which caused the blow up and the crisis.

2. After the 2008 crisis as the markets were correcting themselves as the banks were told to tighten up lending to people who could not afford to pay. We then had a combination of ultralow interest rates and government schemes to help people buy when the banks refused them loans.

3. What followed was a further boom as people could borrow cheaply. With pensions destroyed by low interest rates and savings not earning anything more people borrow cheap for BTL.

4. House benefit from the government pays out billions to BTL landlords.

5. Now in a situation where if interest rates go up a tiny bit people will lose the home they borrowed huge loans to get. So we have interest rates low forever to stop this happening. If the government builds more houses the same thing will happen as prices will fall.

6. We are now stuck kicking the can down the round. May said QE and the housing situation is bad for the young the day she took office. A few weeks later we have more QE. There are no policy options left. All the time pensions are being destroyed and a massive crisis is being stored up for the future.
By:
Whisperingdeath
When: 05 Aug 16 15:14
There is a shortage of houses pure and simple. Secondly Goevrnment handouts in the way of Housing Benefit is keep rents artificially high.People on less than £10 an hours will not be able to afford most of the properties at current prices. If this benefit was withdrawn rents would drop immediately. Too many private landords have become rich at the tax payers expense. this subsidy must be withdrawn and then maybe there will be pressure on Employers to pay fairer wages. BHS emplyees received about £400 Million in Tax Credits, roughly the same anount as Phil Green took out of BHS. Brilliant businessman who deserves his Knighthood or just another on the gravy train?
By:
Dr Crippen
When: 05 Aug 16 16:03
Whisperingdeath what proportion of private tenants are on LHA?
By:
frog2
When: 05 Aug 16 16:20
There are 4.4 million households privately
renting in England, Scotland and Wales,
and 1.4 million of these are in receipt of
LHA to help with their housing costs.
By:
Injera
When: 05 Aug 16 16:32
There's not a house builder with half a brain who would welcome a potential over supply of housing.

They want to build and sell before the house is finished. The 'let's build 1/2 million homes brigade don't understand this. Flood the market with new homes and there could be housebuilders going bust left right and centre.

The boom started decades ago. Once the lending regs were changed the inflation in property went crazy. 2 and a half your salary (early 70s) became 5 times. But even in the 70s the inflation in house prices was 10-25%.

It's a total nightmare. The horse bolted years ago.

My only possible solution would be for the Govt to buy thousands/millions of homes on the open market and rent them at half price. BTL landlords are not the problem. They make 5% if they're lucky. BUT rents must be brought low artificially to give people a chance. It cannot happen through market forces.

Blimey, I'm sounding like Corbyn...
By:
Dr Crippen
When: 05 Aug 16 16:43
Thanks frog2.

Each council calculates LHA from the rates being charged in the private rental sector for that area.

When the coalition dropped Housing benefit by around 10%, it didn't lead to lower rents. In fact the year it was introduced rents went up.
All it led to was claimers having access to fewer properties, and predominantly at the lower end of the market. All the tips in fact.

You see, many landlords don't need benefit claimers. They can rent their properties anyway.
By:
Dr Crippen
When: 05 Aug 16 16:48
Some landlords charge less than LHA anyway.

Look for yourself on the letting sites.

These landlords will not entertain having benefit claimers in their properties. They prefer to deal with people in work and receive lower returns.
By:
frog2
When: 05 Aug 16 16:52
The way it would happen through market forces with all bubble props removed it would be brutal.

If the BOE put up interest rates away from the emergency levels to help savers, pensions and encourage proper allocation of investment resources then mortgages would rise hugely.

The second return to market forces would be the removal of the help to sell for more scheme (called the help to buy scheme). Also end shared ownership. Who wants to borrow hundreds of thousands to buy part of a studio flat that will be paid off when the borrower is 80?

The third return to market forces is end payments of government money to landlords at high rates for low grade property.

The fourth return to market forces is to have the same (i.e. no) mortgage tax relief for all properties to include buy to let so it is the same as someone who buys to live in.

Those who have borrowed and borrowed to move up the 'housing ladder' would be burnt if this happened. Owners (borrowers) have feasted off the government props for a decade now at the expense of savers. The problem is if these people are burnt it will now bring the whole economy down with it.
By:
Whisperingdeath
When: 05 Aug 16 18:39
The problem with so many on Housing Benefit is that too many are abusing the system.
They dont need to work for decent wages as their rent is paid. That distorts the wages market. As I have said before tenants and landlords getting away with ripping off the tax payers.

The supply and demand cycle can only be broken by some sort of nationalisation or House Building Programme. House builders will of course have no appetite for it but there are plenty of builders out there who need work and homes. There are plenty of people claiming benefits. We need houses. Work sets you free! Get them to work!
By:
unitedbiscuits
When: 06 Aug 16 18:45
The problem for the country is that BTL is safer and more lucrative than work. Don't expect the Conservatives to stop the trend; the concentration of wealth into ever fewer hands is really the raison d'etre of the Party. Simple measures to reverse the trend are available now:

1) Tax rent at source: like dividend payments, the first five-thousand should be tax-free (to encourage Spare-Room business) thereafter taxed like other unearned income.

2) Mortgage tax-relief is ridiculous but will not even begin to be phased out until next year. Scrap it now.

3) Make owners, rather than tenants, liable for Council Tax.

4) Amend LHA so that tenants are incentivised to find value. It is Housing Benefit that underpins the whole rotten system and it is dysfuntional because the landlord wants as much rent as he can get and the tenant doesn't care how much it costs, so market forces do not apply.

5) Scrap BTLs company status, which they use to hide profit by buying more and more properties.

Until the system is changed, landlords can simply outbid prospective house-owners; including new builds. So a house building project would just deliver more stock to landlords. Most importantly, the iniquity of child's life chances depending on his parents' status as landlord or tenant will continue to hold back and shame the country.
By:
Dr Crippen
When: 06 Aug 16 18:53
What is really needed is laws to protect landlords from rogue tenants.
The kind who get behind with their rents them scarper, or the ones who damage property and haven't got the means to pay for the repairs.
These types should face jail in many cases.
By:
Whisperingdeath
When: 06 Aug 16 18:57
what a load of rubbish you spout. That might be needed yes but the real crises is that there is too much housing concentrated in too few hands. There is a shortage of property. Housing costs are too high for both owners and renters. They want a low wage economy, that should come with low rents! The BTL Bonanza should be reduced
By:
Dr Crippen
When: 06 Aug 16 19:02
what a load of rubbish you spout. That might be needed yes

Well make your mind up.
By:
Dr Crippen
When: 06 Aug 16 19:07
The housing crisis will continue much as it is now.

The government won't interfere, because they know that any interference can only make it worse.

I'm afraid sometimes people have to put up with what they've got.

Or in other cases - make hay while the sun shines.
By:
Whisperingdeath
When: 06 Aug 16 23:29
There is a housing crisis and you think the most important thing is to protect landlords! You can only see as far as the end of your nose! Prpare for a shock. They are coming after you Crippen! Sell now! Walk away!
By:
InsiderTrader
When: 07 Aug 16 08:22
Dr Crippen 06 Aug 16 19:07 Joined: 16 Apr 02 | Topic/replies: 25,277 | Blogger: Dr Crippen's blog
The housing crisis will continue much as it is now.

The government won't interfere, because they know that any interference can only make it worse.

...

The point is the government is interferring to prop up the bubble.

Low interest rates
Tax advantages for BTL
Help to Buy 1 and 2
LHA
Housing Benefit
Shared Ownership
By:
Mexico
When: 07 Aug 16 08:48
Could start by stop using taxpayers money to pay for those on low/zero income to live in some of the most expensive areas on the planet.

There are plenty of "affordable" houses in UK - stop paying people to live in central London.
By:
Dr Crippen
When: 07 Aug 16 12:21
The housing bubble has to be maintained.

That's the point.

A slump in house prices means a slump in house building, a slump in availability of mortgages. And consequently fewer houses in the long run.

It's tough for newcomers trying to get onto the housing ladder but that depends on where they live.
As Mexico wrote, plenty of areas have perfectly affordable property prices.
By:
unitedbiscuits
When: 07 Aug 16 12:30
As Mexico wrote, plenty of areas have perfectly affordable property prices.

But no work. And steepling LHA. People need to be where the work is, actual social mobility. The envy of provincial misfits Mexico and Dr Crippen is thinly disguised.
By:
Dr Crippen
When: 07 Aug 16 12:57
If anybody wants to see an example of envy, simply read the post from unitedbiscuits above at  06 Aug 16 18:45

That's envy with knobs on.
By:
unitedbiscuits
When: 07 Aug 16 14:51
What a ridiculous claim from Dr Crippen. The implementation of any three of my five point plan would ensure a healthy correction that benefits the whole country, a few BTL landlords excepted, admittedly, but you can't burn a log without roasting a few woodlice.
By:
Dr Crippen
When: 07 Aug 16 15:46
It's far nearer the mark than your accusation of envy towards me. How ridiculous was that?

Nevertheless it's nice to see that the subject of BTL has still got you on the boil.
By:
unitedbiscuits
When: 07 Aug 16 17:55
There are enough homes to house the population. Otherwise, how many million are living on the streets? So a National house-building programme is just a red-herring, easily fooling Murdoch-fodder like tony. Tony57. If the country built a million new homes, most would be sold off-plan to BTL landlords, because conditions are uniquely favourable in the UK. Of course, a forelock-tugger like tony doesn't want to see radical change in the housing market. If he did, he would get behind measures to implement real change.
By:
Dr Crippen
When: 07 Aug 16 20:08
UB talks about real change, but his proposals amount to little more than extra taxation for landlords.
I can't see how that will improve matters in the slightest.

While tony proposes measures which might take the upwards pressure off house prices, and increase competition amongst landlords for renters.
Which if done with a purpose, would see cheaper houses and lower rents.
By:
unitedbiscuits
When: 07 Aug 16 20:31
tonys post is no longer a factor on this thread. Lets get back to my five points - all valid.
By:
bongo
When: 07 Aug 16 20:50
Point 3 was so good it almost makes up for the others being utter detritus, especially to people on low incomes.

Council tax should fall on the owner of the property. It would of course be passed on to the tenant in higher rents, but would greatly simplify collection of council tax and reduce the number of cases of people on benefits being dragged through magistrates courts.
By:
Dr Crippen
When: 07 Aug 16 22:07
That would mean people in council housing wouldn't have to pay council tax either.

And what about the rogue tenants who run up rent arrears. Then scarper without paying?
The landlord would be been housing them free and paying their council tax as well.

At the moment non-payment of council tax and rent is claimable from wages or benefits.
Landlords to not have this option to recover arrears.

Perhaps they should?

Yes that would suit me.
The landlord to pay the council tax and any arrears including rent and property damage to be clawed back from tenants' wages or benefits.
By:
Whisperingdeath
When: 07 Aug 16 22:10
The big issue is supply and demand. neither main political party has the cajones to challenge the Landlords or Property developers so nothing much will change.

Would like to see a mass house building programme and a regeneration of Council Stock. These Housing Associations are self serving, self important I don't even know the words. Housing lists need reviewing. You shouldn't get a property for getting knocked up or if you haven't lived here and worked for at least 5 years. Rents should be no more than 1 quarter of national average wages. Anybody claiming benefit should be told to report to a building site. No Employment Agencies should be used but wages paid direct to the workers. That will cut costs hugely.

People keep claiming how much the Olympics cost. I have to say they probably kept the economy going with all the building going on. Work sets you free. Get Britain working. Build houses. Give kids apprenticeships not benefit and play stations.
By:
bongo
When: 07 Aug 16 22:14
That would mean people in council housing wouldn't have to pay council tax either.

Correct, but it would reflect in higher council rents which would be around £20-£25 a week higher for your typical A/B/C band property.
Private landlords would also increase the rent and charge a higher deposit, plus higher amount for that month rent in advance. LHAs would have to rise accordingly.
By:
unitedbiscuits
When: 07 Aug 16 22:16
There is no housing shortage, only an fairness of accessibility shortage.

Here's the proof:

http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11179073/Buy-to-let-boom-one-in-five-homes-now-owned-by-landlords.html
By:
Dr Crippen
When: 07 Aug 16 22:32
You should be happy then UB.
By:
Dr Crippen
When: 07 Aug 16 22:32
All you need is a deposit and off you go.
By:
Dr Crippen
When: 08 Aug 16 11:06
I'll tell you what's gone wrong with housing in the UK.

Oversupply of labour driving down wages.

Oversupply of people driving up prices.

And sometimes you're stuck with what you've got.

As they say ''You can't get the toothpaste back into the tube.''
By:
InsiderTrader
When: 08 Aug 16 11:51
Key thing you missed is cheap credit.

BTL landlords have no intention of paying back the full value of the property.

If they can borrow at 3% the cost on borrowing 200,000 is 6k per year.
If they can borrow at 6% the cost on borrowing 200,000 is 12k per year.
If they can borrow at 12% the cost on borrowing 200,000 is 24k per year.

Put another way the ultralow rates mean BTL and buy to live can afford to pay 4 times more for a property when rates are 3% instead of 12%.

Prices are a function of interest rates available. Owners are no addicted to low rates that are killing the rest of economy (pensions, savings, investments in business etc). If rates went up now prices would come back down.

To say this is a supply problem is a red herring. We have enough houses. Some people have access to cheaper credit and are gambling that the government will not let the market fail. Those without access to cheaper credit or unwilling to gamble are currently losing out.
By:
Dr Crippen
When: 08 Aug 16 12:09
We've always had cheap credit. When interest rates where higher, buyers could always rely on inflation to ease the burden of their mortgages.
People would skin themselves out and borrow up to the hilt in the sure knowledge that inflation would soon be eating into their debts.
That doesn't happen now.
A 4% mortgage now will mean 4% next year and the year after.

In the old days, home buyers would be taking out second mortgages on the increase in equity in their homes that they had accrued after a number of years. Simply because their mortgages had become so cheap after inflation.
Does that happen now?
By:
InsiderTrader
When: 08 Aug 16 12:16
If a buyer had to pay 12k interest rather than 6k interest would he still be so keen to borrow 200k?
By:
Dr Crippen
When: 08 Aug 16 12:25
They'll pay what they can afford to pay.
And certainly if their wages had been going up over the years.

Which they haven't

You're not comparing like with like, by the way.

Mortgages were cheap then in the situation I outlined, and they're cheap now in the current situation.
By:
Dr Crippen
When: 08 Aug 16 12:28
Strange that when mortgages were so high that it was easier to get onto the ladder if you were on an average income.

Now with cheap mortgages many are denied the opportunity to buy.
It's all relative.
By:
Dr Crippen
When: 08 Aug 16 15:41
tony didn't you read my thread on chit chat that they removed yesterday, after I told everybody what I thought was happening with deleted posts?

They've got you accusing UB now. It's the staff - they're playing games with you.

It's not as easily as you think to get posts removed.

The only way he'd be able to get posts removed quickly and so easily is if he works for Betfair.

Perfectly innocent posts on Politics get removed all the time, and very soon after they've been posted as well.
Yet when others complain, it's half a day or more before the offensive post is taken down. That's if they will take it down at all.

The facility to have posts removed is not available to all posters.
Get in their bad books by rubbing up one of the staff who posts on here the wrong way and you can forget it.
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