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Matthew Parris Piece (Times Newspaper)


Tam & Di

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10 minutes ago, IanD said:

The problem with this is that high house prices -- even with low interest rates, and therefore mortgage/rent payments -- really cripple people who have to find a massive sum to pay for a deposit to buy a house...

Yes, the problem actually getting a mortgage in the first place rather than meeting the payments. I know my son and his partner would manage just fine... without an interest rate rise, but while paying huge rental (more than their repayments would be) they are in catch-22. By now they'd be 10 years into repaying it otherwise and that rate rise the banks are protecting themselves from never happened. In my day the banks had managers who assessed the situation and gambled - they gave me a mortgage just a few months into starting a business with zero books to show because my actual human manager took an interest in my life. Now it would be "computer says no. It's funny really, when I was living in and still paying a mortgage on a house worth just shy of 1/2M the biggest mortgage based on income I could then have got was £18K. I hadn't missed a payment in 20 years and was sitting on that house with £450K equity... but that counted for nothing. I expect it could have been arranged one way or another at my expense but I was just testing the water. It's a funny old world. :)

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15 minutes ago, Tam & Di said:

I'm always slightly bemused by this relatively modern assumption that everyone should expect to buy a house. Even into my 30s a great proportion of people rented property. Thatcher's sale of Council Houses was really the point where house ownership became a major ambition. It also meant there was a scarcity of rental accommodation so rents became much more pricey too, a spiral leading us eventually to where we are now.

 

Tam

 

The reasons people still want to buy houses in the UK are various, ranging from a mortgage being cheaper than rent, poor security of tenure in rentals (landlord kicking you out whenever they fancy it), inability to do anything to make a rental property into somewhere you actually want to live, and the still-popular perception that property is a good investment and house prices will continue to rise forever -- which for obvious reasons can't be true, but every time it looks like prices are so high they *must* fall soon they carry on going up...

 

If the rental market was better controlled/protected and more secure -- like it is in many other EU countries -- then people would be similarly happy to live in rental properties. But because it isn't in the UK, people have a strong preference for home ownership.

Edited by IanD
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10 minutes ago, Slow and Steady said:

Yes, the problem actually getting a mortgage in the first place rather than meeting the payments. I know my son and his partner would manage just fine... without an interest rate rise, but while paying huge rental (more than their repayments would be) they are in catch-22. By now they'd be 10 years into repaying it otherwise and that rate rise the banks are protecting themselves from never happened. In my day the banks had managers who assessed the situation and gambled - they gave me a mortgage just a few months into starting a business with zero books to show because my actual human manager took an interest in my life. Now it would be "computer says no. It's funny really, when I was living in and still paying a mortgage on a house worth just shy of 1/2M the biggest mortgage based on income I could then have got was £18K. I hadn't missed a payment in 20 years and was sitting on that house with £450K equity... but that counted for nothing. I expect it could have been arranged one way or another at my expense but I was just testing the water. It's a funny old world. :)

 

If I hadn't been in the fortunate position of being able to help my kids out with deposits, neither of them would have been able to buy a house/flat to get out of the not-very-nice rental properties they were in -- they now have their own places that they can do what they want with, and monthly payments are considerably less than their rents were. But without help from the "bank of mum and dad" they'd still be renting, in spite of having decent jobs, because saving a £50k deposit (yes, London, I know but that's where their jobs are and they actually *want* to live...) was a huge wall to climb... 😞

 

Even more ludicrously, the "value" of their houses has gone up by getting on for 10% since they bought early last year -- prices were stupid then, and are even stupider now. My warning that the high prices when they bought might be unsustainable seems to have been wrong again...

Edited by IanD
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1 hour ago, Slow and Steady said:

While I agree that there will always be a section of society struggling with housing, things have got worse in real terms. In 1979 as a junior draughtsman I earned £5.2k/year in my first year and could have bought a nice terraced house where I lived for £7k. That same job now would pay perhaps £25k but probably less. The equivalent house is £120K. Rent has followed house price. Earnings have not.

 

 

Do not forget that in the early 1970s, mortgage lenders would only go to 2.5 multiple of one salary (wife's income was not counted as reliable for a long term arrangement).

 

By the end of the 1970s, Equal Pay etc and other social changes led to most couples having two incomes and the mortgage companies were forced to take both into account. Alas, the consequence was a corresponding rise in house prices which fuelled the conclusion that house prices are in an economic class of their own.

 

A similar effect was reported as a result of much more recent support for first time buyers.

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3 hours ago, Mike Todd said:

Do not forget that in the early 1970s, mortgage lenders would only go to 2.5 multiple of one salary (wife's income was not counted as reliable for a long term arrangement).

 

By the end of the 1970s, Equal Pay etc and other social changes led to most couples having two incomes and the mortgage companies were forced to take both into account. Alas, the consequence was a corresponding rise in house prices which fuelled the conclusion that house prices are in an economic class of their own.

 

A similar effect was reported as a result of much more recent support for first time buyers.

I seem to recall as well that in 1983/4 the Bank of England relaxed lending criteria. In 1983, as a single person with a full time job in South London, living in a shared rented house, I started looking at buying. I had modest savings in the Woolwich Building Society, in an account I had had for years. The manageress of my local branch looked at my balance and stared imperiously down at me saying they couldn't possibly lend money to someone in my position.

A year later, the housing market had started to get more active, prices were beginning to rise and I was seriously worried that, as I could only afford properties right at the bottom of the market, I would soon get priced out. But the same woman in the Woolwich was now falling over herself to thrust money at me, despite my meagre savings, and so I got on the property ladder. Sold that first flat for 2½ times what I paid for it 3 years later!

Edited by David Mack
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4 hours ago, Mike Todd said:

By the end of the 1970s, Equal Pay etc and other social changes led to most couples having two incomes and the mortgage companies were forced to take both into account.

 

It was worse than that. Until the late 70s single women were barred from having a mortgage by themselves. The only way to get one was to work for a bank. Banks had a policy of lending to staff of either gender, although I'm not sure why given their blanket discrimination against all other women. I know several women whose career in retail banking was determined by their determination to buy a house without there being a husband to countersign their mortgage application. 

 

Seemed bloody outrageous to me at the time, and even more so with hindsight. 

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26 minutes ago, system 4-50 said:

I remember vividly how I had to grovel to be granted a mortgage.

 

Me too, and failing. The BS manager interviewing me patronisingly explained to me the house I wanted to buy in a good village in Surrey for £6k was a victorian terrace built to a very low standard, and it would only ever fall in value so he was not prepared to lend on it. 

 

It's worth about £600k now. 

 

 

Edited by MtB
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7 hours ago, IanD said:

 

If the rental market was better controlled/protected and more secure -- like it is in many other EU countries -- then people would be similarly happy to live in rental properties. But because it isn't in the UK, people have a strong preference for home ownership.

I am no apologist for a hardcore capitalist system - but when rents were controlled and tenants had largely insuperable security of tenure (largely pre Housing Act 1988), there were very few new tenancies available.  An owner of a vacant property was more likely to sell than grant a tenancy at a low rent for a very long period.

 

 

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30 minutes ago, Tacet said:

I am no apologist for a hardcore capitalist system - but when rents were controlled and tenants had largely insuperable security of tenure (largely pre Housing Act 1988), there were very few new tenancies available.  An owner of a vacant property was more likely to sell than grant a tenancy at a low rent for a very long period.

 

I'm not saying that the system we had in the UK then was great, but other EU countries seem to have a much better rental system than we do in the UK today, and a house ownership market less driven by investment.

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2 minutes ago, Victor Vectis said:

How about extending the right to buy to tenants in the private sector, on the same terms that the Thatcher government sold off council houses?

 

 

That's a copout though.  I'm fairly sure any private landlord who had their house(s) sold - at a heavy discount from market prices, against their wishes - would not require any legislation to stop them reinvesting the (reduced) proceeds in the housing market ...

 

It really was/is a spectacularly stupid policy.

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A hefty capital gains tax extended to housing would help counter the idea that houses are a financial investment. And why should they be? Having a house to live in should be an end in itself. When you sell a house in France you can deduct for the cost of improvements, but any profit after that is taxed, and house prices are far more steady than in the UK,

 

Tam

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Absolutely,  house ownership is good, buy to let is distructive. As per other countries, tennets should have the legal right to a 10 year tenancy without no fault evictions. This would discourage most private landlords. The ridiculous situation of tenants having no security and landlords being exploited by serial defaulters serves no one.

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8 hours ago, Victor Vectis said:

How about extending the right to buy to tenants in the private sector, on the same terms that the Thatcher government sold off council houses?

 

 

How would that increase the amount of accommodation in the UK?

 

 

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23 minutes ago, Cas446 said:

Absolutely,  house ownership is good, buy to let is distructive. As per other countries, tennets should have the legal right to a 10 year tenancy without no fault evictions. This would discourage most private landlords. The ridiculous situation of tenants having no security and landlords being exploited by serial defaulters serves no one.

And what would that do to the availability of rented accommodation for those who are not in a position to buy?

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12 minutes ago, David Mack said:

And what would that do to the availability of rented accommodation for those who are not in a position to buy?

You would introduce the policy slowly by winding up tenancy periods over a number of years, to gently weed out small private landlords, with less buy-to-let demand the house market would correct. There would still be rented accommodation, it would be owned by rental companies with long term interests.

26 minutes ago, MtB said:

 

 

How would that increase the amount of accommodation in the UK?

 

 

The main issue is that it is owned by the wrong people with the wrong interests. These private interests are damaging, a little bit of government interference is needed to correct.

Edited by Cas446
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1 hour ago, Cas446 said:

You would introduce the policy slowly by winding up tenancy periods over a number of years, to gently weed out small private landlords, with less buy-to-let demand the house market would correct. There would still be rented accommodation, it would be owned by rental companies with long term interests.

 

I think Rackman was running a rental company, possibly not the bets way for private rental to go. Also many of the social housing providers are in effect rental companies and in too many cases the quality of maintenance leaves much to be desired.

 

I would suggest that many small private landlords do have long term interests in looking after their property and being fair to their tenants. It is the bad ones, both large company and small private landlords, that needs sorting. perhaps of more importance is massively increasing the supply of new and decent housing units so market conditions bring  the prices down.

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1 hour ago, Cas446 said:

There would still be rented accommodation, it would be owned by rental companies with long term interests.

What is the difference between a "rental company" and a "private landlord"? If it is simply the number of rental properties they own, how does concentrating the ownership of rental properties in a smaller number of hands change the situation? There have been examples of large landlords behaving badly before.

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2 hours ago, Cas446 said:

Absolutely,  house ownership is good, buy to let is distructive.

Not so. You have to buy a house or flat before you can let it out, otherwise there would be no rental accommodation except council houses and flats. That would be destructive.

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8 hours ago, Tam & Di said:

A hefty capital gains tax extended to housing would help counter the idea that houses are a financial investment. And why should they be? Having a house to live in should be an end in itself. When you sell a house in France you can deduct for the cost of improvements, but any profit after that is taxed, and house prices are far more steady than in the UK,

 

Tam

How does that differ from UK CGT?

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In the UK if you sell the house you live in you get Private Residence Relief, which means you have no tax to pay. Only if you use it in any way for business purposes does it incur tax when you sell. Also I did say HEFTY tax on the increased sales value.

 

Tam

 

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The issue here is not who the rental landlord is -- large or small, private or a company -- but the balance in the UK between house rental and purchase and the reasons why houses are bought, which in the UK is primarily investment -- hence the perpetual obsession with rising house prices.

 

Housing in the UK is nowadays largely seen as either an investment or a way of making money/profit rather than providing a decent-quality secure affordable place to live. Landlords with access to capital -- again, individuals or companies -- have a big advantage over those without -- for example, first-time buyers -- due to the high prices and large deposits needed. Landlords are in the game to make money, and by definition if they're making money out of tenants they're getting the benefit of this, not the tenants. Landlords are not inherently evil, they are taking advantage of the way the housing market in the UK works.

 

The lack of security and controls over rental properties, low taxes on purchased ones combined with high UK house prices due to lack of supply, lack of social housing (partly due to right-to-buy properties ending up as buy-to-let), inability of cash-strapped councils to fund building any, land-banking by housebuilding companies, lack of a proper national housebuilding policy, and use of buy-to-let as a substitute for poor pensions all act to stack the housing market heavily against renters and first-time buyers and those who want/need social housing, and in favour of people and companies with access to large capital sums.

 

The consequence is that the poorer or those without access to such capital live in a world of insecure rentals where the rents will go up forever, and they will never have a secure home. Yes there are caring landlords who try and provide high-quality properties at non-inflated rents, but they're doing this because they want to -- equally there are landlords who provide awful properties at high rents and throw tenants out if they object, because they can and the rules let them.

 

I'm not saying that we should all live in a wonderful socialist/communist world where the government provides cheap housing for everyone paid for by taxes, but the housing market in the UK is clearly broken by the way the scales are tilted in favour of housing as an investment and the supply/demand imbalance -- and many other countries seem to do a far better job of this (e.g. providing high-quality long-term secure rentals at reasonable prices) than we do, mainly by making housing as an investment less attractive, and often by having more government/council-owned housing -- you know, like we used to before it was sold off... 😞

 

But doing this in the UK would not only cause screams of protest from landlords who currently make money from the housing market (including many MPs, mostly Tories...) but also home-owners, because one consequence of correcting these distortions would probably to stop house prices rising or even make them fall, and many (most?) people believe that they should go up forever...

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10 hours ago, Cas446 said:

The main issue is that it is owned by the wrong people with the wrong interests. These private interests are damaging, a little bit of government interference is needed to correct.

 

Translation:

 

"I missed out on the buy-to-let boom, dammit."

 

 

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