The economic impact of Covid-19

[Genie]

3 minutes ago, chrisp65 said:

I agree. You can’t see the problem.

Low earners just need to speak to the council about a council house, or acquire an £8,000 deposit from gifts and then pay £700 a month.

Turns out there is no problem, there is no housing crisis, no waiting list, no slum landlords, no profiteering. Let them eat cake.

 

It’s outrageous to suggest 2 people on minimum wage spend around 25% of their monthly take home pay on mortgage payments, then barely survive on a pittance of £2100 a month. 
Instead of putting in a bit of effort/sacrifice to buy a house and pay their bills they could just opt out and get one for free. That sounds much fairer.

[chrisp65]

4 minutes ago, Genie said:

It’s outrageous to suggest 2 people on minimum wage spend around 25% of their monthly take home pay on mortgage payments, then barely survive on a pittance of £2100 a month. 
Instead of putting in a bit of effort/sacrifice to buy a house and pay their bills they could just opt out and get one for free. That sounds much fairer.

The minimum any couple can be on in the UK is £2,800 net and they can simply choose between a council house or a £160,000 private house, having received an £8,000 gift for a deposit? They just need to put in a bit of effort?

I think we’re done here.

 

 

[Genie]

2 minutes ago, chrisp65 said:

The minimum any couple can be on in the UK is £2,800 net and they can simply choose between a council house or a £160,000 private house, having received an £8,000 gift for a deposit? They just need to put in a bit of effort?

I think we’re done here.

 

 

The internet is brilliant isn’t it  

Obviously if you only do 4 hours a week delivering Avon books then you’re not going to be able to buy a house in the real world.

However, I have shown that even low earners with full time jobs can get on the housing ladder with a bit of effort / saving etc if they really want to own a property.

 

 

[Xela]

Its always been difficult to get on the property ladder, although a lot more difficult today. Property prices increase at a far higher rate compared to wages.

My parents had to make sacrifices to buy their first property in the early 70's - a flat in Erdington, which cost £4k from memory. Those sacrifices involved driving a battered old car and not having holidays for years. I think @Genie is trying to say that for a young couple nowadays, working full time, the same discipline (and more) is needed to get on the ladder. Obviously if you're only doing 10 hours week dog walking or part time serving in Starbucks then you aren't going to get anywhere. I daresay the same would have applied 30 years ago as well? It must be very difficult for a single person to get on the ladder today. I would be all for a 'correction'. In 1997 the average house price was 3.6x average salary. Today it is 7.6x. Madness. Imagine how much happier we would all be if it was still 3.6x? We'd have a lot more disposable income and a higher quality of life. 

We do need more social/council houses and I would like to make it financially unattractive for people to own second/third properties. 

[chrisp65]

People just need to make more of an effort.

 

[Genie]

33 minutes ago, chrisp65 said:

People just need to make more of an effort.

What’s the alternative? 
If you were in charge, what would you do?

[chrisp65]

9 minutes ago, Genie said:

What’s the alternative? 
If you were in charge, what would you do?

There are over 1,000,000,000 planning approvals already in place and not being used for new homes. So they wouldn’t require a planning process wouldn’t involve ‘new’ land going over to housing. They are already approved. Oven ready.

Very roughly, the cost of HS2, if redirected in to building those houses, would fund all of them. Employing countless contractors and labour and requiring vast amounts of materials. Just at a time the government needs to stimulate spending and avoid unemployment.

Then the government would actually get income from their sale or rent. Or the privateers would if that’s the model. Whichever.

Building those 1,000,000 houses would punch a hole in private rents and over inflated house prices.

One idea, literally off the top of my head. That’s before we consider building new towns, allowing councils to build council houses, stopping second home ownership for B&B / holiday rental. Hell, we could even stick UK made solar panels on all those roofs.

Just at the time we’ve found the magic money tree and interest rates are so low. Golden opportunity here, with a bit of effort.

[Genie]

1 minute ago, chrisp65 said:

There are over 1,000,000,000 planning approvals already in place

Over a billion new houses?

[chrisp65]

Just now, Genie said:

Over a billion new houses?

Ah that was supposed to be a million.

I developed a stutter. Even I don’t think we need a billion houses.

[Xela]

8 minutes ago, chrisp65 said:

stopping second home ownership for B&B / holiday rental

Absolutely. Air BnB/second homes/holiday rentals have destroyed towns and villages all over the UK. 

[Genie]

4 minutes ago, chrisp65 said:

Ah that was supposed to be a million.

I developed a stutter. Even I don’t think we need a billion houses.

It’s too big for me to get my head around tbh. The implications of building so many houses is monumental. It would make a simple strip of train track between Leeds and London look easy.

[Davkaus]

Council houses used to be reasonably well available, well made, and pretty well maintained.

Governments since the 80s have convinced the public that this isn't desirable, and that having a middleman of private landlords is necessary, or even desirable. How many decent houses were chopped up and let out as tiny, shithole HMOs a few decades ago?

There's nothing wrong with aspirations of owning your own property and being free to do with it as you want, but any British citizen who can't afford that should be able to get social housing rather than being forced in to private accommodation. It's better for the country, it's better for our people, and the only people who lose out are landlords, who quite frankly, can get to ****. Housing for people on low incomes has been a race to the bottom for too long. 

[chrisp65]

1 minute ago, Genie said:

It’s too big for me to get my head around tbh. The implications of building so many houses is monumental. It would make a simple strip of train track between Leeds and London look easy.

It was off the top of my head as a first idea, as there are over one million homes already with approval not being built.

Imagine just providing a quarter of those.

 

[Davkaus]

2 minutes ago, Genie said:

 It would make a simple strip of train track between Leeds and London look easy.

You're wrong about this - One of the big problems with HS2 is the route, and properties already in ther way of that route. There are huge land banks with planning permissions as Chris says, and countless other suitable sites for development.

At the very least, a change I'd want to make is either severely restricting the length of planning permissions, and revoking it they're not built on within a period of time . Use it or lose it. 

[Genie]

2 minutes ago, Davkaus said:

You're wrong about this - One of the big problems with HS2 is the route, and properties already in ther way of that route.

But the route of HS2 is “approved” isn’t it?

Building lots of houses might slow down the rate of house price inflation, and a delay of a potential bubble burst which is clearly good news. I mentioned it not being easy because it’s not just the houses, it’s the roads, noise, schools, hospitals, doctors, dentists, traffic, pollution etc. These things also need to be introduced alongside the houses. I imagine this is probably a contributing factor why the government is struggling to get their target number of houses built. 
 

It may well be a valid way to stop prices going to high and then collapsing, but it’s not easy (hence why it isn’t happening).

[cheltenham_villa]

On 22/08/2020 at 22:00, bickster said:

Sorry but I lived through negative equity and was paying 13 or 14% on my mortgage. We survived. It's like any investment, the value of your investment may go up or down. This has to be taken into account when you make that investment

House prices cannot keep going up the way they have been. Interest rates are very low right now and have been for far too long. Realistically a readjustment has to happen. The continually low interest rates have been part of the problem fuelling the house price boom you've lived through. House prices are way out of kilter with where they should be, it isn't sustainable and its not good for the economy, it is centralising the money flow into the hands of very few people

I dont disagree with many of your points, I think house prices are way out of kilter with income and that the low interest rates are largely to blame. What I dont believe is that a readjustment is possible any more. Firstly the UK cannot afford to return to 13-15% interest rates, the average mortgage balance is far above balances of those days, as you point out people are borrowing 4-5 times their earnings and spending 50% of their income on property. An increase of 2-3 percent would simply cripple many people.

Secondly we now have mortgage rates linked to house prices. We didnt back then. So if my house prices drops and my borrowing is now 90% I pay more. It's in everyone's interest that house prices stay high.

Thirdly the government continue to inflate the house market with stamp duty cuts, help to buy schemes. It's been a priority for all governments, this wont change.

Fourthly, fixed deals. My low interest rate will remain low for 10 years, like many other people. The low cost of borrowing has meant people have secured borrowing for a long time.

I understand all the points you make, I can see the house price increase slowing, it has to I simply do not see a return to those days, the country cannot afford it, times have unfortunately changed.

[chrisp65]

17 minutes ago, Genie said:

But the route of HS2 is “approved” isn’t it?

Building lots of houses might slow down the rate of house price inflation, and a delay of a potential bubble burst which is clearly good news. I mentioned it not being easy because it’s not just the houses, it’s the roads, noise, schools, hospitals, doctors, dentists, traffic, pollution etc. These things also need to be introduced alongside the houses. I imagine this is probably a contributing factor why the government is struggling to get their target number of houses built. 
 

It may well be a valid way to stop prices going to high and then collapsing, but it’s not easy (hence why it isn’t happening).

These aren’t generating any extra people (though they do redistribute people slightly). There won’t be more school children or more dental treatments. They all have planning, so in theory the car parking the flood defences the amenities have all been part of the process.

In reality, some of those approvals will be for 1, 2 or 3 homes in which case car parking and schools are dealt with under that application. Where some applications may be for a housing estate of, say, 70 houses, then they also have to prove the roads and transport links can cope or would also have planning permission, that there is scope in the plan for a shop and a community centre. They will all have had environmental impacts, worked out where the tree preservation orders are, assessed the newts and the bats and the need for a corner shop.

That’s the convenient thing of building off existing approvals, all those extra bus routes and flood plans and school classrooms have already been worked out. Not perfectly, but when I flippantly said ‘oven ready’, they have already been considered.

The reason it isn’t happening is not because it’s tricky. It’s because of landbanking. If you can bag a field for housing and then not build this does several things. First, it stops your competitor getting that land (the same reason supermarkets were pulling the same stunt in the 90’s), it buggers up their application for the field next door and it makes your land portfolio worth far more, now it has planning approval, so you’ve made money without sticking a spade in the ground.

They don’t apply to build and then not bother because it was more complicated than they’d thought.

[chrisp65]

13 minutes ago, cheltenham_villa said:

I dont disagree with many of your points, I think house prices are way out of kilter with income and that the low interest rates are largely to blame. What I dont believe is that a readjustment is possible any more. Firstly the UK cannot afford to return to 13-15% interest rates, the average mortgage balance is far above balances of those days, as you point out people are borrowing 4-5 times their earnings and spending 50% of their income on property. An increase of 2-3 percent would simply cripple many people.

Secondly we now have mortgage rates linked to house prices. We didnt back then. So if my house prices drops and my borrowing is now 90% I pay more. It's in everyone's interest that house prices stay high.

Thirdly the government continue to inflate the house market with stamp duty cuts, help to buy schemes. It's been a priority for all governments, this wont change.

Fourthly, fixed deals. My low interest rate will remain low for 10 years, like many other people. The low cost of borrowing has meant people have secured borrowing for a long time.

I understand all the points you make, I can see the house price increase slowing, it has to I simply do not see a return to those days, the country cannot afford it, times have unfortunately changed.

 

It really really isn’t in everyone’s interests that house prices stay high. How is that in our kid’s interest?

It’s in your interest, currently, due to the way the system is currently contrived. But if the system changed once as you mention, why can’t it be changed again, to protect you against a change in loan to value?

  

 

[Genie]

2 minutes ago, chrisp65 said:

The reason it isn’t happening is not because it’s tricky. It’s because of landbanking. If you can bag a field for housing and then not build this does several things. First, it stops your competitor getting that land (the same reason supermarkets were pulling the same stunt in the 90’s), it buggers up their application for the field next door and it makes your land portfolio worth far more, now it has planning approval, so you’ve made money without sticking a spade in the ground.

They don’t apply to build and then not bother because it was more complicated than they’d thought.

It sounds quite tricky and not “oven ready” to me.

I initially thought when you said a million homes it was a million social / council homes but it sounds like “normal” housing estates that the government will have an option to take a small percentage of at a discount if they wish? This could be the problem, the government is being drawn into the house builder shenanigans and things are stalled.

Do the government build any full on council estates any more? 

[Genie]

3 minutes ago, chrisp65 said:

 

It really really isn’t in everyone’s interests that house prices stay high. How is that in our kid’s interest?

It’s in your interest, currently, due to the way the system is currently contrived. But if the system changed once as you mention, why can’t it be changed again, to protect you against a change in loan to value?

  

 

I think the best case is a stagnation of house prices so that wages catch up a bit because a collapse or reduction is not ideal for the majority either.

Large scale building of social housing could be a lever to achieve that as @chrisp65 mentioned.