Bolitics The New Condem Government

[chrisp65]

Going back to the Help To Buy home ownership scheme. I happen to think it is an excellent scheme, having looked into it. Anything that gives people, especially a first time buyer, a helping hand in getting on the ladder is a good thing surely? I don't see why there is opposition to it? Mainly from people already on the ladder who almost seem to resent people getting help. Or it is just because this government have proposed it?

 

Property prices aren't coming down and lenders still aren't lending with confidence. Well done to the government for looking at ways to tackle this problem.

 

In the 6th year, you'll be charged a fee of 1.75% of the loan's value. After this, the fee will increase each year by Retail Price Index plus 1%. 

The retail price index is going up by at or about 3% at present, so 3 = 1 is, er, 4%. Not much, quite competitive, just make sure you can afford a 4% rise in repayments of the govt subsidised element of your mortgage. Shouldn't be a problem if your earnings go up and inflation doesn't.

 

Shouldn't be a problem for the tax payer as long as those taking out the loans don't default due to redundancy.

 

Subsidising house purchases rarely goes wrong for a country. Right?

 

I'm really really not resenting the perceived help of others, I'm eligible for the scheme too if I decide to buy in england. What I'm suggesting, quite radically admittedly, is rather than temporarily subsidise the purchase of expensive houses, why not make houses cheaper? We have a need to boost the economy, we have unemployed people, we have land banks not being used and we have a housing shortage. Surely its not beyond our ability to get people in work building houses which would give more people an income whilst solving a problem.

 

Here's a thought, use some empty factories to make super efficient super insulated modern prefabs.

[tonyh29]

A lot of people have a lot of money tied up in houses ... I would imagine that for many it is their retirement fund as they downsize when they are older and live off the profit

Devalue everyone's property and I think people will be marching on Downing stretch with pitchforks

Appreciate its tough for first time buyers nowadays to get on the ladder , wasn't there talk of a scheme whereby the government owned the land and people bought the house for about half the price and thus could get on the property ladder ?

[chrisp65]

A lot of people have a lot of money tied up in houses ... I would imagine that for many it is their retirement fund as they downsize when they are older and live off the profit

Devalue everyone's property and I think The Mail And Express readers will be marching on Downing stretch with pitchforks

Appreciate its tough for first time buyers nowadays to get on the ladder , wasn't there talk of a scheme whereby the government owned the land and people bought the house for about half the price and thus could get on the property ladder ?

 

Yeah true, if only mortgages weren't so massive due to high house prices, we could invest in our savings and pensions.

 

Having houses going up perpetually to give a pay off by downsizing at the end of the cycle can't be sustainable can it?

 

Don't get me wrong, I'm currently set to benefit from this crazy system, my house has trebled in value since buying it, but that doesn't make it good for society. Oh yeah, sod society, I'm alright.

[bickster]

At some point home owners are going to take avery big hit, it's just a question of when and who gets the blame

[tonyh29]

You could always donate your "treble" to society if you feel that strongly

I used the housing market to upgrade over the years , you could argue that if my house value was halved overnight it would put me back to where I was before I got on the housing market and thus technically I've lost nothing but I'm not sure it works that way ?

[peterms]

A lot of people have a lot of money tied up in houses ... I would imagine that for many it is their retirement fund as they downsize when they are older and live off the profit

Devalue everyone's property and I think people will be marching on Downing stretch with pitchforks

Appreciate its tough for first time buyers nowadays to get on the ladder , wasn't there talk of a scheme whereby the government owned the land and people bought the house for about half the price and thus could get on the property ladder ?

 

What you're describing is a Ponzi scheme.  Everyone gets richer until the music stops.  No real value has been created, there's just an unspoken collective agreement to trade the same goods for ever higher prices, and those who got in early or own more property can cash in some of the nominal value of their property, paid for by new entrants to the treadmill.

 

On what basis would anyone say this is not madness, utterly unsustainable, and no way to run an economy - other than personal interest in keeping the scheme running while they collect their share?

 

I'm sure that people who have spent years convincing themselves that they deserve the windfall profits of their property appreciating in value through no effort on their part would be angry if these windfall unearned profits were denied them.  In the same breath, they'll no doubt moan about benefit claimants wanting "something for nothing".  Let's face it, who would turn down a few score thousand gifted to them?

 

The idea of government ownership of land is interesting.  Builders make profit from buying and selling land, not from building better homes.  We need to remove the speculative windfall gains from land prices (by taking land back into common ownership, where it was before people grabbed it for themselves), push builders to improve the product they make, and have more housing of far better standard at far cheaper prices.  But we are at present a rentier society, where people think it's right they make money simply from being sat on their lardy arses, while others work to pay them rent.

[bickster]

You could always donate your "treble" to society if you feel that strongly

I used the housing market to upgrade over the years , you could argue that if my house value was halved overnight it would put me back to where I was before I got on the housing market and thus technically I've lost nothing but I'm not sure it works that way ?

You'd still have your house.

[tonyh29]

You could always donate your "treble" to society if you feel that strongly :)I used the housing market to upgrade over the years , you could argue that if my house value was halved overnight it would put me back to where I was before I got on the housing market and thus technically I've lost nothing but I'm not sure it works that way ?

You'd still have your house.

And also potentially a mortgage greater than the new value of the house ? Or would the banks be forced into reducing everyone's debts along with this house value reducing exercise ?

[mockingbird_franklin]

A lot of people have a lot of money tied up in houses ... I would imagine that for many it is their retirement fund as they downsize when they are older and live off the profit

Devalue everyone's property and I think people will be marching on Downing stretch with pitchforks

Appreciate its tough for first time buyers nowadays to get on the ladder , wasn't there talk of a scheme whereby the government owned the land and people bought the house for about half the price and thus could get on the property ladder ?

 

Tony does have a point, massive house price deflation of the kind required to bring the market to where it really should be could cause untold problems if very careful consideration isn't given, things to consider could be schemes implemented, where you are compensated for the loss by a comparable mortgage decrease, ( I think Iceland used a scheme like this when they refused to bail out the banks) Also the likely big winners will be equity rich individuals who have housing portfolios of rental properties who will likely hoover up the now cheaper housing because of increased potential yield. so you may need to legislate to prevent this scenario possibly via taxation to make it less attractive to such an extent it doesnt happen. The problem is legislation should have been in place to prevent the housing bubble, unfortunately it wasn't in the personal interest of the people who should have tried to prevent it or the lobbyists who have their ear. It probably long term would have huge benefits to facilitate a correction of house prices with lower rents etc (think benefit savings), I think on the whole land bank situation, government should look at some sort of stipulations that prevent land banking as a way to drive up profits by creating a false shortage. maybe legislation that requires more self build plots opened up so people can build the houses they really want rather than the overpriced rabbit hutches most building firms want to sell at inflated prices. I personally would love to self build, who wouldn't want to build a proper 3 or 4 bedroom house for a price that is massively (I've seen current estimates that put the saving at about 40%) below the current poorer off the peg options. Currently there are huge brownfield land banks around the country created by the compulsory purchase that took place under Gormless Brown of older properties that were cleared but never developed due to the money running out, open these up to self builders. One thing for sure the current overprice of houses isn't good for majority, but a minority do very well from it

[tonyh29]

A lot of people have a lot of money tied up in houses ... I would imagine that for many it is their retirement fund as they downsize when they are older and live off the profit

Devalue everyone's property and I think people will be marching on Downing stretch with pitchforks

Appreciate its tough for first time buyers nowadays to get on the ladder , wasn't there talk of a scheme whereby the government owned the land and people bought the house for about half the price and thus could get on the property ladder ?

 

What you're describing is a Ponzi scheme.  Everyone gets richer until the music stops.  No real value has been created, there's just an unspoken collective agreement to trade the same goods for ever higher prices, and those who got in early or own more property can cash in some of the nominal value of their property, paid for by new entrants to the treadmill.

 

On what basis would anyone say this is not madness, utterly unsustainable, and no way to run an economy - other than personal interest in keeping the scheme running while they collect their share?

 

I'm sure that people who have spent years convincing themselves that they deserve the windfall profits of their property appreciating in value through no effort on their part would be angry if these windfall unearned profits were denied them.  In the same breath, they'll no doubt moan about benefit claimants wanting "something for nothing".  Let's face it, who would turn down a few score thousand gifted to them?

 

The idea of government ownership of land is interesting.  Builders make profit from buying and selling land, not from building better homes.  We need to remove the speculative windfall gains from land prices (by taking land back into common ownership, where it was before people grabbed it for themselves), push builders to improve the product they make, and have more housing of far better standard at far cheaper prices.  But we are at present a rentier society, where people think it's right they make money simply from being sat on their lardy arses, while others work to pay them rent.

Can't really argue with that its the getting off the cycle I just can't see any way of

I know a few people who bought houses for £70k that are now valued at say £250k ... What those people have done is remortgage and remortgage based on that perceived equity and spent the money on cars , holidays and in some cases home improvements ... So though no real value has been created , maybe in terms of money entering the system there is in examples like this ?

[peterms]

Can't really argue with that its the getting off the cycle I just can't see any way of

I know a few people who bought houses for £70k that are now valued at say £250k ... What those people have done is remortgage and remortgage based on that perceived equity and spent the money on cars , holidays and in some cases home improvements ... So though no real value has been created , maybe in terms of money entering the system there is in examples like this ?

 

Yes, value has been created through their borrowing, because they've spent it on the things you describe, which have caused people to be employed and paid, goods to be bought from secondary suppliers to help make the cars and service the holidays...

 

What hasn't happened is any significant creation of new value from the house itself.  It may have been extended a little, or better insulated, or had the roof renewed, or maybe not.  The new economic activity in this cycle comes from creating new money and spending it into the economy.  In your example, that would not have happened otherwise.

 

What is at the same time amusing and baffling, is that people maintain steadfastly that it is utterly wrong for the government to create new money and spend it, while relishing the effect creating new money has when done on a private basis.  And yet the problem we have is the overhang of private debt...

[mockingbird_franklin]

 

 

A lot of people have a lot of money tied up in houses ... I would imagine that for many it is their retirement fund as they downsize when they are older and live off the profit

Devalue everyone's property and I think people will be marching on Downing stretch with pitchforks

Appreciate its tough for first time buyers nowadays to get on the ladder , wasn't there talk of a scheme whereby the government owned the land and people bought the house for about half the price and thus could get on the property ladder ?

 

What you're describing is a Ponzi scheme.  Everyone gets richer until the music stops.  No real value has been created, there's just an unspoken collective agreement to trade the same goods for ever higher prices, and those who got in early or own more property can cash in some of the nominal value of their property, paid for by new entrants to the treadmill.

 

On what basis would anyone say this is not madness, utterly unsustainable, and no way to run an economy - other than personal interest in keeping the scheme running while they collect their share?

 

I'm sure that people who have spent years convincing themselves that they deserve the windfall profits of their property appreciating in value through no effort on their part would be angry if these windfall unearned profits were denied them.  In the same breath, they'll no doubt moan about benefit claimants wanting "something for nothing".  Let's face it, who would turn down a few score thousand gifted to them?

 

The idea of government ownership of land is interesting.  Builders make profit from buying and selling land, not from building better homes.  We need to remove the speculative windfall gains from land prices (by taking land back into common ownership, where it was before people grabbed it for themselves), push builders to improve the product they make, and have more housing of far better standard at far cheaper prices.  But we are at present a rentier society, where people think it's right they make money simply from being sat on their lardy arses, while others work to pay them rent.

Can't really argue with that its the getting off the cycle I just can't see any way of

I know a few people who bought houses for £70k that are now valued at say £250k ... What those people have done is remortgage and remortgage based on that perceived equity and spent the money on cars , holidays and in some cases home improvements ... So though no real value has been created , maybe in terms of money entering the system there is in examples like this ?

 

And this is another example of how house price inflation didn't actually benefit lots of people, they still ended up with the big mortgage is if they had paid the higher price in the first place (O.K. they got a nice new car and a few nice holidays out of it), I'd say 70%+ of the people I know that bought before the house price bubbles have done this.

[chrisp65]

I know a few people that have used their new found property wealth to draw down money and buy a car.

If ever there was a bad economic model, it would be to buy an item that devalues like a car (or holiday) by increasing the risk on your home and paying interest on that decision for 10, 15, 20 years. I think it's fair to say they'll be paying for that car long after they've traded it for something else.

 

To a great extent, we still haven't grasped what happened five years ago and we are all sat here, waiting for the cycle to kick on again.

[mockingbird_franklin]

 

would not have happened otherwise.

 

What is at the same time amusing and baffling, is that people maintain steadfastly that it is utterly wrong for the government to create new money and spend it, while relishing the effect creating new money has when done on a private basis.  And yet the problem we have is the overhang of private debt...

 

Yet in the same breath, these same people think It's fine for new money to be created by the private banks and be lent at compound interest to the Government to spend. Failing to see that that same money created by the government themselves could be interest free.

Before you say thats not possible or feasible , America did it when it was still a part of the British Empire, In fact it was one of the main contributory reasons for it's initial prosperity, and the banning of this activity by Great Britain and the resultant poverty caused by the poor compulsory exchange rate into British Pounds was actually a huge reason for the revolutionary wars. America also successfully had a government issued currency this during Lincoln's presidency and it was a huge success, as it was when Britain did it in the early 1900's. It was a huge success and worked when Guernsey did it after the Napoleonic wars. Unfortunately every time this succesful policy has breen stopped by outside influences and reverting back to allowing private banks to issue new money and charge compound interest has prevailed against the best interests of the country and the people.

[Xela]

 

Going back to the Help To Buy home ownership scheme. I happen to think it is an excellent scheme, having looked into it. Anything that gives people, especially a first time buyer, a helping hand in getting on the ladder is a good thing surely? I don't see why there is opposition to it? Mainly from people already on the ladder who almost seem to resent people getting help. Or it is just because this government have proposed it?

 

Property prices aren't coming down and lenders still aren't lending with confidence. Well done to the government for looking at ways to tackle this problem.

 

In the 6th year, you'll be charged a fee of 1.75% of the loan's value. After this, the fee will increase each year by Retail Price Index plus 1%. 

The retail price index is going up by at or about 3% at present, so 3 = 1 is, er, 4%. Not much, quite competitive, just make sure you can afford a 4% rise in repayments of the govt subsidised element of your mortgage. Shouldn't be a problem if your earnings go up and inflation doesn't.

 

Shouldn't be a problem for the tax payer as long as those taking out the loans don't default due to redundancy.

 

Subsidising house purchases rarely goes wrong for a country. Right?

 

I'm really really not resenting the perceived help of others, I'm eligible for the scheme too if I decide to buy in england. What I'm suggesting, quite radically admittedly, is rather than temporarily subsidise the purchase of expensive houses, why not make houses cheaper? We have a need to boost the economy, we have unemployed people, we have land banks not being used and we have a housing shortage. Surely its not beyond our ability to get people in work building houses which would give more people an income whilst solving a problem.

 

Here's a thought, use some empty factories to make super efficient super insulated modern prefabs.

 

 

I know what you are saying and yes, in an ideal world new housing would be more affordable but that does't seem likely to happen does it?

 

So, schemes like this are needed to give people a helping hand. I assume you are vetted and approved and have to hit certain criteria to be eligible (steady job etc), and you still have to be approved by a mortgage lender. I haven't read into it in great detail, just the headline facts as a work colleague is thinking of using the scheme. Its aimed at people who can afford a mortgage but due to renting, they haven't been able to build up sufficient deposit stake in order to get the 10%-20% that most lenders seem to want now (in order to get decent rates). 

 

The subsidy is interest fee for 5 years and as you say then a fee of 1.75% is payable, increasing by RPI plus 1% every year. The example they give is a £40,000 subsidy based on a £200,000 house. After 5 years a fee of 1.75% is payable (can pay monthly) which works out to be £700. The example shows RPI at 5% which gives a 6% increase the following year to £744. Following year to £788. I think a nominal increase like that is good value! Obviously the idea is for you to pay the 20% subsidy back (or 10% at least). I think a £60 a month 'fee' for having the use of £40,000 5 years previous is nothing at all. 

Edited June 10, 2013 by Xela

[villaajax]

I'm glad I don't go to school any more

 

I know this isn't really news as we've known about this for a long time but it's still shocking to read. Isn't there anyone sensible enough in the Tory party to rein in this reckless moron? Surely they can't all be so deluded to think that taking education back to the 1960s is a good idea?

 

Saying that they pressed on with the tearing apart of the NHS that nobody wanted and nobody voted for.

 

The Tories really are outdated and out of touch.

[tonyh29]

Can't see any big deal in those changes tbh

[Risso]

Me either.  Making GCSEs not shit doesn't seem like the worst idea in the world.

[coda]

Were pupils not required to read the whole of a play or novel? That is hard to defend.

[villaajax]

This whole idea of GCSEs being too easy is nonsense. And unless anything has changed in the past 7 years they do have to read novels, plays and poetry, I did.