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Guest blog: Shelter's Chief Exec on the rise of unaffordable housing

(574 Posts)
JessMumsnet (MNHQ) Fri 08-Feb-13 15:21:40

This week, to highlight the fact that housing is increasingly unaffordable for many, Shelter published research which showed what our weekly shop would cost if food prices had risen to the degree that housing costs have done over the last decade.

In this guest blog, Shelter's Chief Exec Campbell Robb warns that unless something changes, the next generation will find it even tougher to get a stable and affordable home.

What do you think? Are you struggling to get on the property ladder, with rising rents making it increasingly difficult to save for a deposit - or are you worried for your children's prospects? How do you think the situation could be improved? Post your URLs here if you blog on the subject, or tell us what you think here on the thread.

swallowedAfly Thu 28-Feb-13 16:41:56

i'll say it again - length of term DOES matter. it may not matter you 'we're only paying the interest' but it matters to the lender who is taking a higher risk and losing their capital for longer (and therefore having less money to lend out to other people seeing as they've tied up so much of their capital with these kind of idiotic mortgage arrangements).

swallowedAfly Thu 28-Feb-13 16:43:18

it also means that they can't cut back on idiotic loans quickly enough and start paying decent interest rates to savers and loaning out responsible mortgages to responsible lenders (re: those who can cover repayments and pay back in 25years or less).

it' hth

swallowedAfly Thu 28-Feb-13 16:47:29

reality is the lenders would have lost tons more if interest rates had been allowed to rise - loads more repossessions, lower house prices, massive mortgage shortfalls. so to keep irresponsible borrowers propped up so that irresponsible lenders don't lose even more of their capital than they've already fucked up (and that capital is our pension funds, long term savings, investments etc hence goodbye decent pension schemes and goodbye care for people in their old age etc).

between the irresponsible lenders and the irresponsible borrowers the rest of us have been royally fucked over for generations to come.

how do you not 'get' this?

mortgages were never meant to be interest only and 35years long. lenders got greedy, borrowers and btl borrowers got greedy. the result is what you see before you.

i appreciate though that the concept of a social conscience probably doesn't factor highly in your life.

swallowedAfly Thu 28-Feb-13 16:50:40

incidentally given your salaries have allegedly doubled since buying properties 6 or 7 years ago. how many times your combined salaries were you allowed to borrow at that time? think you have three houses and the one discussed was £135k i think.

interest only, 35 years and what - indebted to ten times your salary at the time? and getting away with it at the expense of everyone else sadly. i think you'll find people are not being 'mean' but perhaps a little stunned at your determined obtuseness.

OBface Fri 01-Mar-13 00:32:00

Do people not get the concept of interest only? You are never going to pay off the balance because it is INTEREST ONLY so the term doesn't really matter. Though to be fair we do pay down our loan between products. The only reason I cite 35 years is because this is the approx period we'd look to hold our properties for.

Not that it's any of your business but we earnt around 70k between us when we bought. Nowhere near 10 x our salaries as you have suggested. Why are people making assumptions when they know so little about our lives?

Expat - I find that a little hurtful. All I have done is counter any uninformed views on my life. Can you blame me?

expatinscotland Fri 01-Mar-13 02:37:13

Hurtful? This thread has become All About You and your personal situation.

expatinscotland Fri 01-Mar-13 02:40:15

As such it is indicative of all that is wrong with the sham of a housing system in the UK and why it needs, but will never get, massive reform, because it isn't about a home or shelter anymore, it's about ME ME ME and my financial vehicles.

A backwards force that will send any young person who can jump ship to other shores doing so. AGAIN.

It's like no one in power ever learns a thing from history in this country and condemn others to bear the brunt of their foolery.

This will be propped up, and the expense of nearly everyone else. Nothing will change.

swallowedAfly Fri 01-Mar-13 07:12:14

no it's you who doesn't get it - of course you will pay the balance back when the house is sold. the longer the term the longer the bank is without that capital and the longer that capital is out of the market for lending to others.

never pay it back ffs. it's not your money - it will go back, it's just a question of when. interest only loans mean the bank is only getting the interest and is out of pocket of that capital (and gambling on ever seeing it again) for the whole term whereas with a repayment mortgage they are getting some of it back every month and reducing the risk month by month as they recoup some of what they gambled out. on a longer term interest only mortgage they are gambling for a longer term and having less cash flow (capital to lend or invest) for a longer term.

if banks have very little capacity to lend (they're only allowed to gamble so much of our pension funds, savings, etc thankfully) and they've lent out loads of that to people who are making no repayments for 35 years of course that creates problems.

is there a brick wall round here for my head?

OBface Fri 01-Mar-13 23:20:05

Swallowed - of course I am aware that the loan will be paid back at the point of sale, I simply meant that by the very nature of interest only products the mortgage isn't reduced. The 35 year time period I mentioned was the earliest point at which we'd think about selling. And we personally have taken the decision to pay chunks off between switching products. But fair enough point, to say it would never be paid back was the wrong choice of words.

Expat, I have had people on this thread make assumptions about the state of our properties and how we operate as landlords, tell me that I'm lying about the financials and that they would take great glee in me losing a lot of money. I don't see that as particularly nice.

I really really haven't wanted this to be all about me but have felt the need to counter some of the assumptions people have made about me. Surely you can understand that? I'm sure we'd probably agree on many things politically, I just wanted to show that not all landlords are equal and that there is a world of difference between me with my very small portfolio of high quality properties and another landlord with a hundred barely habitable properties. Students need student accommodation whatever way you spin it.

And worth pointing out that when we bought the properties in 2006/7 I was only in my mid 20s so exactly the sort of young person who you say would jump ship to another country.

I'm not sure if you've read the entire thread but just in case you haven't here's a little background. We bought a couple of properties as part of pension planning as neither me or my husband gets a pension through work. If we had taken jobs in the public sector or had jobs where employers contributed to a pension pot we wouldn't have had to do this as we would have been well provided for in our old age. But we don't and I wouldn't want to be a burden to the tax payer later in life. To do this we bought a relatively modest house to live in and split the rest of the money we could get a mortgage for (based on our salaries) to buy a couple of properties. So to be fair we were lent the same amount of money for 3 properties as as if we had bought one large house though take on board swallowed's point about the banks not getting the capital back on two of them (not quite true as we probably have paid back about the same as if we were on a repayment mortgage by saving some of the profit and paying down between products).

swallowedAfly Sat 02-Mar-13 07:39:10

do you acknowledge that you have been allowed to tie up masses of capital (for your profit and income) that could be being lent out to people buying family homes who can't get mortgages? do you understand that the money you have been lent and are tying up is from people's pension funds, long term investments and savings? do you get that by keeping rates low for people like yourself those savings and pension funds are not making money?

i don't think you fully grasp that that £110k on this property and however many on the other property (leaving aside your 'home') is real money that has been lent to you and is therefore missing from the pool that can be lent and missing from the funds it has been taken from.

the bank really gave the person you bought from that real money. that real money really came from somewhere - savings, pensions, investments etc and therefore it really does make a difference how long the term is and what return is being seen on that money.

swallowedAfly Sat 02-Mar-13 07:40:12

and the bank really shouldn't have lent out other peoples money on such a piss poor return with no repayments being made whatsoever.

WhatKindofFool Sat 02-Mar-13 07:48:45

So, if it wasn't for buy to let landlords, where would students live?

swallowedAfly Sat 02-Mar-13 07:57:41

the university here is looking to build more residences away from uni in the town and have preliminary planning permission to do so. it is revenue for the uni and jobs for the people who will work there.

also landlords have always rented out to students however they were landlords who actually 'owned' their property portfolios rather than having interest only mortgages tying up capital and needing to be subsidised with ridiculously low mortgage rates.

it's also worth considering that these 'student houses' that are being rented out pay zero council tax. i do believe that where landlords are profiting from renting out to students they themselves should make a council tax contribution for that property as students are exempt yet using more services than their neighbours who are paying.

a student house may have 4 times the rubbish to be collected yet pay nothing towards that. the landlord should pay council tax imo when they are renting out a property to council tax exempt tenants.

swallowedAfly Sat 02-Mar-13 08:00:06

they don't own the capital (our savings do), they are making pure profit without risking their own capital and they are costing the local council thousands of pounds in council tax that could be being collected on that property.

so effectively whilst a btl landlord is profiting from renting out to students in a university town every single council tax payer is losing out and having higher council tax bills to offset them once again.

WhatKindofFool Sat 02-Mar-13 09:17:34

I see your point but even in purpose built student accommodation, the students would pay no council tax. The landlords could pay it BUT these schemes have to be profitable otherwise they would not be built. Getting planning permission involves paying a whole host of "taxes" which severely affect the viability of new development.
Where I live the city council has allowed loads of this purpose built accommodation but there is still loads of traditional rental lets which are a lot more affordable than the private halls of residence. Not all students are able to afford to live in these halls as the rents in them are a lot higher than they are in shared houses.
Even privately owned traditional lets lead to employment - maintenance, extensions, new kitchens and bathrooms, administration, etc. They do contribute to the economy.
I agree that it is a shame that the letting business raises house prices so that families cannot afford to, or would even want to, buy in certain areas but I cannot see an easy solution to this problem. I think it is unfair to blame the landlords.

WhatKindofFool Sat 02-Mar-13 09:19:45

Also, in respect of returns to the banks, the interest rates on buy to let loans are substantially higher than for a private mortgage and the deposits have to be a lot bigger too. Therefore, the loans are profitable to the banks.

swallowedAfly Sat 02-Mar-13 11:34:37

the university would pay for the services provided to the commercial building and would pay business rates i think wkof.

student halls tend to be expensive because there are not enough of them, huge demand for them ergo high price.

OB on here payed a 15% deposit only and claims to be paying somewhere between 2 and 2.5% interest only. traditionally yes they paid big subsidies but the banks got greedy and stupid around that time.

Xenia Sat 02-Mar-13 11:41:36

It has got rather personal on here.

I remember the days of rent controls and no properties to rent and those that were of a dreadful state. These days tenants have huge choice and much better conditions and there is a ready market of places to rent. It is a social good. Most of these buy to let landlords have one place or they are renting somewhere having moved and cannot sell the first place their only place to let it out. There are not rapacious Rackman types doing the poor down. on the hole if prices dont' rise they mkight have done better on the stock market or with their money in the building society. Obviously they hope over time prices will rise and they may or may not but in the meantime they are providing homes for those who rent. We always have cycles of prices getting to high an then dropping back, negative equity and gains, over every few decades in the UK, crashes and highs. That is likely to continue.

As for interest only loans those who have them including many on their own home, never mind letting out properties, they do try to pay back capital when they can so they do not have to be the dangerous things portrayed.

As said above the buy to let interest rates are higher and they like 25% deposit so that protects the banks.

igrcs Sat 02-Mar-13 18:11:41

Message deleted by Mumsnet for breaking our Talk Guidelines. Replies may also be deleted.

roneik Sat 02-Mar-13 19:15:26

swallowedAfly Sun 03-Mar-13 19:57:07

that was a blumming long advert roneik

roneik Mon 04-Mar-13 16:30:11

True they were trying to flog their wares , but there were a few home truths there too.

It’s not all doom and gloom though, might be after a few more rounds of quantitative passive give it all to the bankers easement

All ponzi schemes eventually come to an end

roneik Mon 04-Mar-13 16:36:18

Don’t you just love it when a plan goes well not?

I mean got to make sure all those bankers and bad risk mortgages and buy to fretters {with an F ) are saved

Never mind those pensioners and working families soon to be rummaging in bins eh!

peterkenneth Tue 18-Jun-13 07:49:00

Great piece of writing. I loved the contents.

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