to ask how we can sort out housing?

[Hullygully]

So. First time buyers largely priced out. Rents going up. No new building. HB cap. Little security of tenure for private renters. Landlords being stuffed.

When Right-to-Buy was introduced, both as cynical gerrymandering and vote gathering, and because the govt wanted rid of the responsibility for social housing, there was an encouraged explosion in Buy-to-Let to take up the slack.

Now we have a large number of landlords with a few properties operating on narrow margins who have little protection against rogue tenants (particularly those on HB who are told by their councils to wait it out until eviction) and who are able to pocket the first 8 weeks of rent before any action can be taken, and who are therefore understandably reluctant to take on HB tenants, plus, with the introduction of the Cap, HB tenants will be able to pay less than the market rent in large areas of the country.

Then renters have little security, they can be given two months' notice after six months, a nightmare particularly for families settled at schools etc. And of course there are some nightmare landlords around who don't carry out repairs etc.

Suggestions?
Solutions?

The statement you quoted answered your questions TillyMinto.

Young people who bought in the last 5 years, or those in negative equity were sold a shit sandwich.

a house price fall wont be a managed event occuring in the areas that need it.

interest rates would go up for everyone as banks take on a higher risk

perhaps but i wouldnt wish some more crap in there for them!

House prices will come down for the reasons babyjake outlined- because at current levels they will sufficiently damage the competitiveness of the UK economy mid-term that there wont be enough people who can afford to buy these houses because there will be many unemployed people, so they'll be sold for less.

That is far more painful than some people getting repossessed.

so would you be in the queue for reposession Cheryl?

house prices will stagnate until wages catch up.

Wages will never catch up Hully. The global trend is for downward pressure on wages. That is a structural trend as well as a cyclical one.

It's not a question of wishing more crap in it for them. It's a question of do you want a system for future generations which enslaves them via paying most of their income on housing, or a reset to make things fairer. Some group has to take some pain.

As much as I lay the blame mostly on media and financial services in force feeding people shite about high house prices being good, people should have the sense to question it, and if they didn't what can you do?

so would you be in the queue for reposession Cheryl?

Frankly, yes.

Like I said, I feel extremely sorry for people who would be repossessed, but that doesn't mean it's not the right thing to happen.

Here's an example. There was an article in Newsweek about accounting outsourcing centres in Sri Lanka to which western companies are outsourcing all their financial accounting, because a Sri Lankan Chartered accountant gets £7k per year, whereas a UK Chartered accountant gets upwards of £30k.

Ok, so the initial reaction is that they're just being exploited. But are they? If you look at housing/other living costs, you can live very well in Sri Lanka on £5k, possibly better than you can live in London on £30k.

There's the problem with high housing costs in a global economy.

I agree about dodgy financial services but i think the drop would be far less managed than you imagine.

i see the ecomony splitting into layers more. the more money you have, the more you pull away from those with a lower income. society becoming more like America. but those at the bottom affected worse by global competion.

the only solution i can see is v long term & it is invest in education more (& help all children have a fair opportuntiy at a good education)

TheRealTillyMinto

First, for most young people, house prices falling are a good thing because they probably want to trade up to a bigger house later. I just don't get people who buy at 2-bed flat at £250k and then are happy that it has gone up to £300k when they then tell me they want to buy a 4-bed house at £600k that they could have bought at £500k if house prices hadn't gone up.

Second, if you bought a house in the last 5 years and are in negative equity then it means that you bought without a decent deposit. If you bought without a decent deposit then you were overleveraged. I can buy shares on leverage through a spread bettng account. I can lose more money than I put in. Nobody helps me when that happens. I shouldn't have speculated. So why are houses any different? Share prices can go up and down. So can house prices. Buying a house is a leveraged speculative investment. People need to get that.

so prices drop, increasing the number of people in neg equity then:

banks ask for even larger deposits
banks charge even higher interest (compared with BoE, which is at an all time low)

so more people are in neg equity and

banks ask for even larger deposits
banks charge even higher interest (compared with BoE, which is at an all time low)

whose buying? your couple above arent going to want to trade up as prices slide. first time buyers? too large a deposit.

when it hits the bottom, how will buy? not first time buyers as the deposits will be enormous.

who will benefit? anyone with cash or in a family with cash.

not how will buy? who will buy...

the last few years credit risk has been underestimated. now having cash puts you at a massive advantage compared with anyone else.

People will always prefer to pay into a mortgage as opposed to renting because houses are part of the pension pot. My private pension will provide me with next to nothing when I retire. I am glad that I managed to get on the property ladder when I did.

I think part ownership is the way forward but the system needs tweaking as it isn't really working as it stands.

My friend is a director in the public sector earning around 45k she can't get a mortgage because the deposit required is too big and she can't save much as she is paying out a lot in rent. She doesn't qualify for shared ownership because she earns too much.

We would like to move up the property ladder but we can't afford a 3 bedroomed family home as the gap between a starter home and a bog standard 3 bedroom is a minimum of £100k. We also don't qualify for shared ownership. Surely if they let families like us participate in the scheme it would keep the property market moving as our starter home would then be on the Market.

A relative of mine lives in a 2 bedroom flat which they bought through shared ownership. They have outgrown it but cannot move because the housing association make it so difficult to sell, there are lots of rules that I won't go into. She would like to buy the other 50 per cent as it would then be easier for her to sell the whole flat. She can't buy it because she needs a deposit and yet she has enough equity to cover the deposit but can't because the rules surrounding remortgaging are different when you are in shared ownership.

The whole system needs looking at as I really think shared ownership could boost the economy and solve the housing shortage.

Any solution will require pain somewhere: but the one you offered was simplistic in the sense that it will cause a lot of pain (to the middle calsses, the young families and the poorest) but not actually solve the problem. And the UK system is no less corrupt than a system (like many continental ones) where it's much more expensive to borrow and many young poeple need their parents to guarantee for them.

I do not believe in "big bang" solutions (with very very few exceptions) - I think a much more concerted effort of smaller changes over time is more likely to be successful in this specific case. I am happy to pay more taxes to improve council housing stock (alongisde some changes in tenancy rules), better regulation for tenants and landlords is required, bring on changes to the property laws, and I can see how a property tax may have to be considered (I am sure that is on someone's desk at the treasury actually...). We cannot solve this problem in 6 months. Or a year. It will take 20 years whatever we do. And a brave government or three

"Buying a house is a leveraged speculative investment". I am not sure you can compare buying a house with buying shares though - one can live happily all their life without ever buying a share or any other investment, whilst you will, at some point, get a house.
So the decision for your average person is never going to be purely financial: even the economists that have been predicting a crash since 1995 own houses after all (they are often asked the question in the interviews). Again, on balance I still prefer to own my house, especially since having DD regardless of the fact that I may be better off renting financially (has never yet been true in my case anyway). DO we think people are as naive as to think that the value cannot go down? Maybe so.

What I do think it's very sad is that my generation is going to have to subsidise our children a lot more - whether through inheritance, deposit for a house or by living with their offspring much longer. Which is considered normal where I come from, but perhaps may be a bit of a shock to British parents...

There's no point in investing in education if that workforce is still uncompetitively priced vs the competition.

We need to do something about the cost base. House prices must fall, or doom a generation.

I'm really sorry I've reached my deadline to mn so cant read all posts
My biggest suggestion would be creating businesses in the north (wales etc). There are plenty of empty houses in ex mining and other former industrial areas. Make it worth businesses while to mive into those areas

pologies if already been said or if threads already off on a tangent

My solution is investment in technology that allows people to work from home 2/3rds of the time, where possible (granted not all jobs allow you to work from home).

Then there will not be millions of people all wanting to live in the same job-magnet towns, thus increasing demand and prices. People can live where they like and travel twice a week.

Good point Bumps. If we can outsource admin jobs to Sri Lanka, why can't we outsource them to Burnley (for example)?

I suspect the answer is that the cost-benefit of not having the relevant people on site requires a more significant cost saving but who knows?

Great idea Bumps

It would also relieve pressure on our overloaded transport systems, reduce carbon emissions, etc.

Absolutely. Increased working from home would help ease numerous problems, including our dependence on hugely expensive fuel.

Real,

companies have been outsourcing within the UK and outside for years. Bank call centres used to be in London, or instance, but they have moved up north (Scotland, Bradford, north east etc) or to India. In general, though, it's the low specialisation jobs that get moved, so the jobs that are created tend to have poorer pay and conditions than the jobs that remain in London, New York or Berlin. So it's not always so great for the people of Burnley.

Mind you, the Inland Revenue, Dept for Education, Work and pensions, all have other offices in Sheffield, Liverpool, Blackpool, and I believe they do not offer a bad deal.