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?

You see, a house price fall wouldn't really affect my folks as their place has tripled in value in the last 12 yrs and they bought with no mortgage. It will affect my age group who bought, and in many cases saved and saved and saved to do so. They weren't to know things were overpriced, how were they? I agree things need to change in some respect, still sucks for them though. Especially as many of those on here who appear quite blase about it won't necessarily be the ones affected.

We're ok, we have a large deposit, small mortgage and good savings having bought well 18 months ago, but still sucks.

PigletJohn - perhaps I should rephrase. Rather than mentioning mild recessions/depressions, we should say Keynes' wouldn't have used stimulus when one of the fundamental problems with the economy was already huge amounts of debt.

The great depression was different as there wasn't a debt burden of the magnitude there is now (apart from Weimar).

They weren't to know things were overpriced, how were they?

We've already established there are loads of young people who were aware that something was fundamentally wrong - it was common sense. That others chose to believe the media hype and devil's smiles from loose lenders is an educational problem that is deeply ingrained in the psyche of society.

Bollocks. If you grew up in the age that house prices were high, and when you left school and started work house prices were what they were, then it was all they knew! The housing market was always going to keep moving. Blaming those who did buy for a lack of common sense seems a little "I'm alright Jack", and I find that quite sad. But not uncommon on here to be honest.

Where we live rental prices are through the roof. For many buying was the most sensible option.

Ps: I'm only 30, and despite reading the financial press every day when prices were high due to my job I would have been hard pressed to see anything indicating anything was wrong. So what fundamental mistake did that whole generation make? What did they miss that was so obvious to the more savvy?

What they missed was that house prices don't always go up - and certainly not double digit gains year on year for ever when no-one could save that fast or get pay rises that quick. Surely you don't have to be that smart to realise that was unsustainable???

I'm only three years older than you, but I remember the late 80's, early 90's crash rather well. I was a strange child.

I thought it was well understood by sensible people that house price inflation could not possibly continue increasing faster than economic growth for ever, or house prices would approach infinity? In the same way we all knew that the US deficit could not continue increasing for ever? That has been known for at least 30 years. The trouble is that although we all knew it would end, nobody knew when.

I am 30. We could have bought from a few years back (first on one of those stupid 100% mortgages, and since then using deposit we have saved which is still growing). We thought it was a bad idea. We were afraid we would buy a starter home and then get stuck in it when prices fell and be unable to move. Which is what has happened to many friends.

I'm not "I'm alright Jack" about it, it feel very sorry for them and really angry because I think to some extent our whole generation has been tricked into propping up prices for people further up the ladder who see all the benefits.

The signs were there though. 125% mortgages for a start! How can that be sustainable?

Sorry, I am 31. God, the years start flying by when you have children!

Keynes recommended financing Britain's costs of WWII through taxation and enforced saving. The advantage of compulsory saving was that citizens would be allowed to draw on it when finances improved after the war, stimulating the economy by private spending (during the war, heavy taxation and the spending of reserves helped reduce the deficit required by the cost of Total War.

Neither of these is electorally popular today, but is is hard to see how the deficit can be attacked by spending cuts. Welfare costs go up in times of recession and unemployment, and in the absence of private spending, government spending is necessary to keep the economy active. Inflation will help, since it reduces the real value of government debt (which is why Bond yields have had to increase, especially in the shakiest countries) and citizen's cash savings.

Do we really want to turn this into the bar scene of Good Will Hunting PigletJohn?

No idea.

haven't seen it.

You should. It's a great film.

Ideas

1. slap DOUBLE rates onto all houses with nobody on the electoral roll. Yes that will hit immigrants like me but it will hurt second homes and student houses more.

2. cap all rate benefits - single person discount etc at band E properties and below. If you can afford a big house to be empty so be it.

3. abolish outline planning permission for development. full permission and start within 3 years or it lapses. that will stop all the landbanking, make the builders start to use some of the 300,000 plots they have permission to build on

4. limit tax relief on interest for individuals to basic rate. yes, the rich savers will get hit, but if they are using their ISA / CGT allowances correctly not much. But it WILL stop BTL landlords getting the huge benefits they do now.

5. reintroduce borrwing controls - the mortgagor will be uninsured if the mortgagee has not provided documentary evidence of income to cover both the intersest and capital repayments.

I'll keep thinking

PS
the house builders have NO incentive to build lots of homes and ease the housing crisis
because then prices would fall and their margins would drop

have a look at the Barratt site then look up the 2 bedroom Eliot house - construction price around £90,000 - and see what they sell it for around the country

PPS
please can houses in the UK start being marketed by the square metre (as they are in most civilised countries)?
then the true worth of older homes would shine through and make the housebuilders build sensible homes
or release huge tranches of plots to selfbuilders (which would be the best option)

It might cost £90k to build but there is the land cost to add on too and land cost with planning permission can be very high.

There have always been ups and down. I remember (just) the 1970s with the 18% 22% and 20% inflation rathes 3 years in a row and the ruination of people after the property crash there. That was dreadful.

I remember the 90s crash too and negiative equity - we sold 2 flats at £40k we'd paid £60k for. No one with half a brain who has ever looked at a house price chart over the ages thinks prices go up and up. People enter the market at their own risk.

If you go back to 1900 most people did not own a house. People did not expect to be able to own. Obviously its nice if you can own and int he 1930s in outer London for example load of suburban houses were built and some people could buy but not the very poor.

Also the house we bought in 1983 is available for sale today at not too different a multiple of my older daughter's salary (in the same job as I was 25 years ago) and interest rates are lower. It's cheaper now and I was paying the loest 33% rate of basic tax now. Lowest rate of tax is lower now.

I tend to think whether people want housing to go up or down doesn't really matter.

A combination of global deleveraging, the inability for long-term swap rates to fall further and developed world demographics will undermine house prices in real terms. Dependency ratios fell over the past 40 years but have now bottomed and are rising across the western world ... the impact for house prices is likely to be negative (see slide here on page 19)

ir.citi.com/dUnmgHF4xyifUuNHzVduQYm1V%2FmyRwzGd5Co6Skz0b4%3D

xenia
the point is that the land was bought and has planning permission
300,000 teeny plots worth of it
so they have a sunk cost at a discounting cash value

the only incremental cost now is the cost of construction
and then by maintaining a two bed home in the south east at £250,000 rather than £150,000 their humungous net margin.

looking back to before WW2 is not appropriate because family and work structures were so different
we have to look forward at what CAN be done, not was HAS been done.

I was just pointing out that there are always peaks and troughs.

I don't think we want a market in which there is too much intervention.

Could we not argue that if people had to live multigenerally and with siblings that cuold be better for family cohesiveness and ensure the elderly were looked after by relatives rather than tax payers who cannot afford it even if they were 3 in a bed with granny and it may not be such a bad thing?

No one has a legal right or human right to a show home.

I believe the people who had multigenerational homes and shared a bed with granny (a.k.a. lived in poverty) were absolutely determined it was not going to happen to them.

Five years old, however that is not too long ago - land ownership Britain

i think were are going to return to a North/South divide due to the North's greater reliance on public sector employment, jobs which are being lost but not replaced by the private sector.

xenia
If I lived with either of my parents the murder rate would go up.
And as all of my siblings and I have had professional careers, none of us live anywhere near where we were brought up.

Why is intervening in the market bad?
In the USA every mortgage is underwritten by the Government - how much more socialist can you get?

TripleZ

Yes care in old age is going to swallow up that inheritance in a lot of cases, but it'll at least ensure that lower income people can access better care in old age because they'll have an asset to sell to pay for it. IMO I'm assuming that old age care will become increasing unequal as those with assets will be able to access care while state provision for the those who can't becomes more and more strained.

References to 'quality' social housing always seem a bit optimistic to me. It assumes that governments (and electorates) are willing to pay for quality, rather than churning it out as cheaply as possible.