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?

hence why I think the plots of land should be released to self builders in blocks of 10 - wonderful homes that people want to live in, with proper future proofing and local employment. Sorted.

The first issue to decide is do we want more owner occupiers or do we think ownership is per se wrong as it is not socialist / not fair etc.

Once you decide on that then you move on to the other issues.

the house prices fall can only occur if sellers drop their price or are forced to sell.

i dont think many people can afford to drop their price at the moment & most can afford to keep paying their mortgage. rightly or wrongly i would expect the govt to intervene if there was a mass failure to be able to make mortgage payments.

if that failed i would be VERY worried. but until then i am going to assume the alternative course of action which is stagnation of the housing market continues.

not with a bang but a whimper.....

as they have had in Japan in fact
www.marketoracle.co.uk/images/2008/japan-house-prices--nov08.gif

The govt has already intervened to help people pay their mortgages, its keeping interest rates artifically low despite inflation being above target for the last two years, although I accept that interest rates are a blunt instrument in that respect. The last govt kept the housing boom going longer than it should have done, it was stalling in 2005 so an interest rate cut was actioned. The main engine of our economy has been increasing house prices, thats where a substantial proportion of this countries growth has been generated in the last few years. We generate GDP by selling houses to each other, its tragic really.
Unemployment will increase, the amount of repossessions will go up, the govt will only be able to do so much, we are broke, where will the money come from? I predict an accelerating decrease in house prices over the next 2-3 years. If you cannot afford a property now you may be able to soon. If you are trying to sell, yes you may not get peak price for it but the next property you buy will also be cheaper. If we didn't spend some much on housing we could all spend it on something a tad more productive.

I don't understand why people say that "i dont think many people can afford to drop their price at the moment". The data simply doesn't substantiate this.

The value of UK housing stock is around £3.27 trillion. Households who own their homes outright, with no mortgage at all, own property worth a total of £1.43tn. Households with mortgages own homes worth a total of £1.84tn and of that the equity cushion amounts to nearly £800bn. So the equity value of the UK property market is £2.23 trillion or about 68% of the overall value.

50% of households with a mortgage have one that is worth less than 70% of the value of their homes, giving them an equity cushion of at least 30%. Another 25% of borrowers had mortgages worth between 70% and 90% of their homes. The number of mortgage borrowers in negative equity is 827k the CML calculate. In the 1990s an estimated 1.6 million households were in negative equity, so thus far it is far less of a problem.

There is plenty of room for house prices to fall. The vast majority of the losses in such a fall would cut into unrealized profits.

They do often drop but if you look at any chart over time they always go up again. Most of us buy because we want a home and we might live in that for 40 years. I bought in 1983 and we had four moves to get here. It is likely I will own a house until about age 90 My parents owned their house from 1961 to 2008 (47 years) so that will be about 68 years in the housing market. Few people buy to sell quickily to make a profit. So if we are looking at 40 year spans of ownership over any 40 years I suspect it will given the psychological advantages of owning people will feel it beneficial and I doubt even allowing for inflation anyone buying at any time and holding for 40 years will find they have no gains at all after 40 years even allowing for inflation.

custardcake absolutely agree with you. And If private landlords want to have the tax advantages that they have over those who just want to buy a property to live in, they should treat the operation as a proper business, rather than a hobby as unfortunately some of them do.

I agree with ihatebabyjake.

If you have one house, and you want to move and buy another, it does not matter much if house prices halve. The one you are selling has halved, and they one you are buying has halved. No problem. It is only a problem for people who bought multiple homes, not for living in, but expecting to make a big profit out of unending house price inflation. It is a pity that so many people believed in it and helped build up the hysteria.

Price inflation is usually considered to be a bad thing. There is no reason why houses should be different.

ihatebabyjake your figures are only meaningful if the wannabe sellers are the ones with the equity you mention.

the owners with the most equity probably bought a while ago. whereas new entrants are more likely to have less equity and want to trade up. e.g. first time buyers moving to family home.

& citi bank - their understanding of risk was so good that they needed to be bailed out by the poor old American tax payer. And start another thread if you want to talk about the bailout... & i wont see you there.

PigletJohn if house prices halve, who do you think the banks will be giving mortgages to?

I agree with you it is a load of crap but i think we already have the ending to the boom years and it is a slow errosion through inflation etc. & a different type of market than it was a decade ago.

but the illusion of cheap credit is already over & its dull rather than a drama. i dont think there is any reason in the South of England to panic.

i sold a spare house up North in the summer & it went quickly for a fair price so i dont think that market is destroyed yet.

my mother has two houses with 100% equity
she will not move
they are out of the equation

Roman Abramovich has many houses with 100% equity
but they are a few million outside the normal price bands
so out of the equation

housing (in any country) is not suited to a broad brush approach

I'd be very happy to go with the idea of a 6 month initial contract, followed by 2 yearly tenancies which are enforced on both tenant and landlord, which include the right to decorate, put up shelves, have dogs etc.

What would happen if the tenant stopped paying their rent, though? Or if the landlord stopped meeting their responsibilities to repair? Wouldn't that increase in length of contract need to be accompanied by additional requirements for fair dealing during that contract period on both sides? What would happen if the landlord went bankrupt or died, or the tenant did? Or if the tenant lost their job and wanted to move?

And would you require the tenant to return the decoration of the place to neutral when they ended their tenancy?

things that will help

• No reduction in rates for any reason on high value homes
• No tax relief for individuals or LLPs on interest above basic rate (you wanna be a landlord, publish your figures at companies house)
• No tax reliefs at all for landbanking - if housebuilders were forced to value their land at what they bought it for rather than what they might sell it for once developed, their balance sheets would weaken
• On a really anorak note, maybe companies should not get tax relief on interest if their balance sheet total falls below zero - which would stop leveraged buyouts that have done so much harm to the whole economy.

I am old enough to remember the Rent Act 1977 and when it was virtually impossbile to find private sector rented housing because all tenants had security of tenure for life and ridiculous low rents (which were a joke so low were they really) imposed by the state. No one wanted to provide rented properties. Then the assured shorthold came out which allowed landlords to remove people (by court order if necessary) at the end of a period and suddenly people could rent again. Rent control did not work.

I think Rachman had quite a lot to do with those changes too
Rent control works fine in large chunks of New York. why not London?

I've been waiting for Rachman to be mentioned :o

May I just suggest Linda Grant's excellent novel based on Rachman (it has Clothes in the title)? It is v interesting and he got a most terrible and unfair press.

What was the name of the modern reincarnation of Rackman, had a big house near Chichester and blocked rights of way, eventually got sent to prison?

Van Hoogenstran? Something like that?

Nicholas van Hoogstraten

When an average 2-bed house costs more to rent in an area you have lived for your entire life (born in that County, lived there forever, all your family there, caring for relatives locally) than your wages, something has to be done though, especially as the Government are no longer prepared to step in to cover the shortfall.

A 2-bed house in the town I live in, that my dc were born in, in the County that I have lived in for 90% of my life (was born in London, parents moved OUT of London in order to be able to afford to buy...) costs £900 pcm, and NMW for 37.5 hrs (FT here) is only £1000 pcm after Tax - something has to give. These people need to pay for their utilities and eat too.

My ideas - Change the Stamp Duty threshold on MAIN RESIDENCE to be on properties over £500K. In the SE, a 2-bed terrace in a good area in the catchment for a semi-decent (good as opposed to outstanding) school can go for £230K.

Make the threshold for stamp duty LOWER on Second homes, around £200K. And no 'flipping' of main residence for Stamp Duty purposes.

Ensure longer private tenancies - but with better regulation, so that a BAD LL who doesn't keep up with repairs can be made to compulsory sell the house (with the sitting tenant) to the Council - for market value, even if that leaves a LL who was a 'reluctant' LL due to Negative Equity with serious Debt but also so that it is much easier for LL to evict tenants that don't pay rent, or tenants that behave anti-socially.

Instead of making social housing rents raise to 80% of market value rent - LOWER Private rents (gradually, year by year, over 5 years) until they match social housing rents. If the LL's get the property repossessed because the rent doesn't cover the mortgage - TOUGH! It's a HOME (a basic NEED and RIGHT) not a flashy car etc. You LL's already HAVE a HOME - the people renting DON'T. Your 'investment property' is their HOME.

Build more social housing. Of a size that makes sense - stop trying to build 3 bed houses that are the same size as two bed houses, splitting them into 3 beds and squeezing families with 4 dc into them. Or in a road near me - stop building 1-bed studio flats, splitting THEM into 2 bed flats, and housing families of 4 into the space that is meant to be occupied by ONE.

Just as a side note though - Lone Parents also get the single person discount, if all their dc are under 18yo, or still in FT education. So scrapping that would hurt Lone parents massively - a 25% increase in a bill could cripple someone like me.

Lone parent single person discount : if they can afford a band F or above (as per my original post) they can afford the extra £700 a year in rates

Stamp duty - any thing that seeks to define a type of residence will be abused and enforcement will cost more than it raises

Building homes - NOT the number of bedrooms, but the square metres of living space - look at an advert on the US, French, German property sites - the number of rooms comes much lower than the floor space

Yes, TalkinPeace2, I agree - though I am yet to meet many Lone Parents wo would be able to afford to either rent or buy a property over Band 'F'. I am currently in a Band 'C' property - and if it wasn't Social Housing in the middle of such a 'posh' part of my town, it would only be Band 'B'.

And I TOTALLY agree with the thing about square metres of living space, rather than number of rooms. New houses are so ridiculously small now - and if you think that bought houses are small inside - you should see inside any new 'Social Housing' that has been built in the last 10 years!

I expect mine is band F. I don't get the single parent discount because of age of children in training but not counted as students. I hope the council are spending the extra 25% wisely.

If we did the proposals above no one would buy to rent out. There wouldn't be a private rented sector just as there wasn't in the 70s becuase of rent controls. Some people are still in rent controlled properties. I met someone who lives in one near Oxford St station nad has had it since the 1940s. I thought it was his London flat but instead it's a Rent act tenancy. i can't remember the rent but it's miniscule.

The socialist positoin would be to nationalise all property including housing and then build estates where people live all much the same so you have no differences between people and provide those homes free to everyone. This of course has failed across teh planet and even Cuba now allows private ownership. At the moment interest rates are very very low. We all know they coudl go back to the 8 - 12% we used to have to pay those of us who are old enough and we are taking advantge of this low interest rate period. However no one should buy thinking these rates arel ikely to last forever over a 25 year mortgage period.