to feel seething resentment towards those who profited from the house price bubble and hot anger at the Governments who allowed it to happen?

[TartyMcFarty]

You'll have to forgive my naivety here - I'm ranting about something I don't really understand.

DH and I are stuck. In 2006 we bought a (modest) property on a 100% mortgage. Foolish in hindsight, I know, but based on the advice of our IFA, the unshakeable faith of our families and society that property ownership was the way to go, and the increasing pressure at the time to get on the ladder or miss out, that was the decision we made. We then found that the lender, bastard bastard Northern Rock were unwilling to remortgage based on our lack of equity, despite us having overpaid by several thousand pounds. We couldn't shift the place, and with the agreement of a different IFA, remortgaged against the equity in my DM's property (love her!). It gets more complicated than that, but that's all that's needed here. Now we still can't sell it , our tax credits have suddenly disappeared, my pension contribution has increased (DH doesn't even have a pension) and the tracker rate is slowly increasing. We're on interest only, and as I'm part time since the having DD, with another DC on the way, there's not much of a cushion.

What's really angered me over the last couple of days is the dawning realisation of how people just a few years older than us have profited from the massive increase in property 'values'. I'm still in touch with our ex-neighbour. She bought seven years earlier than us, sold at £120k profit after 10 years (this is not London!), her partner was in a similar situation so they have ended up comfortably in a property of twice the size, renovated to a really lovely standard. Obviously my resentment isn't directed at them personally - they're good people, have profited from a stupid market and good luck to them - but it's just an illustration.

How can we possibly hope to survive in a property market that boomed by more than 3.5x in this instance alone? We can't even afford to maintain our own home to a good standard. Pay isn't moving at all, and we're currently looking at less than .75 of a pension between us. I can't even bear to think about how we'll support our DCs through HE, and the risk to my DM's home if interest rates shoot up.

I just need a rant. Those of us stupid enough to be sucked in at high LTV rates towards the peak of the market are fucked all ways, whereas people just 5 years older than us are untouchable. I know I've only given one example for which I know the exact figures, but there are others I can think of in the same lucky situation. There just doesn't seem to be any point in trying when you compare our situation with those who profited so enormously in the 00s.

Awww thank you. Whilst I do agree with other posters to focus on what you can be grateful for it isn't inaccurate to point out that the current generation is the first to have a lower standard of living than their parents and that psychologically that is hard. It's really hard to do all that was expected of you - to achieve the recipe for success (or what was previously agreed to be the route to success) and to see yourself no further along - that you might as well have just got a bog standard job at 16 because working hard academically does not today = success and financial security.

For those children of taxi drivers and shop assistants who studied hard to be GPs (and racked up £30k debts) but find that they can no longer afford the houses lived in by their parents despite earning far more and technically 'doing far better'. There is no justice in that and it grates. Yes, yes iPods are cheap and we can travel the world for a pittance - but I don't see age restrictions on those luxuries either and indeed the old benefit from those just as much as the young.

But seriously anyone hanging on by the skin of their teeth hoping that the economy is going to get better, unless you have more than just blind hope - I would assume the worst and get out now as this mess is going to get a lot worse before it gets better.

Yellowwellies, I'm going to start diverging from you now. I'm not so sure about the wisdom of a retrospective tax on income that hasn't actually been realised (unless the property is sold). If for example you are a couple who bought a 4 bed house in the early 90s which is now worth over a million, it is only worth that million pounds when it is sold. The fact that the family own a house worth one million, with perhaps a very small mortgage still held on it doesn't make them rich until they sell the property. And if they sold that million pound house and bought another million pound house then they would pay a considerable amount in stamp duty.

Again it's back to the old divide and rule. Much much much much better option is to seriously tackle the ownership of properties by offshore companies as a scheme to avoid stamp duty. Of course that'll never happen because too many of Dave and George's mates do exactly that.

Oh and I'm much much more coming around to the idea of 100% inheritance tax. Much more, and ALL that money being used to tackle the massive shortfall in social housing.

I also think second homes (and third homes and fourth etc etc including ALL buy to let properties) should be subject to 60% capital gains tax, cannot be held by companies, can only be owned by individuals who will be liable for the tax.

Oh and one final point before I go and grab a sandwich... the problem we have in this country isn't that we don't have enough money, the problem is that too much of it is concentrated in the hands of too few people. OP save your frustration for the super wealthy who dodge tax through loophole after loophole. Call it the politics of envy, but we wouldn't feel half as bad if the incomes of the wealthy were rising at the same rates as ours, the fact that they're rising much much faster just serves to make resentment taste all the more bitter.

So do people think house prices are likely to fall? I'm talking about the se and London specifically, because I know they have dropped a fair amount already in other areas.

I have a question that bothers me. If 3 equal families in size, housing etc etc etc were given eg £60k at the beginning of a year,is it not true that they would all have different amounts left at the end of the year?
I suppose what I am trying to say is, if eg the whole population of England for sake of argument, had the same amount, ie we all started again at the same level, we would still end up where we are now in say 200 years with people with a diverse level of income and assets?

I am interested in your suggestions, headfairy, but why not simply remove the principal private residence exemption from the first property? This would mean that all gains on property would be taxed as soon as they are realised. That's easy enough to arrange, surely?

Don't let it upset you so much

We bought in 1987 - height of the market and when we sold 10 yrs later we lost a quarter of it's value. Friends of mine and DB bought 5 or so years before and have made a fortune. It's just one of those things. And property 'bubbles' grow and pop all the time.

I know it doesn't help, but I constantly try to remind myself that the majority of the world is living in poverty and would kill to even be living in a county like ours. I think we should count our blessings that we are not starving or watching our families be murdered in front of us.

CountRy

Word.

Oh fuck, wish I hadn't come back to this thread. I was beginning to get my head round our huge debt and count my blessings, but now I'm worried again.

My real concern echoes YellowWellies' point about wage inflation (or lack thereof?!) I just don't see our salaries growing proportionately. We are going to be repaying a hefty mortgage well into retirement, but we only have my pension in place. DH doesn't have one, and we don't have anything spare to put in.

In theory hopefully that's an interesting idea but I feel uncomfortable with the idea of taxing everyone on their home as though it is some kind of luxury. Unless there was some kind of cut off way above the price of the average home, so that the only people who paid tax on the sale of their principle home would be those whose homes were wildly valuable. I'm not sure how much revenue it would raise.

No doubt someone will come along and bleat about how the super rich would leave the UK in their droves, in which case I would say "lovely, thanks, bye bye then, do remember to shut the door on your way out". The super rich have hardly done this country a massive favour. Most of them don't pay tax at nearly the levels the rest of us do and they are hardly an alturistic bunch, I mean, where are the Peabodys of this age?

'Oh and I'm much much more coming around to the idea of 100% inheritance tax. Much more, and ALL that money being used to tackle the massive shortfall in social housing.'

So my scrimping and saving elderly parents, who worked hard to buy their house and want to pass some of the worth on to us, should anything be left from the care they may have to pay for, should accept that the money will go to buy social housing? What a reward for their industry and frugality. Why can't their assets (if there are any left) be used to support their own grandchildren onto the housing ladder?

No reason at all, but then in a similar vein why should the children of super wealthy families with huge amounts of assets to pass on get such a massive boost in life - for basically being born? I'm not saying I'm totally convinced of it's benefits, but the fact that everyone would start life with the same amount of assets ie none is quite appealing right now.

But lots of people aren't super wealthy but still want to leave their grandchildren and children their money. Not yours. Not mine. Not anyone else's.

And even if everyone started with the same amount of assets that wouldn't be the case for very long. I can think of some people, from a variety of classes and backgrounds, that I wouldn't trust with £30, let alone £30,000.

I have a car I paid £7k for, I know it's not worth £7k now, but I've had the use of it for a couple of years and will for a few more, I've paid off the small loan I took to pay for it so it doesn't 'cost' me to have it, although I have to pay maintenance/tax/insurance/petrol. I can now use it until it 'dies' and it cost me nothing to have it, past running costs. If people saw houses as things they pay to use like cars, rather than investments they expect to make money on, we'd all be better off, no one takes out a car loan thinking "I'll have this car and use it for 5 years, then I'll sell it and use the profits to pay off the loan and the difference to buy a bigger car".

If the OP had thought of a mortgage as like a car loan, something you should only take out if you can afford to pay it back, in order to have a thing you wanted to use rather than as a thing you wanted to use and make a profit from, then people would make more sensible housing decisions.

Perhaps that's the shift we need to make mentally, a mortgage isn't an investment, it's a loan to buy a thing. Unfortunately, people like the OP are going to be the example other people learn from.

100% inheritance tax would mean that middle class people would hit retirement and start spending. When they later need care homes, the state will have to pay. My nana went in a home 5 years ago, the money she made from the sale of her 3 bed house has run out. (In the north, didn't get a lot for the house.) The state is now paying. She thought her house would be an inheritance for her 3 DCs, if she didn't think that I know she'd have had a few more holidays, a fancier car, more lunches out etc. The state would then be picking up the bill from day 1 she needed care rather than 5 years later.

We could afford to pay it back! In your analogy, you pay what a car is worth. However house prices are way beyond what the thing itself is worth. And then the value drops and you're left high and dry in negative equity. The bank doesn't want to know. Oh, and a reminder - this is despite having overpaid around £12k in the 2 years of our fix.

Abraid, all I'm saying it's a school of thought that I think is interesting. Not fully advocating it, but it's worth looking at surely? If someone chooses to spunk all their money that's their lookout, but if we all started on the same footing it would be much fairer.

The people who bought our house under the right to buy got it in the 90s. They made a profit of more than £350,000 when we bought it, which is more than 10x the price they paid only 15 years go! They worked full time, too - I suppose it's none of my business and obviously I didn't ask, but why were they housed by the council if they had good jobs (which they did)? For some reason, the fact that they now get free transportation on top of all that just rubs it in a little more. She told me when we spoke about something else about how she'd realised (having lost her card) that the tube is really quite expensive these days! Grrrr. It seems like a foregone conclusion there won't be any free bus/tube for us by the time we're retired. And now that all these flats and homes were sold off under the right to buy, the taxpayer (ie all of us working now!) needs to again put funds forward for genuine social housing for those who genuinely need it, many of whom probably won't get it - it all got turned into massive profits for a select few.

headfairy, when you say "if someone chooses to spunk all their money that's their lookout", is that in a society with social security, or in a society with none?

My feeling is that unless you have enough income to pay a mortgage out of work as well as in then you cannot afford a mortgage. Ir's not just any loan, it's your home as well. Unfortunately the lack if investment in social housing has meant people have had little other option but up buy.
We are now reaping the downfall of this and people who had no option but to buy at inflated prices just to have a roof over their heads are suffering. Not nice

We bought our first place in the early 1990s. Within six months it was worth two thirds of what we paid for it. Sadly, this is a pattern that repeats every so and often. We had to just sit it out. We also had an endowment (hahahaha).

What I don't agree with is council tenants being able to buy their property at a discount (thereby making a huge profit in our part of London, renting or reselling). There just isn't enough council housing available and it isn't being built fast enough to keep up with need.

Define "what a car is worth" the manufacturers make a profit, you don't just pay parts and labour. Who decides what that profit should be? Basically, it's what someone will pay/can pay.