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.

someone said they would stay away from ex council because those would drop first. Up here there are plenty of repos to chose from and in the medium term an ex metro is very good value for somewhere cheap to live with benefit of garden and larger room sizes. research the street you want to buy on, look at sold prices for the surrounding area fot the last 10 years. zoopla is good at saying if a house is over priced.

Yes - I thought that ex council houses that are for sale from private owners could be relatively good value (!) By that I mean that they are built well, good room sizes, gardens and parking.

Tarty - they are in a better position than you but they have not benefitted. you have lost out by not buying sooner.

Yes Wasabi but how about today's young folk - were they meant to buy as teenagers? Or is it just ok to you that they have lost out by virtue of when they were born?

And Edless house prices are indeed set by supply (houses available) and demand (buyers wanting and with the financial resources to buy) - currently buyers may be daft enough (some folks will never learn not to buy a depreciating illiquid asset in a falling market!!!) to want to buy - but thankfully they are being protected from their own worst instincts by a restriction of credit back to more normal levels. This to me suggests that they do not represent real demand?

Edless do you really think this trend of houses becoming delinked from wages can continue? Would you be happy to see houses costing 25, 50, 100x the average wage?

Edless do you really think this trend of houses becoming delinked from wages can continue?

in a word: yes

reason: look at JApan.
and if there is only enough 'own front door' housing for the top 20%...Then the prices will link to the incomes of the top 20% ...not to the 'average' - so in a way it is still linked to income....

and 'real deman' is increasing at present. you need a reduction in the number of households - for that demand to decrease.

Edless do you really think this trend of houses becoming delinked from wages can continue? Would you be happy to see houses costing 25, 50, 100x the average wage?

It can't, but the problem HMG has is that if it adjusts quickly a huge No. of people go into negative equity, and can't move/sell/have to go bankrupt, up go repos, and all that has all sorts of other nasty problems.

I think they will/are trying to inflate their way out, but then wages also have to inflate and that can't happen if we are competing directly with low wage countries... so, there will be calles for tariff/import limits on ethicalgrounds/etc etc.

It comes back to the fundamental problem being no decent rental market.

After returning to the UK we rented for 2 years while moving about. With kids, dealing with the high rental rates, mad landlords and short term contract insecurity is just unacceptable, so we bought again even though we knew the market was coming to a top.

rent increases fairly constantly for exactly the same reasons as the purchase price of housing.

A fab video (one for Edless)...

Shelter see the primary causation of our current housing crisis (i.e. that would be the bubble) to be the banking industry. Not a sudden increase in demand, not a sudden contraction in supply - rather a bubble of credit, now if Shelter (the charity for the homeless, so I'm sure they have a pretty good idea of the problem) don't see the problem as being an imbalance of supply and demand I'm confused as to why you do?

Unless it's the old Upton Sinclair adage of "It's difficult to get a man to understand something, when his living depends on his not understanding it". I know a lot of folks have mentally 'spent' their HPI paper gains even before they have sold their home and it is hard to break the psychology. But to realise your gains - you do actually have to sell your home and as those who have had their homes on the market for three years will attest, it can be darn tricksy realising that 'easy money'...

Check the ONS data on this ^^ video Edless rent has not increased fairly constantly as you suggest.

Shelter see the primary causation of our current housing crisis (i.e. that would be the bubble) to be the banking industry. Not a sudden increase in demand, not a sudden contraction in supply - rather a bubble of credit,

I think its a two-fold process. As UK housing is a limited asset, then people will spend what they have to to access it. What they will spend then depends on what they can borrow (and if they don't, someone else will etc etc).

If there were more houses than people wanting to buy them, the whole issue would not emerge.

What is more interesting to me is not so much the analysis but what happens next, as that is all one can plan for - the past is another country as they say.

Indeed! My bet, if the government gets away with it - is a slow deflating of the bubble so that prices are more in line with wages and the UK becomes more competitive but without crushing the banks' balance sheets and making older voters suddenly feel poor. However I do think a black swan event - and I'm thinking something to do with the Euro here, could send the entire thing into meltdown as banks pull risks to try to shore up their balance sheets. I am looking at the recent moves to shift folk from IO to repayment and rises in the SVR as being early signs that the banks are doing this...

CassandraW I agree if you mean a second property but if you buy your home then the interest you pay (plus repayment of capital) is usually less than rental on the same type of home and at some point, even if it is 25-35 years down the line you stop having to pay all together. Buying a home is a form of retirement planning.

Shelter also recognise the need for and campaign for the building of more housing (their position on building on agricultural land is an interesting and well-thought out one)

and housing costs can just increase exponentially if sufficient demand is there, short of a collapse in civilisation...

the land of the 100-year family-borne mortgage shows that.

there are surges and corrections, but unless either 1) a whole bunch more housing gets built (what caused the 1970s pull back - oversupply) or 2) the number of households created decreases (less divorce, people staying with parents and taking in elderly relatives) the essential

all that happens is that house price links to income higher and higher up the tree...perhaps 60% of people live in owner-occupied housing now...then it'll be 50%....etc etc..

Not sure I can see how house prices can carry on increasing to a situation that only the top howevermany% of people being able to access.

The top percentage of earners is a much smaller pot of potential buyers (when excluding the mass of the hoi polloi). Therefore these borrowers would be able to pick up second properties as buy to lets also as there won't be many other buyers to compete for all the flats etc.

These landlords would expect their rental income to go some way to paying off that buy to let mortgage surely?

I am in South East; here here you'd have to borrow a lot more to buy a nice detatched 4 bed near good schools etc. than you do to rent that similar house.

This seems more true (and disproportionately so) the higher up the rental market you go. The more ordinary flats, 3bed semis seem to want nearly as much when if you pay an extra £500 you get something to rent which would be maybe £300,000 more to actually buy.

What I meant to say was: if the landlord wants to rent that flat it would have to be at a viable level for the renter/s to afford. Therefore rents and buying levels are inextricably linked to a certain degree. The natural laws of any market system make this true.

To take it further - if the rent for the landlord is not coming anywhere near the mortgage costs and has to be topped up (not to mention the hassle of dealing with void periods/tenants not paying rent etc.) it won't be an attractive investment for the landlord.

Therefore that flat will sit empty as not attractive to the potential landlord buyer. It will be empty until someone finds the natural market price for that one bedroom flat which will be inextricably linked to the income of those renters. However once that sane price level is within reach it might be possible for the potential renter to consider buying that flat.

The market will find its' own place in time. Once all the amateur btl landlords get rid of their "investments" they will not be saturating the market again for a long time.

But rent is an interesting one as it is something that is perfectly within the Government's control.

One thing which noone has talked about (I don't think) is the impact of housing benefit. In the good old days before the social housing was sold off, tenants paid rent to their local council at a nominal rate.

Now, because there is no social housing, and because we thought it would all be better to let the free market sort it out, those tenants now pay commercial rents to private BTL landlords, which is met by the taxpayer.

The propoganda in the press about unsustainable levels of benefits completely misses the mark - because most of this money doesn't touch poor people at all, but goes straight into the pocket of private landlords who are getting tax relief on the mortgage they took out to buy it in the first place.

Rents will continue to increase as long as the Government is obliged to pay the rent, no matter what the economic circumstances of the general public.

Now there's a conspiracy if ever I saw one!

But the Government have started to make plans to cap housing benefit to a level at a percentage below market level, which has been met with outcry amongst the press and much wringing of hands about taking money away from those who need it most.

But in the long run, if such a policy was applied properly with the right intentions in mind, it could serve to bring down rents and house prices to affordable levels.

Panic over.

The Bank Of England has set its sights on an ex goldman sachs banker to take over from mervyn king.

I bet he knows what hes doing, saying that though look who all the people currently running the eurozone used to work for.

I wonder how many of them were elected by the people ?

But in the long run, if such a policy was applied properly with the right intentions in mind, it could serve to bring down rents and house prices to affordable levels.

Where are these tenants suppossed to live? I'm all for using social housing instead of private landlords. But they need to build that first not just turf whole families out of their homes into one room of a band b and ruin their lives.

Banning second home ownership would help to. They won't do that though because they belong to 'deserving people'.

Seems like they make certain people pay more than others for this housing crisis.

I quite agree frothy.

I don't know what the answer is, but as the government pay such a large proportion of rent in this country, they have an awful lot of buying power.

A friend of mine lives in an ex-LA semi which she rents from a private landlord.

She (the landlord) receives £600 a month paid for in Housing benefit by the government.

It's ludicrous

Whoknew you are totally right housing benefit props up landlords far more than it props up tenants.

The government could just print its own money and use that to build the thousands of council homes that are needed.

They wont do this because the bankers wont let them as this way does not involve using the fractional reserve banking system, and the new money printed would not have an interest rate attached to it.

This would also involve using up more land and there is no way the chief landowner of the UK will allow it.

The government are already working on ways to kick people out of their homes

"Seek work or face eviction. Figures showing that more than half of those of working age, living in social housing, are without paid work(- twice the national average) and that nearly three quarters of social tenants under 25 are unemployed, prompted housing minister Caroline Flint to say that council tenants will have to actively seek work or face eviction. The new "commitment contracts" would initially apply to NEW council tenants, Flint said, but could be extended to existing tenants. "

You cant work if there are no jobs, lots of areas of britain are seeing massive unemployment, this is not the fault of the people but they will take the blame and consequences.

The government do not work for the people of this country, they will see people in the gutter before they will tell the banking family where to go.

Had been itching to sell for a few years but prices wouldn't stop rising so rather than sell too early I put house up to rent in 2006 and became a landlord. Did it for a year but the info I gained meant I was quite happy to sell a year later (June 07) even if I lost money. Decided didn't have the stomach for when things turn nasty. Turns out it was a good time to sell.

Whilst looking for rental myself in 2006 I'd noticed a number of properties up "for let" but not "ready for viewing" yet. Turns out these properties are ones where tenants (for whatever reasons) have stopped paying rent.

Landlord issues Court order to vacate. Landlord turns up on day tenant supposed to vacate and if you're a lovely tenant you do as you're told. However not everyone lovely and also some fiind themselves in bad situation eg. job loss/can't pay rent.

If tenant leaves under order issued by landlord then tenant forfeits right to help in re-housing by the council; it is classed as making yourself voluntarily homeless. They are told under no circumstances vacate property on notice to leave date; don't let anyone in to remove any of your furniture etc.

Tenant is told by council to stay put (not only rent free but also in arrears obviously) until the council find an emergency place for them.

I was told that some people have been known to maliciously use system as a way of becoming a priority. Also that the lovely insurance I had in place from the letting agent won't cover in this situation. I was told by my agent not to tell anyone as she'd get into trouble.

It's very difficult to get this information direct out of an agent and they will say don't be silly etc. nothing to worry about; doesn't happen etc. In fact it's just fingers crossed it doesn't happen to you.

Doesn't happen often is the story of the past few years but what concerns me is what will the story of the next few years be?

Currently some are putting property up for rent because they can't sell or can't meet the mortgage. What happens if they get a tenant in who loses their job etc and be unable to remove them until the council finds suitable accommodation.

This looks more sticky in the coming years I think as either 1) economy recovers - and interest rates go up; 2) economy stalls and people struggle more and more to repay mortgage. Neither of these of course include house price inflation which some people still wish upon us all.