To think no one has a right to make money off their house

[Laughingstock1991]

The general consensus among financial commentators this week has been that the housing market has turned. Interest rates are still going up and are unlikely to come down for a few years. The low interest rate financial experiment that has been in place since 2008 has ended and it’s unwinding is going to be painful. The housing boom was based on cheap credit.

My mortgage is likely to go up about 400 a month. Lots of commentators reckon we are in for a big fall in house prices. Good thread here:
https://twitter.com/EdConwaySky/status/1668987423643119623

What pisses me off is the absolute assumption made by some people (like my friend today) that the government should use public money to bail out mortgage holders. Most people were stress tested on their mortgage- I was- and yes it’s going to be tough but do I think public Money (renters money) should be used to bail out mortgage holders- fuck no! The Lib Dems have raised this also today.

House equity is unearned wealth. There are no guarantees. We have been through a boom and now it’s going bust. Hopefully sanity will return & housing will be seen as a home again- not an investment. Its not a ‘market’.

And I say all of this as a homeowner who is going to have to pay a lot more. I want everyone to be able to afford a decent home- not just those with money.

I don’t think that’s unreasonable!

But if no one has the right to positive house equity then no one should have the risk of negative house equity either? It's like anywhere that you put your money - you weigh up the possible risks versus the possible rewards.

The idea that no one has the right to positive house equity when they've taken the risk to buy a property, often spent thousands and thousands overpaying for it in interest and then have to pay for all the upkeep required - is frankly ridiculous. And I say that as someone who would love for house prices to go down.

For some they won't be able to weather the storm though and that's the point!

IMO we need to build more social housing - better quality than the cheap poorly designed rubbish that some councils put up in the past. Housing is an essential good and for too long we have left the market to resolve the problems and it's not working, it's time we bit the bullet and stopped leaving the housing market to the big developers to sort out, they had their chance, let's try something else.

Caring for someone who is dying from COPD is entirely different from a liver transplant for someone who is still drinking who would not receive a liver transplant. But you are absolutely right that we pay for people's self inflicted illnesses. That may well change in the future.

There aren't. It's one of those perpetual fallacies.

The number of renter's that actually want to buy is low. My tenants, for instance, are from mainland Europe and are just working here. In fact all of my tenants so far have been the same. The first went back to Spain after Brexit. My current ones don't know what they want to do but are not committing to buying a house.

Thing is, I work for a large multinational and about a third of employees are from the mainland or elsewhere. A vast proportion of those are just gaining experience in the UK for 5-10 years and leaving because it's great on their CV. I can count on one hand how many have stayed and like yourself, have bought, despite being renters.

If you look at the statistics over the last 50 years, you'll see that we now own more property than we did 50 years ago (50% vs 65-70% now). Of the remainder, social housing has halved from 30% and the rest private rentals. Some people will never be destined to own their home and the current band of private renters make up a large proportion. The actual number who want to buy is relatively small but that doesn't fit the narrative.

We can bail out banks but not individuals? The whole economy is nuts when big orperations don’t pay tax but individuals are goi g to food banks. Full time workers are having to claim benefits while their fat cat bosses make a fortune on thereby being subsidised by the tax payer. I think it’s about time the government started bailing out mortgage holders. It’s the Bank of England that raise interest rates, not high street banks. Not everyone stuggeli g to pay a mortgage alongside childcare are land lords. Yabu

The thought of this makes my blood boil. You take out the mortgage, you pay it. Surely those with mortgages have been subsidised enough with low interest rates at the expense of savers. Utter piss take to bail them out further. Get on with it

I moved to this country in 2015 with four suitcases and four children. Zero credit rating and now own two properties. If people were that desperate to buy, they would.

How did you save, pay childcare & afford rent?

Perhaps the suitcases were full of £££. I get the feeling that a considerable amount of info' is missing from this tale!

I had one of those accounts where for every £200 you put into it I got 50 quid back and I had to help to save ISA things as well. Where again every £50 I put in they gave me 25 that help towards the deposit. I also had help towards my rent. And I didn’t work until three months before I bought the house so no childcare costs.

It’s plenty. Any further tax would just mean rent increases.
Not letting people have more wealth and investments than other people is where communism starts and trust me that is a very bad idea.

I agree - a lot of the UKs problems can be traced back to Thatcher. Her belief that "there's no such thing as society" & we should all be individualistic & basically selfish caused so many long term problems. Giving council tenants the right to buy being one of them.

https://www.theguardian.com/society/2022/jun/29/how-right-to-buy-ruined-british-housing

I can't see how government assistance would actually help, it would be kicking the can down the road.

Take furlough during covid, it propped up some businesses for a while but once it stopped many went under and the government acknowledged that would happen.

If we look at how government assistance might work it could create the same cliff edge.

Say hypothetically the government set the threshold for help as those facing repossession. The banks would need to identify those in need and the steps taken to help them up to that point.

Let's assume that an individual's mortgage is put on interest only. Its safe to say that governments supporting a repayment mortgage that would build equity in someone's property would be a very unpopular political move (using the public purse to build private wealth). So the individual is given assistance on a case-by-case basis to meet their interest only payment. This assistance would need to be lifed because there is only so much in the pot. Let's say hypothetically they are given 12 months. This would mean at the 12 month point they'd either have to sell their home or increase their income. Also their credit rating would be trashed and probably only able to remortgage on a higher rate anyway.

In 12 months, interest rates are not going to go down and we're either still in recession or recovering from it. So house prices will have fallen and the job market impacted. It simply doesn't make sense economically. The government would just create another bubble.

What would make better sense would be to invest that money instead in building new social housing (creates jobs and more housing security), implement tax advantages for those people renting out rooms (this may become a lot more common as people with large houses need to find ways to make them work more).

Also, don't forget that the current housing crisis is cyclical. The birth rate is steadily declining, so whilst there are not enough houses now, in 20-30 years we may see more of a shift.

We need to move away from short term knee jerk government reactions and more towards long term planning.

Yes, people got too used to artificially low interest rates.

I don't mind my taxes helping the poorest - but not to help people buy an increasing asset - and it will increase, sooner or later.

We've been here before. Boom and bust housing. It will level out, in the end.

You're a special one aren't you?

His statement is meaningless. Define good quality as I can't. Is that something with just a roof or something with gold leaf fixtures and fittings? I bet my definition of 'quality' is different to yours.

You do realise that 65-70% of the UK own their homes right? Of the remainder, 15% live in social housing. So we're left with 15% who live in private rentals and have less control over their living environments.

On paper alone that would suggest that your EA is talking out of his arse. It's not actually true at all. Are house prices too high? Yep. Is the cost of living ridiculous? Yep. But the numbers would suggest that the economy is functioning. Is it functioning well? Debatable.

I rent a house out and do you know who's massively responsible for ridiculous rents and house prices? EA's like your friend there. There isn't a month that goes by where I don't get an email telling me that the market has increased and I should charge more. I even had an argument with one as he called me stupid for not increasing my rent for 5 years. Get that.

I don't see my homes as banks and I'd imagine a lot of people don't either. But your EA mate does and that's the problem.

Absolutely this.
These threads are always full of non homeowners rubbing their hands with glee at the thought of houses ‘tumbling’ in price.
It will never happen. Certainly not in the cities or in the south or ‘nicer areas’. Not enough houses. Too many people and it’s getting more and more desperate every year. Even if they do taper off or fall slightly for a couple of years In another 5 years they will soar far higher still and in 15 people will be saying ‘cor you only bought your house for how much!!!?)
Supply and demand- it’s very simple.

You don’t get to see any of that money of course unless you downsize considerably or die suddenly and pass it on. Or move to a far cheaper area (and then will never be able to afford to move back)
It all just goes into the ever spinning wheel of house price increases.

There was nothing wrong with Right to Buy - what was wrong was stopping councils replacing their social housing stock.🙁

Immigrants often do better than the indigenous population so why the cynicism?

It's often because they have more focus, commitment and drive. Something sadly lacking with a subset of our society.

Not where I live

Agree one hundred per cent. They’ve been bailed out enough. The property will increase in value and if it’s then sold will the “benefit” be repaid? No, course not. We need to help the poorest in society not “property owners” who ironically look down on what they consider to be the poorest. Don’t forget lots of these people self certified for huge mortgages when that was an option back in the day. They’ll have to swallow the consequences of that greed won’t they. Absolute liberty to ask for help.

If you didn't work, how were you able to save up the deposit?

You do realise that 65-70% of the UK own their homes right?

Do you mean that they own them outright ? I thought the figures were more 60% own their own homes, with 32% owning them outright and the rest being mortgaged ?

I'm well aware of that. I had an immigrant parent and am married to a foreigner.

The tale above is so full of holes that it could be a Swiss cheese. You don't believe everything you read on MN do you?!

I've seen lots of people say 'not in my area' and when one checks, there are lots and lots of reductions on Rightmove. Are you able to give the first part of your postcode or town?

Buying a house is a form of gambling or investing in that values/prices can go down as well as up. It’s truly hideous when you’re the one that it’s going down for, but we need to remember that we are adults with the expectation that we make our fully informed decisions and have to live with the consequences. It is not the government’s responsibility to bail us out when times get tough. We need to pull
up our big-girl pants and deal with it otherwise where do the handouts end?