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!

Good luck to them! I feel really sorry for younger people and think that they (as a generation) have been dealt a poor hand by the people in charge. I am concerned that they will end up suffering the most in the upcoming downturn too.

Exaggerating ??? perhaps you could provide some sort of example of this ?

@SamanthaCaine apologies. It wasn’t you that made the comment. It was rainingsnoring the old boring man, No Doubt, The one who is constantly exaggerating on the other thread about how rates will go, as if they have any clue what they’re talking about.

Well she's hardly providing us with her insight and any detailed opinions, other than one line quips. She's had plenty of opportunity but continually avoids any form of rational conversation.

I've given my opinions on how complex I think the issue is. I agree and don't think monetary handouts are going to happen. But pressure on the banks may well do and especially when we bailed out banks in the previous crash. Bailing people out is what we do as a civilised nation. It's not going to stop just because some entitled people bemoan their tax going in a direction they don't approve of.

Let's not forget that the taxpayer funds a lot of handouts. The bounce back loans, furlough scheme, energy bills etc. etc. I don't have a problem with any of it as it's not productive to let people suffer. I pay more tax than most and would happily see people not losing their homes. And that's not because I'm at risk either as I'm not.

The situation is highly nuanced and the solution isn't going to be straightforward, especially when so many people mortgage their homes and the potential fallout catastrophic.

Have you?

The only other posts you've made on this thread (that I can see) is the one where you state your tenants can cover your mortgage increase once your current deal ends or you'll sell up, the one where you say your not bothered about selling because you'll have made a few hundred grand, and the one where you make a reference to the changes to stamp duty and tax relief forcing landlords to sell.

None of which give much insight into your own opinion or how the OP "has no idea" about the issue.

@Laughingstock1991

It's bad enough for renters now, do you really think adding thousands & thousands more people to that is going to help anyone??

Govt reforming the entire sector. How exactly and how long will that take??... and in the meantime, what do you suggest? Setting up tents in local parks?

The Govt are in charge of the current situation, Rishi just doesn't care. He's following outdated 'remedies' for a situation that it entirely different.

@ThursdayFreedom but my point is that it might be the catalyst. Nothing that has been said on here convinced me that using public funds to pay peoples mortgages is a good idea - a view similarly shared by economists it seems.

Using public money to buy the houses that are going to be repossessed (at a reduced rate) but allowing the family to continue living in them - in return for rent. Assuming the property is their home and not a second home.

Or buying up the second homes - for a reduced amount - and renting them out. Restock the social housing.

Where is all the money from the right to buy scheme that wasn't re-invested in building more properties?

They could even start buying back the RTB properties that are sold on after - instead of holding that as an option but declining to buy.

2nd home owners should have to sell up if they can't afford their additional properties, not get bailed out by the taxpayer while they continue to accumulate equity.

I disagree that it is unearned wealth.

I've worked very hard for the wealth I have accumulated. 5am starts, 2hr commutes, 50hr weeks, extending over decades.

Many posters have pointed out already that a buyer pays much, much more for a house than the sold price shown in the land registry listings. Over a 25 year mortgage, even those who 'benefited' from lower interest rates since 2007 (and remember, not everyone did) will still have paid almost as much again in interest as the purchase price. During higher interest rate eras, it was even worse. Then there's repairs, maintenance, standing charges for utilities, property taxes ...

Then work out the salary you need to make all those payments, add in the cost of work (season tickets etc.), gross it all up to account for tax (the middle classes pay a much, much higher marginal rate than both the poor and the super-rich), compound it over the 25 years of the mortgage and all that adds up to an amount not altogether far from the prices being demanded for those houses today. It's almost as if the market has - I don't know, what can we call it - an invisible hand?

So, no it's not unearned. The only thing that is actually unearned is benefits payments (and I include the state pension in that, not just housing benefit). And it's mainly the middle class workers and homeowners whose taxes pay for those.

So pipe down - YABVU indeed.

@Mark19735 don’t tell me to ‘pipe down’ like some of the other patronising tossers on this thread. And your post reeks of entitlement.

Well, I think we’ve all got the measure of you now

@3BSHKATS yea whatever. So it’s fine for someone to tell me to ‘pipe down’ but not fine for me to challlenge it.

But it is unearned @Mark19735. The element you fail to take into account is that buying a house gives you a secure home. Factor in the amount of rent you’re not paying and it all looks a bit different.

Our house is apparently “worth” more than four times what we paid for it. If we hadn’t bought it we’d have been paying rent for over 20 years with nothing to show for it. That profit is completely unearned. We’d have lived our lives in exactly the same way, had the same jobs, paid the same tax.

Yes they would. If anything rising prices makes it harder as the steps get further apart.

I buy for £100k with a 90% mortgage.
House prices rise 50%.
I want to buy my next house. It now costs £300k. When I first bought it would only have been £150k.

Let's assume I've paid off another 10% of my mortgage. So I owe £80k. I sell for £150k leaving me with £70k (50k gain+10k original deposit+10k paid off) for my deposit, or 23%.

I still need a mortgage for £230k.

If prices had stayed the same I would have only had a £20k deposit, but the new house would only cost £200k. So I'd only need a mortgage for £180k. Yes, my deposit would only be 10%, but I'd rather be paying the mortgage on the smaller amount. Chucking the numbers for this into a mortgage calculator gives me. 5.2% costing £1072 a month.

If I want to buy the £300k house with the £70k equity I will pay a lower interest rate because I have a better LTV, but its 5% at £1,350 a month.

Rising house prices tend to make life harder for anyone getting on the ladder, AND anyone trying to trade up. It's only if you downsize or get out of the market completely that you can release that capital.

I can see a benefit from renting from a corporation as opposed to you. A corporation would have a long term plan and if they wanted to liquidate their portfolio, it would take them years to do so. They may also manage several blocks and be able to have economies of scale with regard to maintenance. My friend's build to rent flat has an onsite team and full time concierge plus gym..

A private landlord's circumstances can change very quickly hence less stability . It's the primary reason why I bought, I don't want to lose my home just because my landlord's daughter is getting married and needs her own place..don't even particularly care about ownership

We've worked hard to improve our starter home and therefore I disagree that we don't deserve to make money off of it. We've put in a lot of money to it so why shouldn't we receive more than what we paid.

For reference we got this starter home as it was the only thing we could afford (new build without flooring, grass etc) it was the only thing that would get us on the property ladder.

For reference there was a comment near the start about overstretching ourselves causing the issue. We have just been informed that amour mortgage will go up on average an additional £1500 a month as a bare minimum! We've had stability for years and we would never have thought it would have gone up so dramatically. This means that effectively one salary is wiped out just on mortgage! We didn't overstretch however we didn't plan for an interest rate of potentially 6%!

What's wrong with passing on two, if I have two children?

It's normally more tax efficient to pass on one, but I guess that depends on the price of it.

@rosetintedmemories2023 do you know how leasehold works? And section 20s.

The property might not get sold from underneath you, but it might be allowed to fall into such a state of disrepair. You wouldn’t want to live there.

Think the big problem is a lot of people in the UK go to extraordinary lengths to own their home..like they would completely switch area, switch job to afford their 'forever home'. Not talking about people on minimum wage who move to London from Yorkshire to buy starter homes but across all classes, everyone buys into the idea of the property ladder and you would only be happy if you had the ideal home

I own a modest flat in London which I would have rented if I have not bought. I didn't make any significant lifestyle changes to buy. I did live with family but that actually started out because we just moved back to the UK and experienced quite a lot of instability job wide and visa wise so had to retreat to the family home.

Property losing value in a way negates all those 'sacrifices'. But it's a timely reminder why treating property as an asset class when you don't have tons of money is dangerous and likely to lead to disappointment.

I disagree that it is unearned wealth.

Of course it is, my in-laws house is worth almost 2m, parents not far off. Both bought on one average salary. I benefited from that, I didn't earn it.

& if I inherit anything after care fees/tax it's more unearned wealth.

The freehold is owned by the residents. There was a resident who didn't pay her service charge for 10 years lol and even she didn't get her flat repossessed lol. She is now on a payment plan so has paid a lot of the owed service charge back.she wasn't poor, she had her own business and was even renting out the flat at some stage.

My flat is from the 1930s and is still in pretty good nick.

My DH is also a director of the residents management company so we have some control over the repairs.

I think a flat was a good compromise as I have security and can still withstand 10% mortgage interest rates and a house price fall benefits me when I upsize..would probably choose a bigger flat to upsize to!

I posted earlier my son had made an offer on a house and the owner are moving to Cornwall but they wanted another 5k above his offer

he viewed it again today and then viewed another house that the estate agent had and he made an instant offer

The owners own 4 house all next to each other and then are selling them all to eventually buy in Cornwall

They accepted my sons off of 320 rather than 330 straight away and said that if necessary they would move into the empty house they own next door if they can’t get a house in time in Cornwall

He isn’t bothered about the interest rates
he’s has a big deposit and he & his partner are going is taking in a lodger ( their flat mate ) but even without a lodger they can afford it as two guys

In my job, I see the other side of it where residents are presented with a bill for £25,000 to paint the hallway. Usually cause quite a stir. And then we have the residents that end up taking the management company to court because the roofs been leaking for eight years and there’s no money in the pot. All good fun.