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!

I suppose there’s always charity if people feel strongly any wealth is unearned

Most people will pass it on, after tax or care home fees

Ours will probably go on care home fees. There’s a pretty good chance at least one of us will need them. Easy come, easy go I suppose.

Mine is NE26. If I search for our type of house (4 bed plus terrace) in that area then there are 36 results. 22 of them are sold subject to contract and of the other 14 there are 8 that were only listed in the past month and only 1 that’s been reduced. The house that was most recently sold on our street (start of May) went to sealed bids and for significantly over asking price, which was already 60-70% more than the cost when we moved here 6 years ago. It varies massively by area. We are on the coast within easy walking distance to a beach. The experience of lockdown has made that sort of home more desirable & for obvious reasons there are a finite number of properties available in easy walking distance to a nice beach (even more limited when also in east walking distance to the train/town centre shops & by excellent schools). With a number of people choosing to relocate from more expensive parts of the country there is currently loads of demand for our type of house but there are rarely a lot for sale at any given time.

I was a home owner with a mortgage. We bought our first and only home in 2007, just before prices crashed. It was a small terrace in a post industrial town. Prices took years to recover, and when we sold, last year, my father in law was shocked at how little we had 'made' on the house. The timing of when we bought, and the type of house we bought, meant we were 'unlucky' in building up unearned equity. We sold last year to move to a new area where there is a shortage of homes. We moved into rented, intending to stay no more than a year. Thing is, even with a good deposit and higher than average earnings for the area, there is nothing we can buy. It's a small village in a national park, lots of holiday homes and airbnbs. Very little on the market, all unsuitable or way over our budget. Nothing to rent either - I've seen 1 flat marketed since we secured our house 16 months ago. So if our landlord decides to sell, or stick the rent up high, we are stuck Every month now, what we can comfortably afford to buy reduces as the interest rates go up. And prices are stuttering but not really falling. We're not waiting for prices to fall, though it would help. We're just waiting for something, anything suitable to come on the market and not be snapped up by a second (or more) home owner! I don't want anyone to lose their home. I hope there will be help for those struggling to pay mortgages on homes they live in, in a form that is fair (e.g. has to be paid back eventually). But I also think the market went too high, too quickly, and it needs to fall back to a level that is in line with earnings. Lots of house building is required, both private and social. Much better control and stronger taxation is needed over second homes and holiday rentals I don't think any government, this one or a future one, has the stomach to really tackle the issue. It's not about renters vs. mortgage holder or home owners. It's about living in a society where housing is affordable and secure for everyone.

I think it's clear that the OP is pretty angry/frustrated about the state of housing in the UK. I share her frustration. It is appalling that the government/ central bank have allowed this to happen. Of course, it's a much harder thing to come up with ideas with might work. It's always might or a step in the right direction at this stage when we are in such a mess and a question of weighing up pros vs cons.
I'm afraid I haven't read your views as I don't have time to read all the posts at present. We seem to agree that banks as landlords or something similar is more likely than 'bail outs'. Clearly something has to be done, mass homelessness is not an option. I'm not sure that bail outs are that civilised though. It was a massive mistake in the GFC as the can was simply kicked down the road that we are now facing a much larger crisis which is inevitable imo. All these bail outs have just encouraged more and moral hazard. I am not referring to normal families trying to buy a home but to over leveraged, large risk taking, 'investors', etc using cheap money to their huge advantage, pushing prices out of the reach of others and then demanding bail outs in an entitled way when things don't go their way anymore.

Horses for courses. That poor boy in Rochdale died of mould poisoning from a property managed by a faceless housing association. I would never allow something like that to happen because I'm not a faceless landlord.

Do you think corporations and associations don't change? Everybody's circumstances change. Do you honestly think life should be a one way street geared towards what a tenant wants? So it's ok for tenants to move about or want to stay as long as they like but landlords need to accommodate every possible scenario? Sorry but with the best will in the world, life doesn't work like that.

You worked 50 hour weeks to earn income. That is nothing to do with unearned profit from house prices rising. You pay interest on any loan. That is how a loan works. It doesn't follow that you deserve the house price to rise in line with the interest you pay; what a strange way to think of it!

Telling someone with a different opinion to your own to 'pipe down', is very rude. You need to think about the way you communicate.

I agree with @rosetintedmemories2023 here.
I do think that the balance of favour needs to be towards the tenant in most situations (not for non payers/ people who trash the landlord's property). Remember, this is a tenant's home. A home is a vital place of security as we have been discussing on this thread (how terrible homeless would be, etc). There are already lots of tenants in this situation but there is very little coverage of their plight. Everything seems to about mortgage holders and interest rates. In various other countries, tenants do have secure homes for affordable prices, landlords are held to account and do carry out repairs, etc. You may be a very reasonable, decent landlord but there are many who are not.

Thanks.
I can see that property type is in demand. Demand for other types of home seems a bit more mixed. The prices are considerably lower than in lots of other areas and it looks lovely and is by the sea so I can why people are drawn there and why the market is holding up better near you.
It is very different in most other parts of the country though.

Personally IMHO.

Paying twice the mortgage due to interest isn't something you can add to the value of a house. It's the cost of borrowing money that you don't have. A bigger deposit will result in less interest. Savings will result in less interesting (if offset against the loan). I don't think anyone can say the house doubling in price (over inflation) is 'earned' because you paid the bank a lot of money.

Anything over inflation or added due to improvements is unearned. However it's impossible to quantify with improvements as it boils down to the value people place on it.

House prices going up just 'because' is most definitely unearned and it's this aspect that we need to stem. The trouble is, how do you manage it when there are a myriad ownership scenarios. Personally I think price stagnation is the best long term solution (as opposed to a massive drop in value).

Stagnation suits everybody just fine from what I can see. Gives everyone a chance to breathe and catch up after the last three years of mayhem.

'House prices going up just 'because' is most definitely unearned and it's this aspect that we need to stem. The trouble is, how do you manage it when there are a myriad ownership scenarios. Personally I think price stagnation is the best long term solution (as opposed to a massive drop in value).'

Fair comment although I think we will get the large drop first probably followed by stagnation.

If the government banned all private and corporate renting I'd go along with that. If all rentals were to be state owned I'd get on board.

But that's never going to happen because the government are too busy cosying up with big business. Heck, half of the government own shares in these faceless corporations so it's no wonder why legislation is geared against private landlords and towards business.

The industry is already biased towards the tenant legally but sadly the issues with poor care/maintenance etc is independent of whether the house is privately, business or state owned (as evidenced by the many reports in the press). Unfortunately, I just don't think there's regulation in the right places as it's still possible to rent out dilapidated properties not fit for habitation. If, as per the Rochdale case, a huge association can get away with mould ridden and disgusting properties, we're all stuffed.

Remind me again, how many MPs voted against there being a minimum standard for rentals being fit for human habitation?

I suspect people saying prices are still going up are in similar areas. Round here the big detached houses that were going for £800k and over have slowed down a lot but the mid range ones are still crazy. A couple of friends are an estate agent and a mortgage advisor and they are both seeing quite a lot of people coming from the south looking for a 4/5 bed by the sea, which I imagine is the big driver. Who knows in years to come it might be very different, particularly if costal erosion & rising sea levels become an issue. In the end we don’t really care on a personal level that much what happens as we have no plans to leave until the kids are grown up and established somewhere themselves and we have no real concerns we can pay our mortgage. Chances are we can also help the kids buy in the future in some way if they want to.
It does seem nuts to me though that even though we earn a lot more now than we did 6 years ago, when I was working part time, we likely would struggle to get a mortgage for our house at todays prices.

Part of it at the moment must also be the cost of getting work done. It’s so much more expensive for materials/builders and the cost of building a home is likely massively up. It makes sense in a way that the cost of already built housing also reflects that.

I agree that price stagnation would be the best long term solution.

Not that we get to choose, but that would probably be the best outcome all round. Not so many winners & losers but more of a stable situation for everyone.

Housing prices don't tend to stagnate. They are either roaring up, and plunging downwards.

Its been that way for decades in this country.

According to "experts" on radio this morning, the financial pain, for renters and mortgage payers, will carry on for 2-3 years (Interest and CoL) and then things will pan down a bit.

Until the next time.🙄

Apartment prices have stagnated since 2016 in London. And a lot of the houses too in my z3 north London suburb.

Stress testing didn’t take into account of the sheer incompetence by the government that has caused interest rates to go where they are now. We live in a current situation of sky high taxation. What do we get for that? If you’re happy to pay £400 a month good for you. Mine would be about £300 extra a month and the economic situation is not caused by me.

Your quite right. Its no different from bailing out people who loose money on the stock market, or on horse races.
Everything in life has a measure of risk, some greater than others.

Not stagnated everywhere. DDs flat was 10% up when she remortgaged last year. From 2018. No change this year. Location, location, location. Z1.

What a load of selfish comments & people, let’s hope that none of you, your families and friends are ever put in that horrible position.

Unearned wealth?
We've spent a fortune doing up our home.
Not to mention the thousands of hours cleaning and maintaining it to a high standard.
I'd say we've earned the increase in value to be honest.
That's a pretty crazy comment that can't be applied to everyone.

Few people see buying a property as betting. A few might but most don’t. As we don’t have a buoyant rental market, where are people supposed to go? It’s so easy to point fingers but it’s far more difficult to sort the problems out. House prices are what they are due to scarcity. Or inability to get a mortgage which eventually leads to cheaper housing because there’s insufficient finance available. We do see movements from cities to countryside forcing up prices. Very much in attractive areas with wfh.

We don’t build enough homes. That’s why we have all this angst. All governments have contributed to this. It’s also too east to listen to single people wanting to buy in expensive areas. Most of us had to buy when we had two incomes . Also lots of second homes are inherited. Or are purchased after an inheritance. Selling them all is not realistic. Punishing people rarely ends well.

Maybe the government could bail out people if they get behind with there mortgage payments.
the government could pay off their mortgages but then take ownership of their property and rent them back to the original owners.
That way no one is out of pocket and no one is out of a home.