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!

One thing that does happen is buying means people pay towards an asset that can cover care fees

If that was taken away then we’d all pay more to cover them through the state

Care can be hugely expensive- to the tune of a house price

I dont agree with any government bailouts personally to householders. I had to buy a house as a single person and 10 years later than expected back in the 1980s (ie when interest rates were high) and it wasnt long after that that they raised those rates to even higher. The thing was I was already pretty cynical and had factored that possibility in - so I bought the house in the first place with decision already in place to take in a lodger and those raised interest rates meant I took in a 2nd one as well for a couple of years and I also did a variety of sideline jobs on top of my main job and I covered my payments with all that and no Government help (so yep...what was supposed to be 3-4 years of 1 lodger and no doing "sideline" work turned into 7 years of lodgers and quite a lot of sideline work). Admitted I did wonder whether to "weaken" and get married/live together with Someone/Anyone in order not to have to shoulder this burden on my own LOL. But I reminded myself that the costs of the subsequent divorce I would definitely have had (ie because he wouldnt have been The One - and so I would therefore have been unfaithful to him, whilst I kept looking for The One) would be high and might throw me back to Square One and so I'd better soldier on and keep having lodgers and sideline jobs for however long I had to until things eased one way or another. I managed to hang on in there - and the thought didnt cross my mind of the Government helping me out re the house (though it often crossed my mind/still does that I'd love Government/Society to stop financially penalising single people in a variety of other ways)......

Surely if some help was given to those with mortgages those with buy to let mortgages would also get it,therefore preventing them having to increase rents so much.

Why not bring back mortgage tax relief,god knows why Brown ever stopped it,but now ot seems a good idea, again landlords wouldnt have to increase rents so much.

@elizaagain

did you ever meet the ‘one’?🙂

It’s so tough. Think mortgage tax relief should be considered.
however we need so many new houses built to provide homes in public and private sector.
house prices in the UK are far too high and need to drop so folk can afford to buy without fear of not paying their mortgage. Houses are homes, not profit generators.
as for passing on to the next generation why? Annoys me when older folk try to avoid paying for care home fees by handing on property- why should their costs fall to the public purse?

It's a difficult one.

Allowing properties to now crash significantly will affect many families. As a single mum with an above average salary, I have worked hard just to afford a very small 2 bed property simply because it's in the south east.

My issue is property isn't being seen as homes to live in but as investments. The clampdown needs to be on second home owners, overseas investors and property owned by companies. But, clamping down on that means that prices go down overall. We are too far down the line now but in terms of help offered somehow that is where the distinction needs to be made.

Times are tough now, but they were also tough in the 70s and 80s when we married and took out a mortgage. Mortgage interest rates at that time were approximately 7 - 8%.

Wages varied, as follows

• 1970 - average male non-manual wage age 21 and over - £35 16s per week (£1,861 pa)
• 1979 - average male non-manual wage age 21 and over - £113 per week (£5,876 pa)

Source: New Earnings Survey (NES) time-series of gross weekly earnings from 1938 to 2017, published by the Office for National Statistics

• 1970 - average female non-manual wage age 18 and over - £16 16s per week (£873 pa)
• 1979 - average female non-manual wage age 18 and over - £66 per week (£3,432 pa.

There was little (if any) welfare then, and we saw it through, as this generation will.

Yup. That was an atrocious case. Truly awful.
As you say, the government simply isn't on board with making the necessary improvements. I suspect the plan may be squeeze out the small landlords and encourage the corporate. Time will tell!

I'm sure some are in v similar areas. Equally, there are quite a lot of people who are desperately trying to talk the market up now that is in falling overall.

The only real way to see what any property is worth at any given time is to market it and achieve a sale.

Many mortgage holders are private landlords. If they default the rental market fails. Current renters become homeless and pressure is put on the remaining rental housing stock ( meaning prices rise) by private mortgage holders forced out of their homes by a government refusing subsidies. It’s a bigger picture.

Oh sweet Jesus… when are people going to understand that the issue isn’t landlords? It’s supply and demand!

The issue is not LLs buying houses, they provide required housing that the government don’t have capacity to provide now. Why, because they sold off social housing stock.

As the population has grown through numerous economic factors house building has not kept pace meaning there is an under supply of homes regardless of them being rentals or homes for sale which, basic economics, drives prices up. Why is there an under supply of housing…. Because governments have not put in place what was required to meet their housing targets.

If you want to be someone that blindly follows the news that peddle the government rhetoric that the issue is landlords you are just swallowing the nonsense that government is putting out there that allows them to hide behind others!

And no, I am not a LL I only own the home I live in (mortgaged) and I also don’t believe government should bail me out because I believe it would have been up to me to make a sensible decision about the level of borrowing I had knowing that interest rates fluctuate.

I would have no concern about interest rates if I thought my wages would triple or quadruple in the next 9 years. High interest rates and massive massive wage inflation. Have you completely missed the fact that wages in this country have been stagnant for years

There are frequent comments about unearned equity and people getting quite uppity about it. In my view you have to differentiate equity into three parts (a) the money you have paid off your mortgage and the original deposit, (b) the equity earned by the virtue of property value increases in line with general inflation, (c) the equity earned by the property value increase in excess of general inflation. In reality it is only (c) that could fairly be called unearned income, if you lose that c'est la vie

House prices won’t fall much with 800k net migration lol

Unfortunately greedy landlords will mop up the cheap housing and charge eyewatering rents! That didn't happen in the 80s. The house prices came down and everyone could afford to buy a house. In the 90s people started buying up cheap housing and getting renters to pay the mortgage hence the boom of the estate agent becoming the letting agent. That led to multiple houses belonging to one person soon the prices were pushed up because thousands of landlords were building a portfolio of property which stopped the average Joe buying because landlords owned a fair chunk of the market. Then you have the boomer generation who in the 60s n 70s were gifted social housing as they got married and started a family, no 30k deposit to pay and nice affordable rent. In the 80s they could purchase the houses they were given at around £16, 000 without a care where their children and grandchildren were going to live, sod the generation that came after this generation. My landlord bought his council house, and his mum's council house for £32, 000. When his mum died he used renters to pay off her house so now he owned two three bed houses out right. Used the equity to buy his sister's and brothers gifted council properties for 120,000. Now he own four three bed properties he, charges £1000 per month for the three and after six years of renters paying off the mortgage he owns them all out right......each property is on the market now for £300,000 each. Stands to make almost a million off of gifted social housing that didn't cost him more than £50,000 of his own money and not a penny in deposit. He plans to sell, and when the house prices drop he will use the cash to buy more whilst keeping rents at the same price. The housing market will never be the same as too few people own too much property and too people many rent. Houses will come down but rent will never decrease because the demand for houses is too high...... because greedy landlords own more than their fair share. This working class family who needed social housing are now well known, his sons stand to inherit around seven houses and a thriving business. They each own their own homes too and with seven rental houses and a building business the mortgages will be paid in 10 years. They will be multi millionaires. The greed of that generation is astounding and are now sitting pretty, with mortgages paid off long ago and (being the only generation that had money to save) a hefty pot of life savings are collecting two hundred pounds a week in pension.....no £1000 a month rent to pay, no extra mouths to feed, free public transport, free prescriptions, discount in salons and pubs, discounted council tax are moaning about not having enough to live on yet are the only ones in hair salons, only ones shopping in MnS for food, eating out in pubs, buying the luxury brands in the supermarkets etc they seem to have skipped the cost of living crisis! Greed will be our downfall.

Having lived through the 80’s watching thousands lose their homes maybe that’s not the answer either . The population has increased by over three million in recent years so the likelihood is we won’t see that much of a slump anyway as demand outstrips availability anyway . What the government should do in rebuild social housing which was decimated by Maggies right to buy and never replaced . But they won’t do that because then their mates won’t make as much money off desperate renters .

What will happen to the mortgage defaulters who through no fault of their own cannot afford the repayments? Surely all it will do is put more into an already saturated unregulated rental market. Unless there is a massive reinvestment in social housing stock I see no end to this boom and bust cycle.

Talk about clueless. Go and do some research about slum landlords in the 70s and 80s and stop whining. Honestly the way you are going on you would think that nothing has ever been done about Rachmanesque practices. Part of the reason rents are sky high is because of all the landlords leaving the market due to all the changes brought in to appease people like you.

@LLaughingstock1991 what's the alternative? Mass homelessness? The economy is crashing largely because of decisions made by the government. Salaries are not going up with inflation, goods and services have risen sharply for various reasons. The pension age is rising all the time.

I'm a landlord, and I agree with you that there shouldn't be handouts for people who can't pay their mortgages. The government gave away so much money on fucking furlough and lockdown that people have somehow started to think that it's their right to be bailed out.

I also agree with you that nobody has a right to make a profit on their house.

You will probably be disgusted to hear, though, that I will be buying more houses when other landlords decide to get out of the market because they can't pay their mortgages.

I won't be expecting any handouts, though, and I don't think it's my "right" to profit from property. It's just the way it has worked out, and as I am a single parent with no pension, it's just as well that it has worked out.

Totally agree, nobody has control of the economy, but demand is still outweighing supply meaning a crash is still unlikely, I do agree however that the government should be doing more to get young people on to the housing ladder however

I had the measure of the OP long ago.

Buy low, sell high. Same principle for real estate as stock market. People that buy their house when the prices and interest rates are low, then sell once the prices come back up, have absolutely "earned" the equity in the house. They've made the decision when to buy and sell, they've worked to come up with the down payment, and they've worked to pay the interest on the mortgage every month. I don't know why you can't see that's earned. It's not free money.

Why is your mortgage going up by 400? Do you have a variable rate interest mortgage?