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!

What a load of nonsense, of course they do 😅

I did take out income protection but it only last so long, it’s not for life. It also doesn’t replace 100% of your income. Perhaps you need to read yours because you may be in for a nasty shock.

Yes I’m a net contributor, I pay more in taxes than I get in PIP.

My mortgage has gone up, guess what? I haven't had a pay rise at all.

I agree op. We own our home...it doesn't excite me if our house price rises. It would if it was only my house which was increasing in value 😂

You are absolutely right. Attitudes on this, and inheritance are completely out of step with reality

But doesn’t government money help renters in need, so mortgages are being paid indirectly, so it’s already happening. Ie. Landlords mortgages.

@3BSHKATS it always makes me laugh when people start shouting communism though.
Rishi Sunak’s furlough scheme was entirely socialist if you take it against the tories alleged belief in a free market. Help to buy is in intervention into that free market. It’s not a level playing field. Using tax payers cash to bail out mortgage holders isn’t free Market capitalism.

You haven’t lost anything until you sell. It’s still you home.

The government shouldn't have bailed out the banks and they should not bail out people who overstretched themselves to buy houses they couldn't really afford. If they lose their houses, so be it. When people take out a mortgage it is made abundantly clear that interest rates can go up and what that entails.

If you can just inherit a house outright from your parents, why bother working either? Just sit on the dole until they die, then take the combined equity and buy a big house outright.

It really isn’t the norm to inherit a fortune from your parents. And never has been. None of my grandparents, or my great uncles and aunts, or SH’s relatives, owned their homes. Our parents’ generation were the first (and they aren’t dead).

There has been a small bubble for middle class people whose parents bought pre-housing boom and died recently, but that is a small minority of people. When millennials’ parents die, it might be more (though probably still not a majority).

Hardly anyone gets housing for free. And what housing they get is usually not fit for human habitation. Hardly a utopia.

I suppose in the past they had miras so some may expect similar help.

Guess what? You have the option to work more hours or get a better job. I don’t, because I’m disbabled. I have no means to increase my income- you do. Don’t dismiss or devalue that, it is invaluable and an ability I wish I still had.

but many have stupidly overstretched.

many had no choice due to renting costs.

Many made the mistake of going for short fixes because for the last decade that worked. It's not stupidity. I mean the BOE thought inflation was a blip!

It’s a crap situation. I’ve only just managed to buy a house (2 year fix ends in November). I haven’t had a chance to pay off years of a mortgage at a rock bottom interest rate like lots of people and know rates are going to go up steeply and probably never get as low as they were.

I’m a single parent with one income coming in. It’s really scary to be honest.

@troubg they’d probably have to print money again to afford MIRAS or similar- creating inflation- making the problem worse.

"Equity" comes about because of a variety of factors

1. The ampunt of loan you have paid back as part of your monthly mortgage payments. That equity is earned.
2. The value of the house rising in line with inflation (to which the interest you pay for the mortgage is linked). That equity is earned.
3. House values rising above inflation, due to shorter supply etc. That is unearned.

When prices fall, lots of people will lose equity they have earned through 1 and 2.

The housing market is complex and there is no direction for it that is great. Whatever the market does outside of slow growth in line with inflation shit for a lot of ordinary people.

I’m afraid that isn’t true. I have a cousin who is six months younger than me, got knocked up at 17 and has been living in a variety of very nice council properties ever since. Until the final child got to an age where the universal credits people started putting the pressure on her to get a job that it turns out the woman is actually highly intelligent and went from being a minimum wage carer to a fully qualified nurse and guess what, she’s bought a council property at 75% discount. Not stupid that one.
In this instance, it is in an area that most of us wouldn’t be seen dead in however, in two years time, she’ll be able to sell it and move to a lovely area.

Now this one is going to come as a major major shock to you, but guess what her daughter did ?

Spoiler, it was not get a job and work hard to put herself through university and become a net contributor like my daft kids are doing.

The issue with housing in this country is primarily due to BTL and secondarily due to the low interest rate stupidity we’ve endured.

If everything was fair, then house prices would have just risen en par with wages. A house that cost £35k in 1990 when a starting staff nurse salary was £10k would now that the starting staff nurse salary is £30k and the house is £150k. Wages have tripled but house price has gone up by 5x.

Tax on all income from a second property should be rated at 100% irrespective of all other income - it is already classed by HMRC as unearned income.
This would effectively kill BTL stone cold dead.

The only exceptions should be only the social housing organisations authorised by the local councils and the councils themselves.

I fully agree that no-one has the right to unearned capital (yes that’s the term used by HMRC) from house price inflation.

I want my son to be able to afford to buy a house at a sensible wage multiple, he shouldn’t have to wait until I’m dead to be able to live what I call a normal life.

There should be no mortgage-holder bailouts - I was in negative equity of 25% at one point - I just gritted my teeth and held on, viewing the mortgage as no different to renting. Eventually it evened out. People who have recently bought will have to do the same.

@DarkSignOfTheMoon yes excellent points!

They've been predicting a crash since George Michael was straight but here in Edinburgh prices either level off or go up, and up, and up.

If the market slows then people will be put off selling. Prices might soften for a year or two then it's back on the sharp rise again.

So I'll believe it when I see it.

You’ll only lose money if you move. This obsession with moving up the housing ladder is ridiculous and greedy. Here’s a crazy idea. You bought a home , now just enjoy it and live in it . Stop thinking about your next move.

You are right the government should bail people out but saying that the house equity is ‘unearned wealth’ is ridiculous!

It is though. The lack of building new houses & QE which deflated wages & inflated houses has resulted in unearned wealth.

I totally agree. And I say that as someone who is already paying a small fortune, so I dread to think how much more we're going to be paying 🫣

@MorrisZapp i do think this is different though. It’s the end of a low interest rate experiment- it’s a huge shift. I saw one housing expert say it’s the end of a 40 year housing boom (with a couple of blips)