UK New Homes financed by financial services company shareholders? How?

[Isitmebut]

Did anyone see ‘Caribbean’ with Simon Reeve on BBC2 last Sunday, in particular in oil wealthy Venezuela and the extent of the economic mess as a consequence of all the State controls of President Chavez, that seemed such a good ideological idea at the time?

Anyway on top of the Labour UK State controls somehow freezing energy prices for a few years, whether energy prices RISE as fast as they recently fell (financed by the energy company shareholders?), we appear to have a similar idea – so how the hell can money Home Buyers are saving as a deposit for a mortgage, be used to BUILD homes?

Or is this a version of their Private Finance Initiative (PFI) schemes, initially ‘off government balance sheet’, that were so badly negotiated to build public sector projects, we will be paying for for up to 30-years?

“Labour unveils £5bn plan to build 150,000 new homes funded by Help to Buy ISA scheme”
www.independent.co.uk/news/uk/politics/generalelection/labour-unveils-5bn-plan-to-build-150000-new-homes-funded-by-help-to-buy-isa-scheme-10155240.html

”A £5bn plan to build 150,000 homes by 2020 will be unveiled by Ed Miliband today, as Labour puts housing for first-time buyers at the top of the party’s agenda.”

”Mr Miliband will argue that the only way to tackle the chronic shortage of housing is to build more homes. Labour would keep Mr Osborne’s top-ups and any financial institution offering these ISAs would have to invest in housing. A Labour government would underwrite every pound of the ISA investments if banks and building societies put the money into the “future homes investment fund”.

”Labour said the £5bn plan would not require any extra spending or borrowing as it would be funded by the Chancellor’s scheme.”

I guess under a Labour government he can’t expect the UK Home Builders to finance them in the past, as Miliband has totally pissed them off over the past few years telling them they should be building faster using their Land Banks, when the delays were often red tape & planning regs, most of which Labour introduced.

Could someone please explain to me how this will work?

Labour would keep Mr Osborne’s top-ups

That's it, innit - no more subsidising buyers? Fair enough.

AllThePretty Seahorses …. May I humbly suggest that you look just a little deeper into yet ANOTHER commercially impossible electoral pledge the Mr Miliband & Mr Balls are making, that would have President Chavez smiling in his grave – as showing as much state controlled economic incompetence – and Labour wonders why small, medium and large businesses are saying ‘please don’t rock the recovery boat’.

So someone please correct me where I am wrong on the following.

Home buyers put money into a mortgage deposit ISA saving vehicle managed by a financial intermediary e.g. a bank – the government tops up that savers deposit - the financial intermediary pays interest to the saver – when the saver wants to draw down their mortgage deposit they do so and the ISA ceases to exist.

So where does the capital sum come from to BUILD and own these homes from drawing board – to sale, especially as these are £££amount yet unknown SEGREGATED individual savings to achieve a mortgage asap - not even Labour’s favourite savings raid, on pensions they hope citizens forget about as many years before retiring?

• UK banks (or any other bank) are NOT in the speculative business of owning any homes they don’t have to (other than via a repossession), thereby subjecting their balance sheets to home price risk, similar to the UK average home price crash that fell close to 20% after the financial crash began, but thankfully rebounded soon after, due to the shortage of UK homes.

• UK banks PRIOR to the financial and economic crash tried to limit their balance sheet exposure to the housing crisis by securitizing close to 50% of all new mortgages - by packaging hundreds of £millions of them up, making a bond issue out of them, thus getting the risk OFF THEIR BALANCE SHEETS and selling them (and the risk of mortgage default) on to institutional bond investors looking for good high quality bond yields.

• UK banks were demanding 10-20% plus deposits on mortgages post financial crash, as this gives the banks (and their shareholders) a financial cushion to any home price downward correction.

• UK banks AFTER the crash were told by regulators and governments to be more prudent with their lending, hold more capital aside for every loan – effectively ‘closing the stable door after the (black) horse had bolted’ when the banks had clearly already learned their lesson and were too loan shy – so governments then told them DURING THE WORST RECESSION in nearly a century, screw the recession ‘risk’, lend more than you want to.

Mr Miliband has kept telling that he wants to “FIX THE BANKS”; does he mean for good, finishing off all the other high street names that didn’t either go tits up, or have to merge, after the LAST time Labour encouraged the banks to lend too much - but this time with additional property price risk exposures on top of loan risk?

I can see that Carlsburg advert; ‘if the Labour Party were a bank, they’d all be like the Co-op Bank’ – as they have about as much UK domestic financial/debt idea

I understand that the two main parties are launching their 2010 General Election Manifesto’s early next week.

So as no one seems clear HOW this 200,000 new homes a year policy will be funded - and the Old Labour attitude to business is hardly conducive to private sector ‘investment’ - we should expect far more detail/clarity if the pledge is to be taken seriously.

A General Election manifesto commitment to earn the trust of voters clearly should NOT just be a collection of headlines to be cut and pasted onto leaflets and used for soundbites, if there is no substance to it, as there is far more at stake here than having other political parties and the media challenging the 2015 promises for the next 5- years – the UK has desperately needed over 100,000 additional new homes a year for well over 15-years.

Indeed when the government coffers were flushed with funds in 2003, Gordon Brown asked Kate Barker (an ex BoE policy committee member) to specifically look at what was behind the inability of the housing sector to respond to the lack of new private/social housing - and she produced the following disturbing report in 2004 - including the need for the private sector to build 120,000 ADDITIONAL homes a year, and need for 23,000 more social home a year.

The (2004) Barker review: key points
www.theguardian.com/money/2004/mar/17/business.housing

To put this in context, the last Labour government averaged around 115,000 new homes a year, and in 2004 and social/council homes the number of new homes hit a all time low of 130 repeat 130 new homes (according to the Department for Communities and Local Government (DCLG) figures), that would have turned net negative after sales on the Right To Buy scheme - AND in early 2010 there were 5 million people (1.7 million families) requiring social homes.

Yet in Labour’s 2010 General Election Manifesto I see no mention of new homes, never mind a commitment to build a figure.

So within the Labour 2015 manifesto we need to be enlightened how Labour/Mr Miliband and their Housing Policy will go from a ‘2010 zero to 2015 hero’, as based on their housing record in power when there were £billions to spend, if there is no clarity on such an important issue, then who can trust any other manifesto commitment they make?

I've just heard Mr Miliband say "you cannot fund on an IOU", well neither can a party BUILD homes on an anti business manifesto, with Miliband red fairy dust.

I saw Ed Miliband’s speech yesterday, and as far as rhetoric goes, it was one of his most passionate, it pains me g-r-e-a-t-l-y to say that I was (somewhat) impressed.

However we need more than words, we need at least SOME substance to those policies.

The ‘good news’ was that the policy to build a shed load of new homes was on there (see the link below);

www.bbc.co.uk/news/election-2015-32284159

”Build at least 200,000 new homes a year by 2020 with "first priority for local first time buyers"

The ‘bad news’ was that there was no detail on how those homes would be funded when it was intimated our banks were going to start having to leveraging up their balance sheets AGAIN, like the 2000’s, but this time speculating on the home price market by becoming home builders.

To the private sector there is one thing far worse than government I.O.U’s, it is when the government warns businesses of a U.O.Me and has to wait/plan for their shafting at a later date.