There’s a shocking amount of poverty in London,
As I said I'm no economist, but if I were homeless in London the first thing I'd do is start walking out of the place.
Lifetime housing. The house is re-sold when you die. No exceptions.
What about everything else you own? Your car, your furniture, your bike(s), your stereo system?
What happens to your partner who survives you? Or to their children? Are you evicting them, no exceptions, even though your partner owns half of the equity?
What happens to your partner's children if your partner checks out before you do? What if you hold 100% / 50% / 0% stake in the house?
No exceptions.
Complicated situations don't lend themselves well to simple solutions, much as we might like them to. That's how religions get started.
I suppose that in the past social housing was there for the less fortunate but now we have huge swathes of under 40’s (and older) in good jobs who cannot get on the housing market. Especially on their own.
Add in the increase in divorces and you have a much, much larger group of people who are trying to buy a 2 bed terraced house or similar. Guess what type of housing is rarely built? It's all large blocks of flats aimed at the BTL investors or family homes with 3+ tiny rooms, a tiny garden and a useless garage for £200k+. The single person (for whatever reason) earning around £25-30k has no real chance to get 'on the ladder' when everything is geared towards families with 2 incomes totalling 2-3x their own.
Complicated situations don’t lend themselves well to simple solutions
Sure, this is a back of a fag packet idea, not a white paper. The point is this. As we all know house value isn't tied to the actual value of the bricks and mortar, its value is that it's a large investment that you can pass on. (and location obviously) If you want house prices to come down, then remove the incentive for them to be valuable as anything other than somewhere to live, one way to do this would be to allow people only to own a home for their own lifetimes. You could easily overcome most of the difficulties you pointed out.
What happens to your partner who survives you? Or to their children?
If they have an interest in the house, the same thing that happens now. again, if they're orphaned as children they go into care, if not, they get everything...Just not the house. This has the added advantage of folk actually making some provision for their kids, which they will be able to afford, as house prices (if you want to buy) will probably fall, so you won;t need to "invest" all your money in a house.
What about everything else you own?
Same thing that happens now, you make a will. You still get to bequeath your cymbals to little Eliza who loved them so much (much to the annoyance of her parents)
The only change I'm making is that you can't pass on your house to the next generation. Once the purchaser dies, it gets sold. The point being, in order to make house prices plummet; you need to create a situation where a house has no intrinsic value, other than for somewhere to live in...Every 30-50 years or so, 100% of the housing stock gets sold through market. I read somewhere that 50% of the housing stock is mortgage free and never comes for sale. Imagine the collapse in house prices if twice as many house are available...
As I said I’m no economist, but if I were homeless in London the first thing I’d do is start walking out of the place.
Not really talking about homeless people, massive majority of those people are in homes, most of them are in work, they're in poverty because a huge % of their income is spent on housing.....
As we all know house value isn’t tied to the actual value of the bricks and mortar,
Maybe that is the answer. All land prices are equal and house prices solely depend on the actual value of materials/rebuild. Prices would increase in line with building cost.
Some more pie in the sky suggestions:
If a house is empty for a certain period of time (year?) Then it gets taken to be used as social housing. The owner still owns it, but the council are responsible for upkeep.
The owner can sell as a "tennanted" property, but cannot force an eviction. If the tennants leave voluntarily, the owner then has the chance to sell or rent it privately.
Result - reduction in unoccupied houses; landlords reducing the rent offered to entice people in; social housing at low cost to council. Slight fall in house prices due to increased supply. Foreign investors buying up developments in London, Manc. Etc are motivated to rent them out rather than leave them empty.
Maybe that is the answer. All land prices are equal and house prices solely depend on the actual value of materials/rebuild. Prices would increase in line with building cost.
I'm currently sat in a poorly built, 2 bed mid terrace (that I don't own). Its value is pushing £300k. Yes thats obscene, but the reason it costs that and a similar quality thing on a shit estate in a dying industrial town is 20% of the price is that I am surrounded by good transport links and a plethora of well paying jobs.
If every house cost its rebuild value, thousands of people would be lining up to buy it. And trying to out bid the other buyers. Straight away we are back where we started.
Gold and guns I tell ye!
I don't know about anyone else, but where I am (Surrey/Hants Borders), rents are actually cheaper than mortgages..
Example:
https://www.zoopla.co.uk/to-rent/details/49332789
3-bed detached with garage, £1425pcm
https://www.zoopla.co.uk/for-sale/details/55962446
3-bed detached with garage, £400k. 85%LTV mortgage at 3% over 25 years, £1612 a month.
Same street, virtually next to each other.
rents are actually cheaper than mortgages..
But you can't say that - the financial model of each is so completely different. For example, make that 35 years rather than 25. Or 20% deposit rather than 15%. Or 2% interest rather than 3%.
And a very quick Google shows deals costing around £910 a month with a 1.84% rate for a 25 yr term anyway(HSBC). Of course that is only a 2yr deal, but, in general, it would be an odd decision not to take a mortgage with a lower initial rate then move it to another when it goes to the SVR.
I don’t know about anyone else, but where I am (Surrey/Hants Borders), rents are actually cheaper than mortgages..
Yes, and thats why lots of otherwise successful high earning younger generation have normalised extravagant rents. I'm aware of people who pay higher rate tax but have been paying these prices for decades, and the problems comes when some of these people now don't have jobs thanks to the 'Rona and not much else to fall back on. UC won't even scratch the surface of outgoings like that. Incase you're wondering how people end up in that situation, in the place I grew up down South there is currently nothing on the market below £600k according to Rightmove...
Well yeah, you can tweak the numbers either way tbh. I was just going on most likely max LTV in the current climate, standard term has always been 25 years, yes? 3% is probably the rate available to a FTB family at max LTV (it was for us, well, 2.8%). That's assuming family help to get the £60k deposit needed on 85%LTV, or say they have that in equity from having bought a 2-bed flat 5 years ago.
Put it this way, we were paying £950pcm rent on a 3-bed mid-terrace. Our 95%LTV mortgage on a £285k 2-bed mid-terrace (5% deposit was all we could get) is now £1200 a month. I know which one I'd rather be doing, but to say that mortgages are always cheaper than renting isn't true.
If every house cost its rebuild value, thousands of people would be lining up to buy it. And trying to out bid the other buyers. Straight away we are back where we started.
No we are not. You missed the bit where you can only sell your house for the rebuild value...
No we are not. You missed the bit where you can only sell your house for the rebuild value…
True, I misinterpreted that. This actually does make a compelling arguement.
So the first person to say "yes I'll buy", you have to sell to them. Houses would go in minutes round here. They'd go to people with £30k in the bank though, no time to talk to a mortgage advisor. So existing homeowners and those with rich parents still have an unassailable lead.
Once you have a house though, much better standard of life.
Well yeah, you can tweak the numbers either way tbh. I was just going on most likely max LTV in the current climate, standard term has always been 25 years, yes? 3% is probably the rate available to a FTB family at max LTV (it was for us, well, 2.8%). That’s assuming family help to get the £60k deposit needed on 85%LTV, or say they have that in equity from having bought a 2-bed flat 5 years ago.
Distills down to
you can tweak the numbers either way tbh
Agreed, which was my point. The original figures made it sound like renting was cheaper than mortgaging but it isn't straight-forward to make such a claim.
The only change I’m making is that you can’t pass on your house to the next generation. Once the purchaser dies, it gets sold.
Who gets the money?
The only change I’m making is that you can’t pass on your house to the next generation. Once the purchaser dies, it gets sold.
And all the allied trades associated with improving and adding value to houses completely collapse. Who's going to spend £100k on a big extension, £25k on a new kitchen, £10k on a patio etc., if it adds no value to their asset?
Who’s going to spend £100k on a big extension, £25k on a new kitchen, £10k on a patio etc., if it adds no value to their asset?
People who want those things. If you want a better kitchen then you can buy it, just like now. It just may not be an appreciating asset. Just like a car, a TV, an iPhone, a holiday, and all the other things we spend money on. In fact treating a home like an asset is a huge part of the problem
Who’s going to spend £100k on a big extension, £25k on a new kitchen, £10k on a patio etc., if it adds no value to their asset?
why doesnt any of that add value ?
it just incentivises you to sell up before you die and release equity to enjoy it instead of folk going to the bitter end in the 5 bedroom pile that then gets sold to the property developer to turn into an HMO for the students* and inheritance taxed to the hilt ..... or passed to your kids in the hope you dont die in 7 years....
*extreme case
Who’s going to spend £100k on a big extension, £25k on a new kitchen, £10k on a patio etc., if it adds no value to their asset?
People who want a nice home? The problem is speculative increases in value that have no basis in the value of physical assets - for example no one is adding a 10k patio to a BTL
Agreed, which was my point. The original figures made it sound like renting was cheaper than mortgaging but it isn’t straight-forward to make such a claim.
when you factor in inflation, and a longer term view, it definitely is. Rents generally rise roughly at the rate of inflation, mortgages don't. after ~20 years your rent is likely to have doubles but your mortgage remained constant (or, more likely dropped, as you get access to reasonable mortgage deals). I agree it may be less affordable in the short term (~3 years) though
when you factor in inflation, and a longer term view, it definitely is. Rents generally rise roughly at the rate of inflation, mortgages don’t. after ~20 years your rent is likely to have doubles but your mortgage remained constant (or, more likely dropped, as you get access to reasonable mortgage deals). I agree it may be less affordable in the short term (~3 years) though
Again, I agree. To say one is cheaper than the other is an impossible claim unless you take identical circumstances. For example, a person who has to move lots with their job may find it cheaper to rent than to constantly keep selling their house whereas someone who just wants a house with no intention of ever moving would undoubtedly be better off in the long term (ie, 30 yrs +) with a mortgage at the outset.
What would it take for house prices to REALLY plummet?
Rising sea levels due to rampant global warning should sort out all the overpriced coastal areas.
Some sort of global pandemic should sort out the overcrowded and overpriced cities.
Won't happen in my lifetime.
Probably.
Out of interest. How do things work in other European countries? I get the impression you don’t get this problem as much elsewhere.
There’s some OECD data here https://data.oecd.org/price/housing-prices.htm
Not necessarily what you’re expecting
Who’s going to spend £100k on a big extension, £25k on a new kitchen, £10k on a patio etc., if it adds no value to their asset?
That's the problem with this concept, isn't it. At the end of your life your house goes to... what, I don't know, social housing? but you've had no incentive to do any work on it for the last 40 years and so it's Donald Ducked.
This thread is amazing. The solution is seemingly to simultaneously do away with both the ability to rent and the ability to buy. I'm buying shares in static caravan manufacturers.
And when the share price of caravan manufacturers rise you'll be accused of profiteering.
Same principle will also apply if you buy shares in tent manufacturers.
It's a matter of historical fact that carriages can be made from pumpkins, and white mice be repurposed for the transportation of said vehicle. Caravans should be an easy development.
Now we've moved onto mistreatment of white mice.
That’s the problem with this concept, isn’t it. At the end of your life your house goes to… what, I don’t know, social housing? but you’ve had no incentive to do any work on it for the last 40 years and so it’s Donald Ducked.
That depends on what incentivises you doesn't it? Living somewhere nice that you like or "adding value" for the next never ending upgrade to... ...what exactly?
Call me a mug if you like but I spend about 15k on an extension, about 2k knocking out a wall and another k on the garden, added value is probably half that at best. Why? Because I want to enjoy living here.
People spend money on their house in the same way they spend money on modifying cars, tattoos, hairstyles or whatever else you care to think of that costs money but has no tangible value to anyone else. Similarly people seem quite happy living in [url= https://www.rightmove.co.uk/property-for-sale/property-72172785.html ]utter shit piles[/url] as it is.
Bargain - £45k and surely lots of Grumble stashed away in all that chaos. A veritable Aladdin’s Cave awaits the successful purchaser.
Same principle will also apply if you buy shares in tent manufacturers.
Now is the winter of our discount tents?
That depends on what incentivises you doesn’t it? Living somewhere nice that you like or “adding value” for the next never ending upgrade to… …what exactly?
Assuming you were allowed, would you build a conservatory on a rental property?
Similarly people seem quite happy living in utter shit piles as it is.
Before viewing the link I genuinely worried that you'd stalkered the house I'm selling.
Looks like either squatters or drugs (or likely both) were involved there. And is that rhythm pamphlets all over the floor in the second picture?
Doer-upper though. You'd never buy that to immediately move in to, but get a cleaning company and a decorator and then rent it out...
Cougar did you check the "similar sold nearby"? Saw one that looked really nice, 68k, well done up if very neutral.... Then spotted the iron railings on it and all the adjoining houses' front doors. Looks like a lovely area!!!
You'd be surprised how little that needs to turn it into a btl.
I've mentioned before I did splash and dash refurbs while at uni.....
This could range from - lick of paint and a new carpet to.....
Full suit and mask - taping your gloves and boots to the suit and long periods holding your breath while digging mounds of feaces out the bath and pumping the water out from under the floor cause the junkies stole every bit of copper pipe including the main stop and the hot water tank. ..... That Leeds house just needs a skip and a good scrub with selective modernisation comparitively
Then spotted the iron railings on it and all the adjoining houses’ front doors. Looks like a lovely area!!!
Probably because of the 'residents' of the first property...
There doesn’t have to be loop holes in tax law you know. They’re only their due to lobbying from interest groups.
Well I never knew that. I had assumed that there were always loopholes that clever/ well motivated people could find if there was the prospect of making a stack of cash from it. Are you really sure that is the case? Seems unlikely.
There are plenty of things in the past that sounded like they could never happen until they did – e.g. ....banning of hunting with dogs,
Erm. I hate to break it to you but...
Who’s going to spend £100k on a big extension, £25k on a new kitchen, £10k on a patio etc., if it adds no value to their asset?
If this was true, then what would be the point of luxury cars, super-bike MTBs, nice clothes, expensive shoes, holidays abroad..? Of course people would still do those things.
Assuming you were allowed, would you build a conservatory on a rental property?
Dunno, maybe. I'd probably put a shed in at the very least. My gran lived in council houses all her life, I'm sure if it had been an option and would have improved her quality of life she may well have done. But then, she had an assured tennency and wasn't liable to get kicked out if the landlord decided to sell up or because her rent had risen dramatically.
As I said, people spend plenty of money of stuff with no financial return, why are houses special?
Looks like either squatters or drugs (or likely both) were involved there. And is that rhythm pamphlets all over the floor in the second picture?
Quite likely, yes. But it doesn't change my point does it, people live in such conditions by choice already. Apparantly one of my SIL's friends grew up in a house not too dissimilar (obsessive hoarder as a parent) and that was bought and paid for.
And yeah, never noticed those, is that a pile of vintage VHS muck under the window as well?
Assuming you were allowed, would you build a conservatory on a rental property?
On an assured tenancy I fail to see why you wouldn't if you so desired one.....but since conservatories are a liability the owner probably wouldn't want you to.
Houses are special because they cost a lot of money and the idea, whether sustainable or not, is that you can recoup said investment.
Cars, bikes, etc. Meh, but our economy has developed to the point where housing can offer a return. That's the reality...
Houses are special because they cost a lot of money and the idea, whether sustainable or not, is that you can recoup said investment.
Exactly, so take that away, and watch prices fall...
...and an economy under pressure from Brexit and Covid-19...
People seem to be wishing economic disaster so they can buy a house to sit outside of with an assault rifle...
The real world, on the other hand...
People seem to be wishing economic disaster so they can buy a house to sit outside of with an assault rifle…
agreed - if property prices fall so far so fast it would only be a result of seismic changes in the economy and jobs market so why would anyone think they would have the means to buy in such circumstances when they couldn’t afford to before?
It's more realistic than the notion that building more houses will allow people to buy homes who couldn't previously do so.
It’s more realistic than the notion that building more houses will allow people to buy homes who couldn’t previously do so.
It's been mentioned already, but if you've not watched it then give a viewing to Manctopia: Billion Pound Property Boom on iplayer to see the full, totally depressing dysfunctionality of the UK property market.
Manchester is a building site. Thousand of 'housing units' being built all across the city. I won't use the word 'homes' because providing those -places for people to actually live - doesn't even seem to figure in proceedings. 90% of these 'luxury' properties are bought as investments, off-plan, by foreign investors, to sit empty. They're just places to store money. The other 10% are buy-to-let landlords. The council is busy issuing compulsory purchase orders on existing estates of former council housing so that the land can be sold on to the property developers to build yet more 'investment opportunities'
Meanwhile, Manchester streets are full of homeless and there are 95,000 people on the waiting list for social housing, none of which is being built.
The housing market in this system in this country is completely and utterly ****ed up! I don't know how you change that, but it appears that there's no willingness at all by anyone who can make a difference to even address the issue
