Anyone would have thought they might have learned from 2008 that lending more isn’t always good for them or the customer.
Well they did learn for a few years and getting a mortgage in the few years after was definitely harder but they soon seemed to forget all about it and 2008 wasn't really that long ago.
This is a great illustration of why Toryism and laissez-faire economics are shit. Governments need to control housing markets one way or the other, otherwise our lives end up worse and the rich just get richer.
how would you control them? if you (say) just limited how much someone could borrow, you'll end up in a situation where folks have to move into a small house, then save up, then be able to buy the bigger house later on (rather than just get a mortgage on the big house at day one). This means moving more often and living in a smaller house for longer. Neither of those things sound like life is 'better'?
Governments need to control housing markets one way or the other, otherwise our lives end up worse and the rich just get richer.
Governments are controlling housing markets to do exactly what you say they should stop
how would you control them? if you (say) just limited how much someone could borrow, you’ll end up in a situation where folks have to move into a small house, then save up, then be able to buy the bigger house later on (rather than just get a mortgage on the big house at day one). This means moving more often and living in a smaller house for longer. Neither of those things sound like life is ‘better’?
When people left school at 14 you could work, buy a house and have family in your twenties. now half the population goes to uni, they dont even enter the work force until 22-23. Give them a few years to find a spouse, save for a deposit, and they are into their thirties on their "starter house". Yes fertility treatment has improved but the 21st century lifestyle has outstripped biology.
And you will still end up with people like my parents living just the two of them in a five bed country(ish) pile, becuase moving is a hassle and they like the garden.
If there were a massive price correction, I think its naive to believe that the ‘have-nots’ are the ones who would benefit from it.
A couple of random thoughts.
Whilst borrowing is cheap, most home owners are better of paying their mortgage than renting, so regardless of their circumstances and income, selling up really is a last resort.
The changes to mortgage interest tax releif for buy-to-let landlords should be putting a squeeze on profits, but again how many will sell up? The current suspension of evictions is actually preventing landlords from selling property.
Shortages and delays in supply lines due to Covid plus Brexit have the potential to cause inflation. Would interest rates be raised more than a few percent?
A government short of money could look at rent controls to reduce the welfare budget. This has the potential to really hit landlords.
The changes to mortgage interest tax releif for buy-to-let landlords should be putting a squeeze on profits, but again how many will sell up?
I think it makes new BTLs less attractive, but if your existing BTL is not highly leveraged, its less profitable but probably still more profitable than other options (if you can deal with the hassle). Additionally, it only applies to higher rate tax payers, and most small-scale BTLers probably have someone in their household who isn't earning that much - either one of a couple being a part time worker or one or both being retired - thus the changes have zero impact on them
The thing is borrowing might be relatively "cheap" but banks are simply cranking up the minimum deposit requirements, so if first timers could each just rustle up an extra 20k (vs 6 months ago) that would be smashing...
That's the same first time buyers already being stung by silly high rents while earning pretty much zero interest on savings, so even affording a deposit becomes a harder proposition. Well done housing and financial sectors you're successfully ****ing a generation.
And yes I take the point above about dual income couples becoming the norm and therefore household incomes (rather than a single breadwinner) being the basis for house prices, except isn't that just the housing market and lenders colluding over time to gouge "average" households for participating more in the job market? A step towards gender equality has just become an opportunity for the finance sector to extract more wealth from more people...
That pattern only serves to keep people relatively 'poor'. Couples now spend such a high proportion of their incomes on first acquiring a house and then servicing a mortgage so they then start hammering consumer credit for other things, car(s) on PCP, holidays on finance etc, etc...
Imagine if housing in the UK were affordable? Consumer credit wouldn't be quite so lucrative for the banks, neither would mortgages, people might actually live within their means, in fact banks would be smaller businesses, and we'd maybe not be so beholden to them? Perhaps...
The thing is those whinging Millenials didn't create this financial circus focused on leveraging the basic human need for a roof over your head.
No it was their parents and grandparents generations born post war.
The same ones now sat in unattainably "valuable" properties banging on about the highlights from the last 50 odd years, how hard they had it surving three day weeks, 15% interest rates and Nigel Lawson...
Well guess what this lot are facing down a global pandemic, likely to see a record breaking recession/unemployment in the coming months, already get kicked with no fault evictions and their savings haven’t earned any interest in over a decade, I wonder what anecdotes they'll be relating in 50 years time...
how would you control [property prices]?
Lots of ways but the simplest one is to build loads of really good social housing. That would suppress sale prices.
No it was their parents and grandparents generations born post war.
Only a very small number of those people were actually culpable for this situation. The ones in charge. You cannot blame everyone's grandparents for this. They just did what they had to do.
Lots of ways but the simplest one is to build loads of really good social housing. That would suppress sale prices.
at the bottom end of the market, yes, but I'm not sure it'd affect nicer, bigger places in the same way. I'd still be competing against someone on a similar salary for a 4 bed house, cos neither of us want to live in a council estate?
but I’m not sure it’d affect nicer, bigger places in the same way.
Also seems to be a big shortage of nicer small houses - bit hard for boomers to downsize when they're used to a bit of luxury and the only small houses are shit overpriced starter homes.
Round my way, all the decent old two bed stuff gets sold and then immediately extended, so plenty of poorly designed "family" homes but nothing smaller.
Lots of ways but the simplest one is to build loads of really good social housing.
I kind of agree, with the caveat of the 'quality' and 'loads of' leads us to the door of the big housebuilders. They have a vested interest to not build themselves out of a market through volume or quality. They're not housebuilders, they're shareholder profit makers.
at the bottom end of the market, yes, but I’m not sure it’d affect nicer, bigger places in the same way.
You're assuming social housing needs to be cheap and rubbish.
I kind of agree, with the caveat of the ‘quality’ and ‘loads of’ leads us to the door of the big housebuilders.
It needn't. The government could hire builders and architects itself.
Only a very small number of those people were actually culpable for this situation. The ones in charge. You cannot blame everyone’s grandparents for this. They just did what they had to do.
I'm not so sure TBH, where was the concerted challenge to the erosion of social housing from previous generations? how many governments got elected on a promise to make housing affordable, improve the rights of renters and keep landlords in check?
Nope several generations have voted for promises of "economic growth" which was substantially supported by house price inflation and at least one round of flogging off social housing...
Don't get me wrong, I'm now very much part of the Problem. The offspring of a pair of empty nest boomers (still living in a 4 bed property they bought in the 90s). The owner of a pretty expensive house myself (as part of a dual income married couple), expecting it to gain value over the next decade or two, so we can eventually downsize (just like my parents planned oddly enough). I already see myself repeating many of the same problematic patterns, and I see how unsustainable it all is long term...
Ultimately you don't stop the merry-go-round unless a generation is willing to vote against their own financial self interests, consider the prospects for younger generations and choose to support policies that don't feed constant inflation of property prices...
The government could hire builders and architects itself.
Off on a tangent, but I am currently watching War Factories and they were pretty scathing of Atlee's post-war Government, its attempt to nationalise everything and the striking collapse of productivity and quality in industry. I am not saying that history would repeat itself but our track record isn't great.
You cannot blame everyone’s grandparents for this. They just did what they had to do.
True.
I can absolutely blame some of them for their shitty attitudes towards anyone younger and prettier than them, though.
POIDH
how would you control them? if you (say) just limited how much someone could borrow, you’ll end up in a situation where folks have to move into a small house, then save up, then be able to buy the bigger house later on (rather than just get a mortgage on the big house at day one). This means moving more often and living in a smaller house for longer. Neither of those things sound like life is ‘better’?
It's called living within your means. Funnily enough that's exactly the process many of the older folk I know followed to get into the houses they are in today.
I’d still be competing against someone on a similar salary for a 4 bed house, cos neither of us want to live in a council estate?
Council estates are no more. Up here anyway. New builds now have to incorporate a percentage of social housing into any development.
Rental houses will always be a popular investment. All the ones I’ve worked in recently have been paid for in full by people looking to make more money than they can from bank accounts no borrowing needed. The rental sector is not all BTL lots of it is straightforward investments.
If you live in an area you can’t afford to buy in move. If saving for a deposit sell everything and cancel your social life till you have enough money. Rubbish things to have to do but that’s life.
if you (say) just limited how much someone could borrow, you’ll end up in a situation where folks have to move into a small house, then save up, then be able to buy the bigger house later on (rather than just get a mortgage on the big house at day one). This means moving more often and living in a smaller house for longer.
Welcome to my world.
If you live in an area you can’t afford to buy in move. If saving for a deposit sell everything and cancel your social life till you have enough money. Rubbish things to have to do but that’s life
😆
Rubbish things to have to do but that’s life.
So what you're saying is that things are shit when you're poor and you should suck it up. A very Tory attitude.
If you live in an area you can’t afford to buy in move. If saving for a deposit sell everything and cancel your social life till you have enough money. Rubbish things to have to do but that’s life
It doesn't have to be like that. Not many of the people who are buying their house are getting any benefit from it costing more. Uses up more of their money throughout a very long period and then when they own it they are typically old and a) could die or b) require care and have to sell it to pay for care. Not many people get to walk away with the money as still need a house to live in.
Wouldn't it be better for everyone if house prices were a lot closer to how they were just 20 years ago, i.e. someone on minimum wage could buy at least a flat, whereas today a good salary would be required just for a very small flat (talking south coast here)
Not a Tory attitude at all molgrips but a realistic one. House prices aren’t going to massively drop. I spent two years in my first house with no heating a mattress and a chair as my only furniture as that’s all I could afford. If it makes you feel better to call me a Tory crack on. I could call you a lazy lefty wallowing in your own misery because your too lazy and unmotivated to make change in your life. I won’t though as I’ve never met you and don’t know you.
You forgot option e) Move to Cumbernauld.
I see it's time for my annual " Can you still buy a flat in my town for less than the list price of a Ford Focus?" challenge.
List price of a 2020 Focus ST = £30,575.
3 bedroom flat in a block* that some of my school mates lived in and still 300 yards from my parents house? = £29,995
https://www.rightmove.co.uk/property-for-sale/property-88488254.html
*Admittedly, I did once witness an Alsatian crashing through one of the top floor windows after it's owners had made it join in with them as they sniffed glue, but, y'know, a house is a house.
Something's just occurred to me.
There's a lot of... shall we say "displeasure" about people buying to let. But is it such a bad thing? The problem isn't a lack of housing, the problem is a lack of affordable housing.
If you want, say, a £150k property then in the current market you need to find a 20% deposit. That's thirty grand. That's a big ask for a lot of people - I haven't got that sort of cash lying around now in my 40s, let alone back when I was in my 20s. A landlord fronts up the deposit putting those properties in reach of someone who can scrape £500 together.
Sure, like overdraft charges and credit card fees it's once again taking more money off those in society that have none, but the alternative is what? Living with mum and dad until middle age, or buying some squalid flat in Little Beirut?
Wouldn’t it be better for everyone if house prices were a lot closer to how they were just 20 years ago, i.e. someone on minimum wage could buy at least a flat, whereas today a good salary would be required just for a very small flat (talking south coast here)
I do wonder whether there's going to be a paradigm shift in location, location, location in the next few years.
In many cases people live where they live in order to be near work. I'm thinking particularly of things like London's 'commuter belt' here. With working from home being the new normal for a lot of people, this criterion no longer applies and they could theoretically live anywhere. For the price of a London flat they could move 200 miles North and get a huge house.
What would that do to the market, I wonder?
where was the concerted challenge to the erosion of social housing from previous generations?
From memory, everybody was quite happy. Tenants were given a "right to buy" and took advantage of it. But before you start pointing fingers, would anybody on STW turn down the offer of getting an ex-council house cheap?
That right still exists for public sector housing. I know some people you are taking advantage of it, and who can blame them? So if you increase the stock of social housing, you'll also need to remove the right to buy. I doubt any politician will do that.
If you live in an area you can’t afford to buy in move. If saving for a deposit sell everything and cancel your social life till you have enough money. Rubbish things to have to do but that’s life.
That's a very simplistic attitude, not to mention defeatist. It doesn't have to be that way.
That right still exists for public sector housing. I know some people you are taking advantage of it, and who can blame them? So if you increase the stock of social housing, you’ll also need to remove the right to buy. I doubt any politician will do that.
Once again, not up here. Right to buy was ended a few years ago and social housing provision is now a condition of any large scale development.
There’s a lot of… shall we say “displeasure” about people buying to let. But is it such a bad thing? The problem isn’t a lack of housing, the problem is a lack of affordable housing.
Because it comes back to affordability and this idea that all property is an investment. BTL landlord comes along and buys a cheap property and charges rent at a rate that pays the mortgage, covers maintenance (if they give a crap), covers a wage for his "work" and covers enough profit to afford the deposit for the next item in the portfolio. That rent is only going one way especially since its not regulated. This then pushes rental rates up, either gentrifying an area and placing it out of reach of those who live there or turns into slum housing, ultimately being sold via an improvement order and being bought up by a flipper and once again gentrifying it.
Meanwhile, the tenants want to buy a house since a mortgage costs less to service but can't afford to save for a deposit and even if they did inflation is higher than interest rates. Then, if and when they finally get the money together for a deposit they fail the affordability check for a £150 a month mortgage despite paying out £700 a month for their current arrangement (this is based on a very true and very current story).
The alternative is regulated rental prices and more social housing but who would vote for that?
If you want, say, a £150k property then in the current market you need to find a 20% deposit. That’s thirty grand. That’s a big ask for a lot of people – I haven’t got that sort of cash lying around now in my 40s, let alone back when I was in my 20s. A landlord fronts up the deposit putting those properties in reach of someone who can scrape £500 together.
In Skipton 10 years ago you could buy a terrace house for sub 100k + 10% deposit. 120k bought you another bedroom and a bit more space. My street was full of young families and older folk that had lived there all their life and 90% or so were owner occupied. Since then the BTL crowd has been snapping up everything available on those streets creating demand that has pushed prices up to the point where they cost 130/150k with 20% deposit if you can find one, which you can't as they're all up for rent. The rent on one of those terrace houses costs more than the mortgage on my 3 bed detached.
!0 years ago it wasn't that difficult to save/find 10k for a deposit and there were plenty of houses to choose from. As you said, 20% on 150k is a little harder and all the stock is taken up anyway!
It comes back to tax (someone post links to Rutger Bergman!) because the lack of CGT / income tax on first and 2nd house wealth is driving the inequality. I'm paying a mortgage and I would be happy paying tax when we eventually sell because future generations will be able to live and move and not obsess about property which is bad for our economy and mental health & wellbeing
These threads miss something i heard on radio 4 once: Family-locked cross generational wealth.
If you want to buy a house in the S.East etc in future (now?) you need to have selected the correct grandparents-parents who have gained from huge equity growth...by living in the S.East. Bank of mum and dad giving you hefty deposit to add to your salary-multiple mortgage and get on the ladder. Not good for social mobiliy. Prices will keep going up indefinately, even if there's a coronovirus blip.
Me and my sister grew up in RG27, family house is now a huge pile of equity ~£600k.
We've married into Wales & North East families so see the disparity clearly.
Question for those who see landlords as protagonists of affordability/price growth issue. How can they make a difference as a given property can have 1 family unit from either the rental pool or the homeowner pool of family units:
I'm currently a landlord about to sell my buy2let - the tenants can't afford to buy it so will get turfed out if the new owner wants it vacant. These tenants will then have to compete against the other tenant units in the rental pool with -1 rental house in the supply. Have i saved the day because I've sold the buy2let to a family, likely a first time buyer?
IMO 'investors' who buy a family house then make it a multi-let / HMO are helping ease house price growth as they are fitting more (single person) units of demand into a single unit of supply. Same effect from 'developers' building in their gardens.
Dirty radiological device, anthrax?
Building more affordable homes would also do that.
Interesting, about the south east (not London) as the houses that ring the university of Reading used to house lecturers and ancillary staff now they're completely unaffordable for staff as there are very few under 500k. My mate is a senior lecturer, lives with his wife in a tiny terrace built for factory workers in the 30's.
With low interest rates there will always be a market for good properties in the right location, so whilst some segments of the market may drop, it wont be overall and it wont be sustained IMHO. Similar to 2008/9, most people pause plans rather than sell at a loss
Question for those who see landlords as protagonists of affordability/price growth issue. How can they make a difference as a given property can have 1 family unit from either the rental pool or the homeowner pool of family units:
The point I was making was that the landlords buy the cheap houses. This puts the price of them up and removes stock from the market so first time buyers or those on lower incomes have less choice. They then have to rent the houses they used to be able to buy at a cost higher than a mortgage would cost them which takes more money out of any pot they had to save for a deposit (which has also gone up)! If they could afford the next level up (bigger terrace or semi) they'd have loads of choice but they can't as they're first time buyers or on lower incomes.
And so the wheel keeps turning.....
Of course the problem is buy to let FFS. There is no justification for people who just happened to be born at the right time and are deemed credit worthy (despite having the same earnings as someone younger) 'owning' two or three properties. It pure greed that has been allowed to go on far too long. If property developing is not your full time job, then you are simply profiteering from the misery of others.
There are enough houses, that's not the problem! The problem is a generation trapped by sky high rents and monstrous deposits + all the other shit (tuition feea, zero hour contracts, laughable pensions etc) thrown on them by people who just simply do not care.
If it makes you feel better to call me a Tory crack on.
I didn't call you a Tory - I don't know you - I said that's a Tory attitude, because it is. Take your shit sandwich from the rich and put up with it - that is the Tory line, even if you're not aware of it.
I could call you a lazy lefty wallowing in your own misery because your too lazy and unmotivated to make change in your life. I won’t though as I’ve never met you and don’t know you.
Well I own a house and I earn plenty of money so it's not really accurate. I might actually be concerned for other people rather than just my own situation.
Of course the problem is buy to let FFS. There is no justification for people who just happened to be born at the right time and are deemed credit worthy (despite having the same earnings as someone younger) ‘owning’ 2 or three properties. It pure greed that has been allowed to go on far too long.
Please don't lump us all in that one pile.
A bit like saying all moumtainbikers are overbiked, lazy and too rich.
My tenants love that I rent the place to them.
If you want to buy a house in the S.East etc in future (now?) you need to have selected the correct grandparents-parents who have gained from huge equity growth…by living in the S.East. Bank of mum and dad giving you hefty deposit to add to your salary-multiple mortgage and get on the ladder. Not good for social mobiliy.
Well not always. If me and my partner combined our 2 London flats into one property the mortgage would be affordable and living costs less. Both of us bought late with hefty deposits (as that’s what you need being self employed) and neither of us had a bank of mum
and dad or huge equity growth either, just working and saving hard.
No kids or cars though, that probably makes a huge difference!
Buy to let isn't the whole problem but a massive part of it. Rich people get to use their money in a way that siphons money away from poorer people (and their descendants) and make them even richer.
How is that not wrong?
Sorry I disagree, you might be (a rare) good landlord, but if you and people like you were not in BTL, that family could love that house, but own it. This means not being evicted because you 'have a change of plans' this means their monthly payments going down over time not up. This means they can provide a secure foundation for their kids.
We are storing up so many social and economic problems in this country due to the ever rising cost of basic living.
Rich people get to use their money in a way that siphons money away from poorer people
It's not even their money! They just have been granted access to credit, because ...!?
Meanwhile, the tenants want to buy a house since a mortgage costs less to service but can’t afford to save for a deposit and even if they did inflation is higher than interest rates. Then, if and when they finally get the money together for a deposit they fail the affordability check for a £150 a month mortgage despite paying out £700 a month for their current arrangement (this is based on a very true and very current story).
How is any of that the landlord's fault? It's a wider problem.
In Skipton 10 years ago you could buy a terrace house for sub 100k + 10% deposit.
In Accrington last week you could buy a terrace house for 60k cos that's what mine just sold for.
The point I was making was that the landlords buy the cheap houses.
What's stopping prospective homeowners from buying them instead?
There is no justification for people who just happened to be born at the right time and are deemed credit worthy (despite having the same earnings as someone younger) ‘owning’ two or three properties.
By that argument there's no justification for people like Richard Branson to own multinational corporations when a corner shop would suffice. Welcome to capitalism.
