Novel model to prevent repossessions with banks showing their moral standing

Radiantsoul

A reasonable idea, but banks would be wary about moral hazard(ie that people might find the idea encourages people to be less willing to pay in future).

Probably more flexibility around rearrangements will emerge, although I am not sure if banks will be so keen on shared equity. Also not to clear what the legal position would be. And if property prices exploded people would doubtless moan the bank had a cheap share in their house(as people now moan about fixed rates).

Dylanwing

I am no expert but... (Is that a good start).. Instead of uncoditional loads of cash to Banks, maybe the Government should buy the property at true market value less 10%, and rent it back to the occupant as a Council House. The Banks get their money, nobody is made homeless, and the Banks can't just fritter away Government money on Executive perks and bonusses. And Council stock gets replenished without the need to buils rabbit hutches on any piece of spare land.

whathavewedone

I think buying back repossessed properties and renting it back to the previous owners as council houses makes great sense. People who wouldn't normally be council tenants would just stay there until they got back on their feet, freeing up the houses for needy families. To make sure that happened there should be 5 yearly means tests. If people didn't want to move but could afford to they would have to pay the council the market rent or buy it at the market rate.

davilown

whathavewedone wrote: »

I think buying back repossessed properties and renting it back to the previous owners as council houses makes great sense. People who wouldn't normally be council tenants would just stay there until they got back on their feet, freeing up the houses for needy families. To make sure that happened there should be 5 yearly means tests. If people didn't want to move but could afford to they would have to pay the council the market rent or buy it at the market rate.

TBH I think this could be the easiest and possibly best route - although I think both the owner and the banks should be made to 'suffer' - I mean it shouldn't be the easy way out of owing/losing money.
I Do, however, believe that all council property tenants should be treated like this.

whathavewedone

Well I'm just taking a pragmatic view. I mean, where are people going to be housed? You do hear stories of people being repossessed, go into temporary housing for a while, have to move their children's schools etc and end up somewhere horrible having housing benefit paying rent that was significantly higher than their mortgage was.

If for example we end up in a situation where interest rates have to go sky high (much higher than the average of 6% say) a lot of people will lose their homes purely because they bought during the boom. I think this would be a better option than not raising interest rates because the government would be too frightened of the carnage that would ensue.

Quite frankly I doubt even the conservatives would be happy about taking such action because they would lose so many core voters. Imagine lots of middle class families in temporary accommodation, owing so much money they would never be able to become home owners again - there wouldn't be much incentive for them to continue working as lawyers, doctors etc. Might as well go on the dole if you're never going to be able to get back on your feet again. A whole new underclass would emerge, their children wouldn't go to university or see the point in getting qualifications.

I agree that it shouldn't be painless, although for many people who bought their homes, saved up for a good deposit etc, the stigma of being a council tenant would be a punishment in itself. I definitely think that the whole system should be reviewed anyway to get rid of underoccupation and to ensure that people who can afford to pay a market rent.

I have no problem with the RTB scheme but it should be on the basis that people have to pay a market rate for the property.

olly300

whathavewedone wrote: »

Well I'm just taking a pragmatic view. I mean, where are people going to be housed? You do hear stories of people being repossessed, go into temporary housing for a while, have to move their children's schools etc and end up somewhere horrible having housing benefit paying rent that was significantly higher than their mortgage was.

If for example we end up in a situation where interest rates have to go sky high (much higher than the average of 6% say) a lot of people will lose their homes purely because they bought during the boom. I think this would be a better option than not raising interest rates because the government would be too frightened of the carnage that would ensue.

Quite frankly I doubt even the conservatives would be happy about taking such action because they would lose so many core voters. Imagine lots of middle class families in temporary accommodation, owing so much money they would never be able to become home owners again - there wouldn't be much incentive for them to continue working as lawyers, doctors etc.

Believe it or not lots of people in well paying jobs actually like the job they do and don't only do it for the money.

Before GPs pay when up I met a few medical students whose aim in life was to become a GP even though at the time they could have made much more money being a hospital doctor and couldn't opt out of working out of hours.

whathavewedone wrote: »

Might as well go on the dole if you're never going to be able to get back on your feet again. A whole new underclass would emerge, their children wouldn't go to university or see the point in getting qualifications.

I agree that it shouldn't be painless, although for many people who bought their homes, saved up for a good deposit etc, the stigma of being a council tenant would be a punishment in itself. I definitely think that the whole system should be reviewed anyway to get rid of underoccupation and to ensure that people who can afford to pay a market rent.

I have no problem with the RTB scheme but it should be on the basis that people have to pay a market rate for the property.

My issue with the RTB scheme is that councils could not replace the properties they were selling off. Put that in place and make people pay market prices for property then majority of people against it won't have a problem.

whathavewedone

I don't know that many lawyers who love their job tbh!

I agree wholeheartedly that new houses would have to be built if the RTB scheme continues in any form.

Dylanwing

If things get really bad (Seems likely), we could end up with Becketts Builders building new houses on playing fields, green fields etc, whilst a whole heap of private houses remain empty following repossession. We might even end up like parts of the US with whole areas falling derelict, whilst a few miles away, a school playing field is being developed to house the former occupants of the derelict houses.

olly300

whathavewedone wrote: »

I don't know that many lawyers who love their job tbh!

The only ones I know who love their jobs seem to be in roles where they help individuals and aren't acting for companies.

dinoyoung wrote: »

I agree wholeheartedly that new houses would have to be built if the RTB scheme continues in any form.

The government needs to badly change rules that penalise councils for building or creating more council properties.
But that won't happen.

leveller2911

whathavewedone wrote: »

Well I'm just taking a pragmatic view. I mean, where are people going to be housed? You do hear stories of people being repossessed, go into temporary housing for a while, have to move their children's schools etc and end up somewhere horrible having housing benefit paying rent that was significantly higher than their mortgage was.

If for example we end up in a situation where interest rates have to go sky high (much higher than the average of 6% say) a lot of people will lose their homes purely because they bought during the boom. I think this would be a better option than not raising interest rates because the government would be too frightened of the carnage that would ensue.

Quite frankly I doubt even the conservatives would be happy about taking such action because they would lose so many core voters. Imagine lots of middle class families in temporary accommodation, owing so much money they would never be able to become home owners again - there wouldn't be much incentive for them to continue working as lawyers, doctors etc. Might as well go on the dole if you're never going to be able to get back on your feet again. A whole new underclass would emerge, their children wouldn't go to university or see the point in getting qualifications.

I agree that it shouldn't be painless, although for many people who bought their homes, saved up for a good deposit etc, the stigma of being a council tenant would be a punishment in itself. I definitely think that the whole system should be reviewed anyway to get rid of underoccupation and to ensure that people who can afford to pay a market rent.

I have no problem with the RTB scheme but it should be on the basis that people have to pay a market rate for the property.

I have always lived in a council house, the RTB scheme has good and bad aspects.Yes it took a lot of houses out of the rental market,it also saved councils £millions in repair and renovations. You were entitled to variable discounts from market value dependant your qualifying years as a tenant.It was wrong that councils could not use the money it raised to build new social housing, BUT an even bigger problem is that successive government,s policy of only making developers build a ratio of 2 social houses for every 10 houses they build. We don't need 4 and 5 bedroom houses on gated estates we need 2 and 3 bedroom houses.The RTB gave tenants a chance to own there own house which was a great idea.
Just what is the "stigma" of living in a council house???? why would it be "punishment enough?" F**cking cheek !!

Can I remind a few people on here ...It was over greedy motgage borrowing thats partly got us in the state we are in, NOT council tenants....:rolleyes: