MSE News: Government house buying scheme launched

InMyDreams

RenovationMan wrote: »

What is the alternative for youngsters who want a secure home for their children and don't have access to the Bank Of Mum And Dad?

I wouldn't call being in eye-watering negative equity with a young family a very secure position to be in.

What I can't understand is why in this day and age, people view home ownership as 'secure'. That's what I find frightening. I'd rather see the money spent on bailing out home owners (or even worse, encouraging more people to become home owners) to be spent on social housing or helping those people who are renting and in trouble.

RenovationMan wrote: »

Many young families are living in rented family accomodation at rents that far exceed the equivalent mortgage rates and leave them with little or no money with which to put a large deposit together. They don't have security of tenure and they don't want to keep moving their kids from school to school whenever their BTL landlord decides to sell up/go bust.

And many young families are trapped in negative equity, at risk of repossession, because they have been fed the line that owning a house means they have provided security for their family.

We need to be tougher on those who buy houses they can't then afford. Then maybe renting won't continue to have the stigma it seems to still have attached to it and won't be seen as the 'insecure' option. Then maybe the housing market will become more realistic again rather than artificially inflated at tax-payer's expense.

RenovationMan

InMyDreams wrote: »

Then maybe renting won't continue to have the stigma it seems to still have attached to it and won't be seen as the 'insecure' option.

I don't see renting as having a stigma, it's a perfectly fine method of housing yourself and your family - in countries that have decent rental laws. Renting is not 'seen' as insecure, it is insecure. You have a maximum of 6 months guaranteed occupancy and then it's month by month.

Talk about waiting for house prices to fall to 'realistic' levels in paradoxically unrealistic. It's not going to happen. People have been talking about a HPC since 2001, it's now 11 years later and they are still talking about it. Families with school committments can't put their lives on hold for that long.

spikyone

InMyDreams wrote: »

We need to be tougher on those who buy houses they can't then afford. Then maybe renting won't continue to have the stigma it seems to still have attached to it and won't be seen as the 'insecure' option. Then maybe the housing market will become more realistic again rather than artificially inflated at tax-payer's expense.

Whilst I agree with what you're saying, this must also apply to BTL mortgages. Simply pushing people into renting won't reduce house prices because people will still need a home, and someone has to own that home. As I understand it (and correct me if I'm wide of the mark here) landlords are currently able to use properties as equity towards their next BTL mortgage, which is a preposterous situation.
We need to make sure that BTL mortgages are only given to those with a cash deposit that's just as substantial as any other mortgager. Only by reducing everyone's ability to buy homes they can't actually afford will prices go in the right direction.

Of course, the other thing needed to re-balance the market is a sensible base rate, and it seems unlikely that will happen soon either...

ashleyriot

vzbfhr wrote: »

Due to a new addition to the family i need to move house NOW and don’t have time to save for a deposit.

But you didn't wake up one morning and find the baby on the doorstep did you?

You made a choice (and maybe that choice was a failure of contraception but you still have choices).

Children are used to justify so many things...

vzbfhr

I don’t see where the 95% mortgage = unaffordable argument comes from?

If people are buying houses right at the top of their limit of course. But they could still do this with 20% or more.

For me. Me and my wife earn £65000 between us. Can we get a £250000 Maybe. Would I? No.

However I would like to get a £170000 mortgage but as I have little deposit I don’t have much option other then this.

So my point is that a 95% mortgage has nothing to do with over committing. It just helps with those of us that haven’t got a deposit and would like to move now.

InMyDreams

RenovationMan wrote: »

I don't see renting as having a stigma, it's a perfectly fine method of housing yourself and your family

Oh, I agree! But I do think that home ownership seems to be viewed by many as some sort of holy grail of security that everyone has a right to.

RenovationMan wrote: »

- in countries that have decent rental laws. Renting is not 'seen' as insecure, it is insecure. You have a maximum of 6 months guaranteed occupancy and then it's month by month.

I suppose I meant less secure rather than insecure. People seem to accept that if you rent you are at risk of having to leave your home, whether or not you are struggling to pay the rent, but if you have a mortgage then you should be somehow more protected from having to leave it. All I'm asking, is why do we have that attitude? And if we don't, why do we see ownership as security for our families? What the government is proposing seems anything but secure for the families relying on it to me, and setting them up for financial disaster.

RenovationMan wrote: »

Talk about waiting for house prices to fall to 'realistic' levels in paradoxically unrealistic. It's not going to happen. People have been talking about a HPC since 2001, it's now 11 years later and they are still ding it. Families with school committments can't put their lives on hold for that long.

It's certainly not going to happen if the tax payer keeps propping it up.

spikyone wrote: »

Whilst I agree with what you're saying, this must also apply to BTL mortgages.

Quite. I've no idea how BTL mortgages work. But I certainly agree that they shouldn't be getting tax payer's help either. Do they? Is the government proposing to offer similar assistance to become a landlord? Surely not!

RenovationMan

InMyDreams wrote: »

Oh, I agree! But I do think that home ownership seems to be viewed by many as some sort of holy grail of security that everyone has a right to.

The 'right' should be to be able to permanently live in a single accomodation provided you pay the rent/mortgage. Mortgage holders have this right, council tenants have this right and people renting privately do not. I don't think that owning a house is a right, I'm saying that under the current tenancy laws, it's the only way to provide a secure, stable home life for your family.

InMyDreams wrote: »

I suppose I meant less secure rather than insecure. People seem to accept that if you rent you are at risk of having to leave your home, whether or not you are struggling to pay the rent, but if you have a mortgage then you should be somehow more protected from having to leave it. All I'm asking, is why do we have that attitude? And if we don't, why do we see ownership as security for our families? What the government is proposing seems anything but secure for the families relying on it to me, and setting them up for financial disaster.

Where in the proposal does it say anything about any of this?

InMyDreams wrote: »

It's certainly not going to happen if the tax payer keeps propping it up.
ot!

How is the taxpayer 'propping up' the house market?

tifo

Many people say "don't have kids" but no kids = no future work force, to pay off the govt borrowing by working and paying tax. And less workforce would mean immigration and then the same people still won't be happy.

RenovationMan

tifo wrote: »

Many people say "don't have kids" but no kids = no future work force, to pay off the govt borrowing by working and paying tax. And less workforce would mean immigration and then the same people still won't be happy.

They seem to be saying that you shouldn't have kids until you have bought a house. Considering that the average age of a first time buyer is 38, it seems that we will have a lot of geriatrics turning up with their kids at University Graduations.

spikyone

vzbfhr wrote: »

So my point is that a 95% mortgage has nothing to do with over committing. It just helps with those of us that haven’t got a deposit and would like to move now.

OK, look at it this way - if you can't afford to (or simply won't) save for a deposit, what evidence is there that you're financially savvy enough to manage a mortgage? Don't forget that on top of the mortgage there are bills, maintenance costs, etc, etc that are an additional drain on a FTB's expenses, and one which a lack of deposit shows they may be unprepared for. Moreover, if you have only a 5% deposit, your payments will rocket if/when interest rates return to a more normal level. Setting a higher deposit requirement is simply protecting people from themselves!

InMyDreams wrote: »

Quite. I've no idea how BTL mortgages work. But I certainly agree that they shouldn't be getting tax payer's help either. Do they? Is the government proposing to offer similar assistance to become a landlord? Surely not!

Sorry, didn't make myself clear. What I was getting at is that using a property you already own as equity to take out a further BTL mortgage is just as bad as only having a 5% deposit, and that to avoid keeping the market artificially inflated this would also need to be tackled.

RenovationMan wrote: »

Where in the proposal does it say anything about any of this?

But that's exactly what the proposal is about, making it easier for people who can't really afford a house - whether they already have a property or not - to get a mortgage. It's guaranteed by government (aka tax-payers') money. And people are being protected from losing their homes; the current 0.5% base rate is in place almost uniquely to ensure people can stay in homes they couldn't otherwise afford.

The problem is, as I say, that the government are proposing offering 5% mortgages, which will just keep us in this situation because people will continue taking mortgages that they couldn't afford with a more sensible base rate. In turn, FTBs are less able to save (because interest rates are lower than inflation). This proposal is just keeping us in a vicious circle. What we need are higher deposit requirements coupled with a higher base rate, and less of a protectionist attitude towards those who can't afford the house they currently inhabit. House prices (and therefore deposit requirements) will level-off (I can't see them reducing significantly because people are unwilling to take that hit), FTBs will be more able to save, and the housing market will start to move again.