Is fraud propping up house prices ?

Graham_Devon

HAMISH_MCTAVISH wrote: »

So it obviously wasn't lending that caused high house prices, as the excellent recent article by Stephanie Flanders pointed out.

So what was it then Hamish?

Supply and Demand? If so, howcome prices are not excelling peak prices? Supply and Demand hasn't changed in terms of numbers.

So you tell us.

DervProf

HAMISH_MCTAVISH wrote: »

Most higher earners receive a significant part of their income in performance related pay. So now the "bears" want this part of their income to be not allowable for mortgage calculation.

And now we see calls for greater scrutiny of income, and taxation, etc, as they still can't believe as many people out there either earn more than they do or are willing to pay a greater proportion of their income towards a mortgage than they are.

It just seems to me that this is little more than the politics of envy, and an attempt to level the playing field by dragging everyone down to the bottom.

Hamish, this isn't the politics of envy, and it certainly isn't about dragging everyone to the bottom. It's about making sure that when two or more prospective buyers put in offers to buy a property, one of them hasn't lied about their income (or worse, evaded tax on their income) to enable them to possibly outbid the other honest buyers.

As far as bonuses are concerned, I don't think I`ve ever said that they should not be taken into consideration when calculating the amount allowable for a mortgage.

We have a shortage of property in the UK, it is dangerous to turn a blind eye to mortgage fraud. The longer the property shortage goes on, the more the temptatation and need will be for fraud to take place. The more people that commit fraud, the more otherwise honest people will have to do the same in order to "compete".

Why is it that in this country we "sleepwalk" into problems ? The signs are there, but nobody wants the fun to stop. I was talking about NR and B+B long before they went under. I had a strong feeling they would go under, and they did. The signs were there for all to see, but the will to prevent a serious problem was not there.

System

I dont think I've ever met a self employed person that doesn't do the odd cash in hand job.

DervProf

Joeskeppi wrote: »

I dont think I've ever met a self employed person that doesn't do the odd cash in hand job.

I don't doubt that, but the odd £50 here and there is not like a fireman running a business on the side and not declaring anything. It isn't an Asian shopkeeper who has multiple properties in his kids and relatives names.

And even if a self employed person is pocketing a lot of cash, how can it be right if a mortgage broker grants him a mortgage based on that undeclared income (if indeed that is what is taking place) ?

HAMISH_MCTAVISH

DervProf wrote: »

an Asian shopkeeper who has multiple properties in his kids and relatives names.

I've yet to hear why this is fraudulent as opposed to sensible tax minimisation or inheritance planning.

DervProf

HAMISH_MCTAVISH wrote: »

I've yet to hear why this is fraudulent as opposed to sensible tax minimisation or inheritance planning.

As long as he isn't visiting a mortgage broker with the intention of obtaining a mortgage based on income from properties that are not in his own name, then it isn't.

DervProf

As a self employed person, I can tell you that I regularly get told by my customers that they don't want a receipt - "don't be silly, stick it in your pocket, you don't want to give money to the tax man". Sometimes they think I'm mad when I give them a receipt anyway.

1. One day I may need to borrow money, so I'll need to prove my income.

2. I am saving for the future, cash under the mattress will not be worth much in 10+ years time.

3. I really do sleep well at night (and not because there isn't a bulge under the mattress !).

4. My customers, who often are paying tax, are actually effectively saying "I'll pay my share, and some of yours too".

julieq

Graham_Devon wrote: »

So what was it then Hamish?

Supply and Demand? If so, howcome prices are not excelling peak prices? Supply and Demand hasn't changed in terms of numbers.

So you tell us.

Demand for owner occupation purchasing has dropped back due to mortgage rationing. Rent is going up as a consequence, with prices settling as a function of yield.

You don't need props, the market is self supporting. Looking for props is like a Catholic looking for signs of the existence of God, it's the same psychology. God exists therefore there must be signs. What can the signs possibly be? CF Prices are too high therefore there must be props, what can the props possibly be. Needless to say the "props" located are negligible or don't work when used elsewhere. There is only supply and demand, all else is the work of man.

RUN_RABBIT_RUN

julie just got biblical on our !!!!!!

DervProf

julieq wrote: »

Demand for owner occupation purchasing has dropped back due to mortgage rationing. Rent is going up as a consequence, with prices settling as a function of yield.

You don't need props, the market is self supporting. Looking for props is like a Catholic looking for signs of the existence of God, it's the same psychology. God exists therefore there must be signs. What can the signs possibly be? CF Prices are too high therefore there must be props, what can the props possibly be. Needless to say the "props" located are negligible or don't work when used elsewhere. There is only supply and demand, all else is the work of man.

You forgot the -

Amen.

Seriously, let's accept that not a penny has been added to the sale of a property, due to the buyer having fraudulently acquired the money to make the purchase. That doesn't mean the fraud doesn't take place, does it ? Can we really conclude that there can't be any fraud taking place because repo's are suprisingly low ?