When will the correction come to house prices?

CLAPTON

mobfant wrote: »

If it was much easier to just build more houses, then it would have happened. But despite everyone across the political divide recognising the need to build more houses, we're not building enough. It would much easier to change the rules so that mortgage interest payments can't be offset against tax than to build the required number of houses next year.

Except that changing the rules on tax relief on rental businesses will reduce the amount of new building, will increase the rents and increase the occupancy (over crowding) for renters.
There may be a benefit for owner occupiers.

HAMISH_MCTAVISH

mobfant wrote: »

It would much easier to change the rules so that mortgage interest payments can't be offset against tax than to build the required number of houses next year.

That wouldn't change the fact that we still need to build those houses. Therefore it isn't tackling the problem.

Changing rules to make interest non-deductible, unlike every other form of business lending, would be little short of deliberately targeting existing property owners in an attempt to force redistribution.

Deliberately undermining private property rights, whether through outright confiscation or tax policies that achieve the same thing, would have grave consequences for inwards investment into the UK across large parts of the economy.

It's simply not going to happen.

Bantex_2

HAMISH_MCTAVISH wrote: »

That wouldn't change the fact that we still need to build those houses. Therefore it isn't tackling the problem.

Changing rules to make interest non-deductible, unlike every other form of business lending, would be little short of deliberately targeting existing property owners in an attempt to force redistribution.

Deliberately undermining private property rights, whether through outright confiscation or tax policies that achieve the same thing, would have grave consequences for inwards investment into the UK across large parts of the economy.

It's simply not going to happen.

Giving private tenants roughly the same rights as council tenants (with a few exceptions) would shake things up a bit.

AndyGuil

I'm not sure how punishing people is going to help. As pointed out, watch investment disappear, houses get scarcer and prices rise.

HAMISH_MCTAVISH

Indeed.

There seems to be a lot of people making up all sorts of complicated hare brained schemes in an effort to avoid doing the simple things that would actually work.

If you think Landlords have an advantage over FTB-s because they can borrow more, then the solution is clearly to lend more to FTB-s....

If a rental income stream is good enough to be counted as income for a landlord to borrow against, then surely the renter paying that rent is a good bet for a mortgage...

The solution to a shortage of houses and a shortage of mortgage lending, is to build more houses and issue more mortgages.

Simples.

Bantex_2

HAMISH_MCTAVISH wrote: »

Indeed.

There seems to be a lot of people making up all sorts of complicated hare brained schemes in an effort to avoid doing the simple things that would actually work.

If you think Landlords have an advantage over FTB-s because they can borrow more, then the solution is clearly to lend more to FTB-s....

If a rental income stream is good enough to be counted as income for a landlord to borrow against, then surely the renter paying that rent is a good bet for a mortgage...

The solution to a shortage of houses and a shortage of mortgage lending, is to build more houses and issue more mortgages.

Simples.

Not like that though. A landord would be unlikely to get the mortgage if he only had a choice of one tenant for the term.

wotsthat

Bantex wrote: »

Not like that though. A landord would be unlikely to get the mortgage if he only had a choice of one tenant for the term.

There's a pool of renters who want to buy but lenders don't trust them to repay a mortgage. However the same lenders trust them to pay a higher level of rent each month to the landlord.

Yes the risk is being aggregated across a pool of renters etc but if renters were so unreliable lenders would be unwilling to lend against the income stream and it's doubtful that landlords would be looking to borrow in the first place.

Meanwhile there will be much bleating about earned income being passed from poorer to richer and from younger to older.

Graham_Devon

The red herring in all this "the only way to reduce property prices is to build" is that property prices reduced in 2008. They stayed static 2011/12.

Hamish wasn't talking about building more back then. no, he was talking about mortgage rationing and how it's holding back the market.

Credit plays a huge part in house prices. We've seen the results of credit being reigned in and we've seen the results of it being ramped up.

Yes, building more would be great, but that's just ONE part of the solution. Identifying and dealing with the credit risks is another part. No looking at ALL the issues in the market will just have us panic reacting to everything and limping from boom to bust.

HAMISH_MCTAVISH

Graham_Devon wrote: »

property prices reduced in 2008.

Yes.

When the number of mortgages being issued fell by 75% thanks to the global credit crunch.

If virtually nobody can buy a house thanks to mortgage rationing, then prices will fall.

Only an idiot would think that's normal or desirable however.

Because the result is rents will soar (as they did) house building will fall to the lowest levels in a century (as it did) and a generation of young people will be forced to spend many extra years stuck in rented, buying a house for their landlord instead of themselves (as they were).

It is frankly bonkers that you think repeating all the mistakes of the last 7 years is a good idea.

wotsthat

Graham_Devon wrote: »

The red herring in all this "the only way to reduce property prices is to build" is that property prices reduced in 2008. They stayed static 2011/12.

Hamish wasn't talking about building more back then. no, he was talking about mortgage rationing and how it's holding back the market.

Credit plays a huge part in house prices. We've seen the results of credit being reigned in and we've seen the results of it being ramped up.

Yes, building more would be great, but that's just ONE part of the solution. Identifying and dealing with the credit risks is another part. No looking at ALL the issues in the market will just have us panic reacting to everything and limping from boom to bust.

Less lending = less building = continued shortage of housing = higher prices.

Pointing out that this can't be true because prices fell in 2008 during a GFC is a little strange - lending locked up and building fell off a cliff - prices are rising at a faster rate now as a result.

There are other factors and you regularly highlight those on the demand side where, as far as I can see, the proposal is to increase the number of renters per property. You're alright Jack I suppose.