Right To Buy from 2016!

markharding557

pol-zeath wrote: »

My daughter earns a good income but does not have the savings for a deposit and initial costs. Her mortgage will probably be less than the full rent she is paying on her property

Why does she not have savings reserves from a good income?
I would expect a financially astute person with a good income to have this.

This is a measure of her credit worthiness.

Generali

Butti wrote: »

If you sell you have lost an asset you can borrow against.

But you have received cash instead which is also an asset (store of value).

Ches

I bought privately. I am now a tax paying OAP who will be subsidising someone so that they can get a house cheaper than me. Crazy.

pol-zeath

markharding557 wrote: »

Why does she not have savings reserves from a good income?
I would expect a financially astute person with a good income to have this.

This is a measure of her credit worthiness.

The same reason why most single parents don't have savings - she is only 26 but manages working full time with two children under 5. Life will improve for her she just starting out in her career.

Butti

Generali wrote: »

But you have received cash instead which is also an asset (store of value).

Investors would rather have the asset to secure lending against. HAs typically put a charge on a property as soon as it was finished. Borrowed against the asset base. If you have a slow growing asset base you have certainty, low borrowing costs and basically a virtuous circle. If you have a government changing policy by the minute and are selling off your assets your credit rating goes down, your costs go up and your asset base reduces. Some HAs are stopping building affordable housing.

michaels

Butti wrote: »

The taxpayer subsidised the cost of building the asset and subsidises the rent through Housing Benefit if the tenant needs it. Sometimes they don't. Contrary to what the Daily Mail says, some aren't on benefits.

If you sell you have lost an asset you can borrow against.

If HAs charge market rents then why is it 'affordable' housing compared to any other private bousing?

If they charge less then it is subsidised housing and that subsidy must be coming from somewhere, I guess from the 25% govt grant up front?

So if a ha tenant chooses to buy they get a subsidy for the capital but stop receiving a rent subsidy, just as is the case for council house rtb sales?

Butti

You are both right and wrong.
HA ttenants are usually charged either Local Housing Allowance or 80% of market rent. So it is subsidised. HAs have long term loans based on building not selling their asset base and based on a 10 year business plan where they borrow against new assets (the remainder of their funding is very safe low cost loans). So around 75% is private business funding not subsidy and based on funding what was a very stable sector.

The properties are not affordable because in most areas of the country 80% of a market rent doesn't fit within the various definitions of affordable. The rents increased massively in 2011 as the Government cut initial grant, increased rents and "let housing benefit take the strain" ( Grant Shapps). We have been following a failed Australian funding model that has mushroomed the welfare budget.

In the last budget George Osborne claimed HAs had massively increased rents. They had because Government policy was to do so. He imposed a 1% reduction in rents across the sector for the next four years which has torn a big hole in the 10 year business plan and the low cost of borrowing the sector had secured.

Mr Cameron has now announced starter homes at 20% below open market value and HAs are talking about stopping building affordable rent. So the scenario could be starter homes for the middle classes with a bit of deposit from the bank of mum and dad, no affordable rent and presumably homeless people squashing into the private rented sector.

Hope he remembers to leave out housing when he is rewriting the definition of poverty.!!!

Generali

Butti wrote: »

You are both right and wrong.
They are usually charged either Local Housing Allowance or 80% of market rent. So it is subsidised. They have long term loans based on building not selling their asset base and based on a 10 year business plan where they borrow against new assets (the remainder of their funding is very safe low cost loans). So around 75% is private business funding not subsidy and based on funding what was a very stable sector.

The properties are not affordable because in most areas of the country 80% of a market rent doesn't fit within the various definitions of affordable. The rents increased massively in 2011 as the Government cut initial grant, increased rents and "let housing benefit take the strain" ( Grant Shapps). We have been following a failed Australian funding model that has mushroomed the welfare budget.

What failed Australian model? We don't have Housing Associations in Aus.

wotsthat

This is an awkward one for the 'let's build council houses crew'. Building a load of houses and giving the occupants a 20% discount at a later date is good but giving a 20% discount upfront is bad.

At least the latter cuts out the middle man and we don't have to subsidise lottery winners rent whilst they save up although arguments about which group of rent seekers is more deserving will get old really quickly.

Butti

Generali wrote: »

What failed Australian model? We don't have Housing Associations in Aus.

The 80% affordable rent model not the housing associations. I shall find you a reference.

Referred to in a report called 'Affordable Housing Development Models' pg.10. It also makes reference to small scale housing associations.