Sell off state homes at 100% of value

cells

Here is an idea. Sell off state homes at 100% of value. The subsidy should be in the form of 95% LTV Interest Only mortgage fixed at 3% for 25 years. I think that's a very reasonable and affordable subsidy and could actually be a profit*

No need for income multipliers any tenant that gets together a 5% deposit can go for it. Worse case is that they default in which case the state reposes its house back and ends up where it was no loss or risk

I think this could work and could see the sale of a million state homes within 5 years turning lots of renters into owners and in the process improving lots of council estates.

Mistermeaner

Not enough incentive to achieve desired outcome and default position in counter productive as results in the asset back in state ownership thus negating the reason for doing it.

Also how would this work with ha?

Whole point of the discount (whether you agree with it or not) is a bribe to the occupier. The upside for the buyer is 'free' equity from said bribe. The upside for the seller is no more landlord responsibilites and costs, plus more liquidity in the form of cash to do other things.


Your solution doesn't achieve this.

wotsthat

Just sell off state housing by auction as they become vacant. It'll take some time but within a couple of decades the whole stupid experiment could be behind us.

cells

Mistermeaner wrote: »

Not enough incentive to achieve desired outcome and default position in counter productive as results in the asset back in state ownership thus negating the reason for doing it.

Also how would this work with ha?

Whole point of the discount (whether you agree with it or not) is a bribe to the occupier. The upside for the buyer is 'free' equity from said bribe. The upside for the seller is no more landlord responsibilites and costs, plus more liquidity in the form of cash to do other things.


Your solution doesn't achieve this.

The bribe isn't working as the numbers who take up RTB are now low.

My guess is the want to buy is there but the ability to get a mortgage especially on some council flats is not there.

If the state offered full price sales but with affordable IO mortgages then I think a lot more would make use of it maybe as much as 10x the current sales

At 3% IO mortgage if the Property was sold for £120k would cost £300pm which is very affordable I don't see the buyers defaulting especially since they would have put down a 5% deposit they would now lose. There would be some defaults as there is in normal mortgages but the figure will be low and the cost of default for the state would be negligible

cells

wotsthat wrote: »

Just sell off state housing by auction as they become vacant. It'll take some time but within a couple of decades the whole stupid experiment could be behind us.

Why is this idea worse than that idea?

You get the same result (sales at full price) but much quicker

Could of course do both but this would be politically easier

Carl31

The reason why RTB take up is low is probably as people in social housing do not follow this UK centric obsession with owning property

Some people just want a cheap roof over their head they don't have to give 2 thoughts about, probably the best place to be in to be honest

ukcarper

Carl31 wrote: »

The reason why RTB take up is low is probably as people in social housing do not follow this UK centric obsession with owning property

Some people just want a cheap roof over their head they don't have to give 2 thoughts about, probably the best place to be in to be honest

Or simply because they can't afford it, it's not easy to get social housing and in generally goes to the worse off. Ex council houses on my old estate are selling for £375k so even with max discount almost £300k.

cells

Carl31 wrote: »

The reason why RTB take up is low is probably as people in social housing do not follow this UK centric obsession with owning property

Some people just want a cheap roof over their head they don't have to give 2 thoughts about, probably the best place to be in to be honest

In some cases that will definitely be true but I would guess that like with non social tenants 70-80% do want to buy they just can't afford to do so especially as some council flats are unmortgageable so it would have to be a pure savings purchase

The government offering cheap IO mortgages would help a great deal

wotsthat

cells wrote: »

Why is this idea worse than that idea?

You get the same result (sales at full price) but much quicker

Could of course do both but this would be politically easier

There's only one potential buyer and a seller who wants to get rid. Good luck getting 100% of the market value.

cells

wotsthat wrote: »

There's only one potential buyer and a seller who wants to get rid. Good luck getting 100% of the market value.

That's just saying nobody would take it up which I think is wrong given such a chance I think hundreds of thousand's would take up the option

The current system is better for those who have savings or can get finance as they get upto £100k discounts. However if you can't get finance then this would be a lot better

michaels

Wouldn't everything be much clearer if we just set council/ha rents at market rates then it would be much more obvious what made sense in terms of incentivising council tenants to buy their council house or another property.