Twenty years on – the winners and losers of Britain’s property boom

HAMISH_MCTAVISH

mwpt wrote: »

renters are losers.

I don't think that is the case.

Some renters, particularly those who subscribe to the HPC mentality, have made a conscious decision to speculate on falling property prices. And they have indeed lost badly.

Other renters, by far the majority, want to buy but are being stymied by the current lack of mortgage lending and the consequential worsening of the housing shortage.

This has caused their rents to soar making it ever more difficult to save deposits. And lending affordability criteria that dictate people cannot 'afford' a mortgage payment that is demonstrably lower than the rent (and laughably in the case of remortgages, often the mortgage payment) they are already paying certainly doesn't help.

There is a broad range of outcomes for people with housing, and unfortunately this argument seems to have become fixated on the extremes, which is not helpful.

HAMISH_MCTAVISH

SailorSam wrote: »

All hail the wonderful Maggie for selling off the Council houses.

Putting aside for a moment the undeniable fact we need significantly more housing of every type (including council and housing associations)... even within the private housing market we have very much thrown out the baby with the bathwater in terms of options for people.

The range of outcomes that are theoretically possible within the private housing market are broadly as follows and I'd suggest are ranked in order of desirability both for society and individuals:

1) Buying a house with a large deposit and a full repayment mortgage - ideal but not possible for everyone

2) Buying a house with a small or no deposit and a full repayment mortgage - Almost as good as option 1 and better than options 3-6

3) Buying a house with a large deposit and an interest only mortgage - not as good as options 1 or 2 but better than options 4-6

4) Buying a house with a small or no deposit and an interest only mortgage - it's certainly better than private renting for many

5) Buying part of a house via shared ownership - when none of the above 4 options are affordable/available

6) Private renting - the least desirable other than for those who want/need to move a lot or for short periods of their lives between houses or when young

Unfortunately we have virtually eliminated many of those options thanks to heavy handed regulation and society is now paying the price with a worsening housing shortage and soaring rents.

As I have noted many times, UK mortgage borrowers, borrowing with the types of loans and in the quantities they did prior to 2007, were not responsible for either the global financial crisis nor the failure of the UK banking system.

In fact had UK banks just stuck to lending to UK residential mortgage borrowers, their losses would have been 1/16th the size they were and they wouldn't have needed the bail-out at all.

Rich2808

I am afraid when you effectively build your economy on selling bricks and mortar at ever higher and higher prices this is where you end up.

Maybe we didn't have as much housing wealth in the 1950s and 1960s - but perhaps we were a lot happier and contented as a nation. Almost everyone had long term security of tenure - either via a council house or a home they owned.

So many people now have no option but to rent privately - even well above average earners in London. Families and elderly people who can effectively be chucked out on the street with 8 weeks notice even if they have paid the rent on time for years. What a terrible state of affairs - and the spiralling cost of housing benefit as well.

And of course we end up with the same old booms and busts - and economic turbulence it creates.

Not sure what the answer is - I fear with our ever rising population and lack of capacity to deliver housing because the state has outsourced the process to private developers (whose motive is delivering profits rather than a mass housebuilding programme) this is just going to get worse and worse.

Wednesday2000

This makes me depressed.:D I wish I had bought property instead of going to uni. I wish I had bought a flat or house in Blackheath or Greenwich as I would like to live there now.

It must be a million times harder for first time buyers in London now, unless they are taking money from Mummy and Daddy.

cells

SailorSam wrote: »

All hail the wonderful Maggie for selling off the Council houses.
When was that about 40yrs ago. ?
At the time my Mum wanted to stay living as tenant. It was what everyone had always done. But i managed to persuade her that £7k was a good buy, and with my help she could afford it, Sold about 8yrs later for £22k but without that she'd never have got on the housing ladder.
I thought Maggie had it right at the time to get everyone involved in being more responsible for their own homes. But looking back now and seeing people looking for somewhere to live and not having access to a Council house, it was probably a bad idea.

There are still five million council/social homes. How many more do we need?

cells

Rich2808 wrote: »

I am afraid when you effectively build your economy on selling bricks and mortar at ever higher and higher prices this is where you end up.

Maybe we didn't have as much housing wealth in the 1950s and 1960s - but perhaps we were a lot happier and contented as a nation. Almost everyone had long term security of tenure - either via a council house or a home they owned.

So many people now have no option but to rent privately - even well above average earners in London. Families and elderly people who can effectively be chucked out on the street with 8 weeks notice even if they have paid the rent on time for years. What a terrible state of affairs - and the spiralling cost of housing benefit as well.

And of course we end up with the same old booms and busts - and economic turbulence it creates.

Not sure what the answer is - I fear with our ever rising population and lack of capacity to deliver housing because the state has outsourced the process to private developers (whose motive is delivering profits rather than a mass housebuilding programme) this is just going to get worse and worse.

Are you sure about any of that ?

More people rented privately in the 1950s
We had far fewer owner homes on the 1950s

The housing stock has pretty much doubled in size since the 1950s (twice as many homes but not twice as many people).

The housing stock has gotten much much better especially the council stock which especially in the 90s was very poor. Just go on you tube and search for kingsmead estate hackney and watch the documentaries shot in the 70s and 90s.

I think your post is a lot more to do with the general sillyness of looking at the past with rose tinted glasses.


If anything we probably reached a peak of housing goodness in 2005 and that was thanks to credit availably to all as Hamish says the great equaliser but that's now gone with mortgage rationing which has reduced ownership from nearly 70% to soon 60%

cells

Wednesday2000 wrote: »

This makes me depressed.:D I wish I had bought property instead of going to uni. I wish I had bought a flat or house in Blackheath or Greenwich as I would like to live there now.

It must be a million times harder for first time buyers in London now, unless they are taking money from Mummy and Daddy.

London was underpriced in the 1990s it went from oversupply and low prices to now undersupplied and high prices now.

cells

HAMISH_MCTAVISH wrote: »

Putting aside for a moment the undeniable fact we need significantly more housing of every type (including council and housing associations)... even within the private housing market we have very much thrown out the baby with the bathwater in terms of options for people.

The range of outcomes that are theoretically possible within the private housing market are broadly as follows and I'd suggest are ranked in order of desirability both for society and individuals:

1) Buying a house with a large deposit and a full repayment mortgage - ideal but not possible for everyone

2) Buying a house with a small or no deposit and a full repayment mortgage - Almost as good as option 1 and better than options 3-6

3) Buying a house with a large deposit and an interest only mortgage - not as good as options 1 or 2 but better than options 4-6

4) Buying a house with a small or no deposit and an interest only mortgage - it's certainly better than private renting for many

5) Buying part of a house via shared ownership - when none of the above 4 options are affordable/available

6) Private renting - the least desirable other than for those who want/need to move a lot or for short periods of their lives between houses or when young

Unfortunately we have virtually eliminated many of those options thanks to heavy handed regulation and society is now paying the price with a worsening housing shortage and soaring rents.

As I have noted many times, UK mortgage borrowers, borrowing with the types of loans and in the quantities they did prior to 2007, were not responsible for either the global financial crisis nor the failure of the UK banking system.

In fact had UK banks just stuck to lending to UK residential mortgage borrowers, their losses would have been 1/16th the size they were and they wouldn't have needed the bail-out at all.

Good post should be mandatory reading for the crash wishers.

The overreaction to the recession imposing over tight regulations is forcing maybe 10% of those who could be owners to have no choice but rent

O think you are ahead of the curve if you remember I used to disagree with you on this a couple of years ago. Maybe in another couple of years the government and regulator will wake up to the impact of their decision's forcing a shift to renting.

The UK needs a return to honest self cert 90% interest only mortgages. The type you tick a box to say 'I am confident I can service this mortgage' not the type where borrowers needed to lie

redux

cells wrote: »

London was underpriced in the 1990s it went from oversupply and low prices to now undersupplied and high prices now.

Yeah, but why is Osborne investing taxpayer funds in shoring up the market?

Help to Buy, it's supposedly called, but if the government are offering interest free money into a scheme they are financing with these tens or hundreds of millions they are probably not expecting their share of the value to drop.

There are some even odder schemes than the 8 weeks notice to tenants someone mentioned above. In some places some people are being compulsorily purchased out of a home they've owned for 20 or 30 years, then offered a new dwelling that costs 2.5 times as much. £175k to £420k, how can I get a mortgage for that at my age, asks an 85 year old.

Worse still, some property owning leaseholders being compulsorily bought out were being stuck with £10,000 bill for repairs, only 8 months before the building is due to be demolished.

And the lease and maintenance fees are due to nearly treble from £800 to £2300, another pensioner pointed out.

I have mixed feelings about this, as someone I know is looking at a new flat in a certain place, and looking it up brought me back to a bit of TV programme I remembered from a while back, which coincidentally is the same area.

Jeremy Corbyn stands up in Parliament and reads out of couple of letters from people worried about how on earth will they afford to stay where they are when the area is redeveloped. In reply Cameron completely ignores the point and instead mocks him, saying don't you want to help people buy a house.

Turfing an 85 year old out of a house she's owned for 30 years and offering another with quarter of a million shortfall on the price, and the lease fees trebling, doesn't quite fit Cameron's description.

Cameron did a speech from a scheme in Poole about a year ago, about how the government is helping people to buy. Small 3 bedroom house now on sale there for £350,000. That doesn't quite fit his description either.

Another point occurs to me. Then government is stepping up the interest free loan proportion for Help to Buy in London to 40%. I wonder if any discount schemes have been arranged with developers, such that the government gets its 40% for say 33 or 36%. It might not be possible to find out, as some details are commercially sensitive and thus secret

Maybe they should also consider giving interest free terms to the people who have owned a house for 30 years and been turfed out of it and now can't afford more than 40% of a new one.

I also wonder what Help to Buy is like when the interest free period runs out after 5 years. 1.75% fee on the government share, which might be about akin to the mortgage rate. But the principal still owed is also accelerating by RPI plus 1%. I wonder if that will still be locked in even if the housing market actually falls, if the property speculators from China and Hong Kong get bored with London and look elsewhere.

None of our political parties have got this right, but maybe we are on strange ground when the current government is not only making the rules but engaging in property speculation on its own account as well as the limited proportion of the population people it thinks or says it is helping.

CLAPTON

redux wrote: »

Yeah, but why is Osborne investing taxpayer funds in shoring up the market?

Help to Buy, it's supposedly called, but if the government are offering interest free money into a scheme they are financing with these tens or hundreds of millions they are probably not expecting their share of the value to drop.

There are some even odder schemes than the 8 weeks notice to tenants someone mentioned above. In some places some people are being compulsorily purchased out of a home they've owned for 20 or 30 years, then offered a new dwelling that costs 2.5 times as much. £175k to £420k, how can I get a mortgage for that at my age, asks an 85 year old.

Worse still, some property owning leaseholders being compulsorily bought out were being stuck with £10,000 bill for repairs, only 8 months before the building is due to be demolished.

And the lease and maintenance fees are due to nearly treble from £800 to £2300, another pensioner pointed out.

I have mixed feelings about this, as someone I know is looking at a new flat in a certain place, and looking it up brought me back to a bit of TV programme I remembered from a while back, which coincidentally is the same area.

Jeremy Corbyn stands up in Parliament and reads out of couple of letters from people worried about how on earth will they afford to stay where they are when the area is redeveloped. In reply Cameron completely ignores the point and instead mocks him, saying don't you want to help people buy a house.

Turfing an 85 year old out of a house she's owned for 30 years and offering another with quarter of a million shortfall on the price, and the lease fees trebling, doesn't quite fit Cameron's description.

Cameron did a speech from a scheme in Poole about a year ago, about how the government is helping people to buy. Small 3 bedroom house now on sale there for £350,000. That doesn't quite fit his description either.

Another point occurs to me. Then government is stepping up the interest free loan proportion for Help to Buy in London to 40%. I wonder if any discount schemes have been arranged with developers, such that the government gets its 40% for say 33 or 36%. It might not be possible to find out, as some details are commercially sensitive and thus secret

Maybe they should also consider giving interest free terms to the people who have owned a house for 30 years and been turfed out of it and now can't afford more than 40% of a new one.

I also wonder what Help to Buy is like when the interest free period runs out after 5 years. 1.75% fee on the government share, which might be about akin to the mortgage rate. But the principal still owed is also accelerating by RPI plus 1%. I wonder if that will still be locked in even if the housing market actually falls, if the property speculators from China and Hong Kong get bored with London and look elsewhere.

None of our political parties have got this right, but maybe we are on strange ground when the current government is not only making the rules but engaging in property speculation on its own account as well as the limited proportion of the population people it thinks or says it is helping.

these compulsory purchases
these 10,000 repair bills
the rehousing options

are these run by central government?
or by local councils?