Income vs Inheritance

HAMISH_MCTAVISH

HornetSaver wrote: »

So basically, if your parents were not rich, you do not have the right to put a roof over your head?

You're trying to frame housing and access to it as a morality question.

It's not - it's an economic question.

Without access to the money to buy a house you're not going to own a house - go back 100 years and only the wealthy (or their children) could buy. Around 10% of people owned 100% of property and the other 90% of people were forced to rent from them.

We spent many decades since then evolving as a society and the expansion of credit became the great equaliser enabling young people of all backgrounds, not just those with inheritances or rich parents, to buy a house.

The contraction of credit availability since 2007 has reversed that process, and now only the wealthy, those with an inheritance, or a small handful via government assistance schemes, can buy a house.

Unsurprisingly given how few youngsters can now access the funding to buy, house building has fallen off a cliff since 2007, and is now hovering around 100 year lows while population soars and the housing shortage worsens. Which has caused prices to start rising again anyway.

Equally unsurprisingly, rents have soared, and property is now consolidating in the hands of the rich.

You don't have to be a rocket scientist to realise that mortgage rationing is a very, very bad idea.

Unless you're already well off.

Then it's a great idea as it means you have less competition for houses - can hoover them all up - and force poorer people to rent from you.

As we've seen happening since 2007...

wymondham

HornetSaver wrote: »

So basically, if your parents were not rich, you do not have the right to put a roof over your head?

yes seems we have gone back to Victorian times!

HornetSaver

HAMISH_MCTAVISH wrote: »

You're trying to frame housing and access to it as a morality question.

It's not - it's an economic question.

This is true, without further qualification, if we're specifically talking about ownership.

In terms of rentals, where there is sufficient housing in proximity to where workers are required for everyone to have somewhere appropriate to live (though in many cases not desirable or in some people's opinions acceptable), then comments about rent increases are economic ones - prices becoming so high that people cannot afford to rent is a hypothetical question, because prices will never become so high that properties become long-term vacant.

That argument does not hold when you reach the point that there are insufficient properties to sustain the desired rate of business growth in an area. In this scenario, you can reach a point where people cannot put roofs over their heads without either moving away and not being adequately replaced, or by cutting back on things which should not be cut back on (appropriate food, personal hygeine, heating, that sort of thing).

When, and (as much as I'd like the country to have enough decent human beings for it to be otherwise) only when this point is reached, it becomes a moral issue. It becomes a moral issue whether the sub-humans eluded to in my previous brackets like it or not, because at this point economic growth is stalled by not tackling the moral issue. This is why there is as much regulation related to housing as there is, as much spent on housing benefit as there is, as much social housing as there is, and so on.

cells

HornetSaver wrote: »

But cells, to be clear, I'm not specifically talking about ownership with that comment.

It's not "fair" that those with large inheritances will be able to buy whilst those without and on similar incomes won't, but that's a fact of life. Whether inheritance tax is 0% or 60%, it will remain a fact of life for as long as currency is in existence. And to my knowledge even the radical left isn't proposing abolishing currency.

The question of how the young can afford to put roofs over their heads when costs continually go up faster than inflation (be that council houses, rented or owned) without an ever-growing government spending programme is highly relevant to the wider discussion over housing. It's also a discussion distinct from the question of whether those houses are as good as young people in the previous generation would have had.

London is expensive the SE somewhat expensive the other 75% range from affordable to give away prices.

So we need to make it clear we are talking about London/SE rather than all of England or the UK.


We also should note that at the very peak ownership was close to 70% of households so 30% even at the peak couldn't afford to buy.

Expecting 100% ownership is unrealistic. Some of us will be in that 30% and I suspect there is some correlation with ownership and inheritances


There are ways to increase ownership. The right to buy of council homes was one way ownership and inheritances increased. Another way would be to return to 100% LTV mortgages. Another would be to allow Housing Benefit to be paid for mortgages and banks to accept it. (In about half the country it would be cheaper to pay housing benefit for mortgages than to put people into council homes). Of course all those ways to increase ownership and inheritances are controversial.

silvercar

Somewhere like London will have a lot more people with wealth and assets than than Stoke-On-North-Midlands-Trent

In theory, assuming previous generations owned property, those in London will inherit enough to use as a deposit on London property and those from S-O-N-M-T enough to help buy elsewhere. Which is fine as long as those from elsewhere don't have an urgent need to move to London.

That argument does not hold when you reach the point that there are insufficient properties to sustain the desired rate of business growth in an area.

That is when people start to commute....or commute further distances.

cells

HornetSaver wrote: »

This is true, without further qualification, if we're specifically talking about ownership.

In terms of rentals, where there is sufficient housing in proximity to where workers are required for everyone to have somewhere appropriate to live (though in many cases not desirable or in some people's opinions acceptable), then comments about rent increases are economic ones - prices becoming so high that people cannot afford to rent is a hypothetical question, because prices will never become so high that properties become long-term vacant.

That argument does not hold when you reach the point that there are insufficient properties to sustain the desired rate of business growth in an area. In this scenario, you can reach a point where people cannot put roofs over their heads without either moving away and not being adequately replaced, or by cutting back on things which should not be cut back on (appropriate food, personal hygeine, heating, that sort of thing).

When, and (as much as I'd like the country to have enough decent human beings for it to be otherwise) only when this point is reached, it becomes a moral issue. It becomes a moral issue whether the sub-humans eluded to in my previous brackets like it or not, because at this point economic growth is stalled by not tackling the moral issue. This is why there is as much regulation related to housing as there is, as much spent on housing benefit as there is, as much social housing as there is, and so on.

So what is your solution/s

Hamish I think rightly (although I used to object a few years back) suggests we need a return of credit and lending. A return of 100% IO self cert mortgages. That it would push ownership up and renting down and build rates up.

I would add that we can increase ownership yet further by allowing those in receipt of hosuong benefits to use that same benefit for mortgages. That might seem 'wrong' to a lot of people using state money to help poor people buy homes but its practical. Payin £400-£500 per month indefinitely for HB to a council or private rental property makes a lot less sense than doing the same for 30 years and giving the poor a house and capital

HornetSaver

cells wrote: »

Another would be to allow Housing Benefit to be paid for mortgages and banks to accept it. (In about half the country it would be cheaper to pay housing benefit for mortgages than to put people into council homes).

It's all about branding I suppose.

The government already has schemes which specifically make money available to first time buyers to the exclusion of all other members of society: HTB ISA, the buyer's bonus on LISA, HTB equity loan and so on - they recognise that a problem exists and also that the scheme is cost-effective, relative to a percentage of those helped being unable to buy, and later in life requiring state support for housing.

Out-and-out housing benefit for mortgages would be impossible to implement right I suspect - at least if the intention were to reduce the net cost to the state (which is probably the only possible justification for it). Though it is an interesting concept.

Mistermeaner

Damn those pesky migrants

mwpt

HAMISH_MCTAVISH wrote: »

You don't have to be a rocket scientist to realise that mortgage rationing is a very, very bad idea.

I don't mean to rehash this endless but I am not sure I've received a real answer to one of my questions. I do understand your overall point that credit is an equaliser, so I'm not going to question that right now. But I don't understand why you think mortgages are being "rationed" compared to any reasonable time period. As I keep pointing out, we have interest rates the lowest they've ever been, various HTB schemes, mortgages available from 95% LTV and banks allowed to lend at higher figures than most of history (right up to 4.5 times salary and over that for 15% of their book, and in fact people not constrained by 4.5 multiple when taking a 5 year or longer fix). It is only when you look at the very excess of credit boom years 200x-2007 that you could consider the state of the mortgage market right now as rationing.

cells

mwpt wrote: »

I don't mean to rehash this endless but I am not sure I've received a real answer to one of my questions. I do understand your overall point that credit is an equaliser, so I'm not going to question that right now. But I don't understand why you think mortgages are being "rationed" compared to any reasonable time period. As I keep pointing out, we have interest rates the lowest they've ever been, various HTB schemes, mortgages available from 95% LTV and banks allowed to lend at higher figures than most of history (right up to 4.5 times salary and over that for 15% of their book, and in fact people not constrained by 4.5 multiple when taking a 5 year or longer fix). It is only when you look at the very excess of credit boom years 200x-2007 that you could consider the state of the mortgage market right now as rationing.

State regulation is causing applicants that would otherwise get mortgages based on internal credit risk to be turned down. That is rationing it only impacts maybe 10% of households but that's a swing of 3 million households to rental or ownership.

The over reaction made of v.hard for older borrowers to get mortgages. But since the old vote and perhaps some old politicians were turned down for mortgages that over reaction has been largely reversed with some banks lending to age 75 and even talk of some building societies looking into lending all the way to 85.

I'm sure a few years back you didn't even think of that group let alone the rationing they were facing. You would have stood up and cried that mortgage rates qee lower than they ever had been.


The age over reaction is going.

We now need the interest only over reaction, the self cert over reaction and the 100% over reaction to go too