Use 'student loans' to fix the housing problem?

GreatApe

Graham_Devon wrote: »

Do you really want this explaining to you?

I mean, I'd be happy to, just wondering if you genuinely need it explaining.

As for your example, indeed...but what on earth makes you think landlords would stop buying? What on earth makes you think people only buy property to live in or rent out? Increasing prices mean people are happy to buy and leave empty or buy as second homes.

Have you thought any of this through? Or are you simply going to make up random scenario's to make your suggestion fit? If so, let me know and I won't get in your way.

Landlords in the UK have been net sellers of property from 1945-2004 it is only after 2004 when landlords become big net buyers. The main reason for this was due to big increase in migration when EU free movement kicked in in 2004.

Some 5 million net migrants since 2004 (actually more than that if you include the children they have once they are here) need somewhere to live and the council stock was more or less full and the migrants often came here without the ~20% deposit needed to buy a house so they had to rent. Landlords reacted to this additional demand by purchasing property to rent out. It was a logical functional market. This is further proven by the fact that only about 14% if British born rent privately that means 86% don't.

The rental sector can both grow (2004-2017) or shrink (1845-2004) depending in the demand for rentals. There is no one way trend the market responds to demand.

If my proposal to allow students (young adults) to use student loans to buy property with happened then we would see the private rental sector shrink. Either the students hand over some of their £60-80k loans to a landlord and rent a property or they can use it to buy a property as owners. Overall demand for property does not change so overall prices do not change a lot.


Now having said that I do think net demand would increase because with this idea young adults would probably move out of their parents homes sooner but that is supposedly something we want as a country. I estimate the bet additional demand would be less than 20,000 units a year. So yes demand would go up but building rates have been going up for 5 years there is ni reason to think this additions 20,000 builds could not be done. Its not like proposing we build 2 million new homes a year that would unrealistic but 20,000 is very doable.

There would also be side benefits too. For instance the biggest pressure on housing by far is in central and inner London. These student loans for housing would mean fewer people opt for university as they would find more value in buying a house outright than in doing a modern arts degree. Well central and inner London have lots of university students I think its close to half a million. If that number halved (say because the 18 year old from wales decides their £60k is better spent buying a house in wales rather than spending £60k on an education and rent in London doing circus gymnastics studies at one of the London art schools). So it would reduce demand for property in London more so than most other towns and cities in the UK.

fatbeetle

katebl wrote: »

Previous generations could have them all,

The eternal cry of those who want something for nothing, and who haven't a clue what they are talking about...

My generation only 6% of people went to university, and only 46% owned houses. Those who did own houses, like my parents, worked long hours in dangerous jobs, and often sacrificed their health.

Get a grip soft lad.

MobileSaver

katebl wrote: »

Why either an education, OR a house? Just like why should people have to choose either a house, a pension, or a child? Previous generations could have them all,

Because previous generations were prepared to make sacrifices and compromises to "have them all" and have worked their backsides off for decades to get where they are now.

The younger generations want all of the above plus a top of the range smart phone with unlimited data, super-fast broadband at home, a large flat-screen TV, hundreds of TV channels on tap 24/7, at least one overseas holiday a year, a brand new car on PCP, a new build property in a nice area with shiny brand new appliance and big enough so their 2.4 children can have a bedroom each. Oh, and of course they want all this as soon as they've been working full-time for 2 years because it's their human right innit and they are blooming well entitled to it.

The fact that the generation they are so jealous of had five kids sleeping in one bedroom in a two-up, two-down cobbled street terrace, cooked on hand-me-down cookers, drove £100 rust-buckets and were able to watch three channels on a tiny TV that stopped transmitting at 11pm always seems to be glossed over when complaining how great their elders had it...

System

GreatApe wrote: »

Young adults either need to rent or buy..

Increasingly they do neither, but continue living with their parents.

Paying them to buy houses will increase demand for houses.

GreatApe

Clifford_Pope wrote: »

Increasingly they do neither, but continue living with their parents.

Paying them to buy houses will increase demand for houses.

It has gone from 21% of young adults (age 20-34) in 1996 to 26% of young adults in 2017

That is not a huge change and some of it is positive eg part of the reason is because teenage pregnancy rates have fallen which means fewer young adults being booted out of home to get a council property etc. Another very big factor is a lot more migrants now than 20 years ago and migrants do things differently. Especially the Indian/Pakistani community many of them live in multi-generational homes. It is odd to us but its the norm to them. Also even EU migrants they tend to live at home a lot longer. Eg the Germans and the Spanish and the Poles all have far higher rates of young adults living with their parents despite having lower house prices and rents than in England

So its 21% in 1996 to 26% now but strip out the migrants and I suspect the figure has not gone up as much

Sapphire

The OP's idea is absurd for all the reasons pointed out in the messages following his post.

In addition, who would pay such largesse, year upon year, upon year? Would the many people who didn't themselves go on to further education be expected to pay? Would those who came from poor backgrounds, worked incredibly hard without buying fripperies, and scrimped and saved to eventually buy a property (sometimes not achieving this until their late 20s and early 30s – though property may have appeared inexpensive in the 70s and before, wages were frequently in the 100s per year, mortgages were often almost impossible to get, and mortgage rates were often very high)?

Dosing the already over-privileged youth (certainly compared with the youth of the 70s and before) with such largesse would be a massive waste of money, given that few school leavers know what they want to do in life (hence they often appear to go for useless degrees they consider 'trendy', which don't land them jobs), and many only come to grips with a career once they have grown up. It is also doubtful whether people aged 18 are generally ready to take on the responsibilities of owning a home.

GreatApe

Sapphire wrote: »

The OP's idea is absurd for all the reasons pointed out in the messages following his post.

In addition, who would pay such largesse, year upon year, upon year? Would the many people who didn't themselves go on to further education be expected to pay? Would those who came from poor backgrounds, worked incredibly hard without buying fripperies, and scrimped and saved to eventually buy a property (sometimes not achieving this until their late 20s and early 30s – though property may have appeared inexpensive in the 70s and before, wages were frequently in the 100s per year, mortgages were often almost impossible to get, and mortgage rates were often very high)?

Dosing the already over-privileged youth (certainly compared with the youth of the 70s and before) with such largesse would be a massive waste of money, given that few school leavers know what they want to do in life (hence they often appear to go for useless degrees they consider 'trendy', which don't land them jobs), and many only come to grips with a career once they have grown up. It is also doubtful whether people aged 18 are generally ready to take on the responsibilities of owning a home.

But you currently are willing to give them £60k-£80k to do photography studies at luton 'university' all of which will go up in smoke as the kid wont be able to pay a penny of it back as he is unlikely to get a decent job with his degree and previous failed a-levels and GCSEs

So why is it better to give the kid £60k to spend on the photography studies degree rather than £60k loan to buy a house? With the house loan you will get it back in full and save a huge amount in benefit payments you say that is a silly idea but currently those funds go to to do photography studies degree and you get nothing back.

Also it would not have to be used on their 18th birthday allow them to make use of it anytime upto the age of say 35

Currently 60% of the students dont pay back their loans in full. If this system was offered we would see <1% of the housing loans not paid back in full and the remaining students who decide to go to university would mostly be the worthwhile subjects at the good universities so they too would mostly pay back their loans.
It would be a huge saving to the country

Also we already provide free housing for those who are incapable or unwilling to work a good enough job to provide housing for themselves. A single mother on a lifetime of benefits gets housing benefits which goes to the landlord the state pays perhaps £10k a year for that housing. Why not give this young person £60k and her partner £60k and if they join their resources they can buy outright a 3 bedroom house in say Birmingham for £120k (or a smaller cheaper property alone like a flat). You save £8k a year in housing benefit payments and at some point in the future you also get the £120k loan +CPI interest back when the property is sold or the person dies.

GreatApe

As things stand the most logical advise to give to a lower ability child is that they should go to university. If nothing else they are 4 years closer to retirement it wont cost them a penny and they get to fool around for 4 years and have free income of £10k a year in maintenance 'loans'.

That 10k for free 'studying' film production studies 15 hours a week sure beats gutting fish in the local factory for £7.05 an hour.

Out,_Vile_Jelly

I thought there wasn't a "housing problem" as everyone can either buy a house in Stoke for 50p or is guaranteed to inherit a six figure sum?

wymondham

Duckyduck wrote: »

If you give everybody £60k towards a house then everyone can afford to offer £60k more. Therefore prices increase by £60k, benefiting those that already own property, doing nothing, in fact worsening the affordability issue.

and this is exactly why Government schemes to buy houses fail... it pushes up the baseline... pointless exercise..