Use 'student loans' to fix the housing problem?

GreatApe

Out,_Vile_Jelly wrote: »

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?

There isn't a housing problem for the 75% of the young who will buy or inherit property.
This scheme would primarily help the poorer 25% who otherwise would have to mostly rely on social housing. The other factor is that it will probably reduce the age people buy at on average by perhaps 2 years. That would shrink the rental market by about 3% and increase ownership by 3% because people spend less time in rentals.

My guess would be that 20% decide to go to university 80% make use of the loan for housing.
The result would be that almost all the loans are repaid, while currently only allowing the loans to be used for a university education means close to half will go to university and 60% of them wont pay back their loans.

It would save a lot of money for the country and it would help the poorest the most.
Giving a dim student £60k of housing wealth is better than giving him a degree in 'photography studies' for £60k

GreatApe

wymondham wrote: »

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

You can not say that as a fact as there are many variables that move house prices so you dont know which one in particular is/was at play at a given time

Also once more the UK is many housing markets and most the UK has seen stagnant nominal prices over the last ten years and real price falls of about 30%. London is distracting the media from the fact that most the country is not only affordable but cheap. In our second biggest city which is Birmingham you can buy a 3 bedroom terrace for £120k which makes the repayment mortgage comparable to social rents and the interest portion the actual cost less than half of social rents. Buying a house in much the UK is not just affordable it is down right cheap

Sapphire

GreatApe wrote: »

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

I am not 'currently willing to give them £60–£80k …' No one asked me, and since I was never funded to receive any university degree, I object to funding others. Such 'gifts', year on year, would be completely unsustainable, and we have better and more deserving things to be spending money on. There are currently poverty-stricken elderly people who are destitute (Javid's apparently rich 'baby boomers' among them – they do deserve help.)

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.

As above. Taxpayers should only be funding people's degrees (if at all) if the degrees they are taking are in subjects that will actually benefit society. They should not be funding media study courses or similar. Young people also need to be taught a work ethic, which appears to have disappeared in many them since things have become so much easier for them than for their predecessors

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

Lovely – I'd like that too, in lieu of what I didn't received on my 18th birthday or any time thereafter.

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.

You talk about 'giving' these people money as if taxpayers like me would not be involved. I disagree with the amount paid out to many benefit claimants. Perhaps there's some magic money tree somewhere.

Quick answers above. My opinion stands, for all the reasons given by previous posters.

GreatApe

Sapphire wrote: »

Quick answers above. My opinion stands, for all the reasons given by previous posters.

You would not be giving them free money you would be giving them a loan of which 99.9% would likely be recovered.

If that is the case on what grounds do you object? If it is just 'oh no way I wasn't given it' that doesn't seem a good enough reason.

At the same time the government would likely save a lot in taxes paid out in housing benefits and save a lot in less payment of the non paid student loans for universities and perhaps even get more taxes in with more people entering work sooner. Those savings and additional taxes can be used to address some or all of your other concerns.

GreatApe

To note the student loans company seems to work as follows

They get government money eg £10 billion
They give loans to the students £10 billion
They sell off the loan books to others for eg £6 billion(eg banks private equity etc)

Because a lot of the loans wont be repaid the loan book is only sold for £6 billion in effect the cost to the government/tax-payer in this example is £4 billion.

If these loans were extended to housing it would be closer to the following

Government give the housing loans company £10 billion
Housing company gives the young adults £10 billion
Housing company sells off the loan book for £9.99 billion
Net cost £0.01 billion

Windofchange

Well this is going much as predicted. The age seems to have now risen to 35, and he's now dishing out £60k rather than £32k, which has risen from the £30k he initially started at. Oh, and now it seems that Great Ape has decided to let people spend their money on a mix of university and housing, which is a change from the university or housing stance from earlier. Everyone up to speed? I love the last post insinuating that a load of poorly educated 18 year olds would never default on their mortgages etc, giving a net cost of £0.01 billion.

GreatApe

Windofchange wrote: »

Well this is going much as predicted. The age seems to have now risen to 35, and he's now dishing out £60k rather than £32k, which has risen from the £30k he initially started at. Oh, and now it seems that Great Ape has decided to let people spend their money on a mix of university and housing, which is a change from the university or housing stance from earlier. Everyone up to speed? I love the last post insinuating that a load of poorly educated 18 year olds would never default on their mortgages etc, giving a net cost of £0.01 billion.

60% of the students that take loans default on them

With housing this will be much closer to 0%
The loans paid off on income over £21,000 at 9% as is the case with student loans (or even have it as 10% on income over £15,000)
Any outstanding debt can be repaid on sale of property or death.

GreatApe

AFF8879 wrote: »

I don't see why it's needed anywhere other than London / south east.

I think it would be better to reform student fees / finance as a standalone concept. It's beyond ridiculous that PPE at Cambridge costs the same as Film Studies at Sunderland.

Its easy to say but how do you reform student fees/finance so that numbers fall towards 10% of the population?
too political a topic to shrink student numbers. Labor probably wants 100% of students to go to university and the public isnt smart enough to go along with the tories shrinking the sector down to 10% going to university.

The only way to shrink student numbers is to give the students choice on how the £60k-£80k loans are used. With choice most the students would go with the other choices rather than the dance degree at luton poly. They probably know their degrees are not worth the paper they are written on but getting a free £60k-£80k to frolic around doing a media studies degree is a lot more fun than gutting fish for £7.50 an hour so its no surprise they opt for the education they wont pay back.

We either continue to fund kids £60k-£80k to do useless degrees who wont pay any of it back and end up in low paid non graduate jobs anyway. Or let them use the same sum to buy themselves housing helping them for decades to come and saving the government £60-£80k and likely lots of future benefit payments too.

It has lots of benefits saves lots of money likely brings in additional taxes (young adults start work 3-4 years sooner) and also boosts home ownership and reduces rentals.

Norman_Castle

GreatApe wrote: »

Why would house prices go up when overall housing demand does not go up?

Because of the increase in available funding.

Are you 18-35 and dreaming about the government buying a house for you? Try asking Santa.

GreatApe

Norman_Castle wrote: »

Because of the increase in available funding.
Are you 18-35 and dreaming about the government buying a house for you?
Try asking Santa

Yes I am in that age group but I already own my own home I bought when I was 27

Increase in funding does not happen because it is matched by a decrease in funding from landlords.

Currently we give students £60k and they go and hand about £6k a year to a landlord.
Landlords enter the market to serve students and they do that by putting money into the housing stock sometimes savings sometimes savings+BLT-Mortgage.

Also some 75% of young adults buy as things stand. so any purchase today is 0.75 non purchases tomorrow.