'Is Gordon Brown right to help first time buyers?' blog discussion

2

Replies

  • BazmanBazman Forumite
    99 Posts
    The government know that if the housing market bursts before the election then they are out end of story.

    So it's not that surpising that they are willing to sacrifice economic sense for short term political gain!

    Also its completely obvious that for first time buyers the best thing is for a house price correction and a serious program of house building that will keep up with immigration! Also why do ministers keep harping on about affordable housing? Most of these schemes seem no better than council housing and are not likely to be many peoples idea of a dream home.

    Why not just create alot more nice houses and then let market forces do their work. I know new houses are contentious issue but with the popuilation growth forcast for the UK in coming years is there any other viable solution?


    The really depressing thing is who else can you realistically vote for? The tories? I think not. the true masters of the economy screw up.

    Osbourne is a complete idiot. One example I remember watching him on Sky news rabbiting on about how the SPV used by Northern Rock was dodgy. Clearly it was not and similar structures are used by almost every other high street bank. By the time he appeared on another channel a few hours later he'd obviously been briefed and backed off completely.

    Oh ans just what was so fundamentally different about Georges proposal to have the BoE run Northern Rock rather than the governments own ill advised buy out plan.

    Also check out Kirstie Alstrop the tories housing advisor who believes that the solution to the housing crisis is NOT to build more houses I wonder why?

    The real root of the problem is a global liquidity glut following the dot com crash. The asset bubbles we have seen are driven by global factors and they will be reversed by global factors. With China and the rest of the emerging world fact becoming an exporter of inflation the era sustained ultra low rates is behind us.

    Utimately I don't think there is that much labour can do, they cannot afford to prop up the market they'd bankrupt the country several times over if they tried. I'm not sure they are that stupid not only will they not be elected next election it could be several elections before they are forgiven for that one (just ask the tories).

    The only party that seems to speak any sense these days is the Lib Dems, and you are hearing this from someone who has never previously voted Lib Dem.

    It'll be interesting to see what they government do propose next week.

    At the end of the day there has been a bit of a house buying mania in Britain in recent years fuelled by a deluge of low quality TV shows that show it being a one way track to riches. This makes the situation here a bit different from the US. Where people seem more obcessed with buying shares, nonetheless I don't think this will be enough.

    Thing is never get into an investment without thinking clearly about it. At the moment its hard to make a good argument for property.

    Remember if house prices rise 10% but you pay 5% on your mortgage you only made 5%, however if they drop 10% you loose 15% so many people who bought over the last 2-3 years are liable to end up with some serious negative equity even assuming a relatively gentle fall. Even if prices stay flat you are still loosing in one year what you gained when they wre rising at a 10% clip!

    Moreover there seems to have been a genuine repricing of risk in the market and although confidence will return eventually its lible to be accompanied by serious regulation so I think 125% mortgages with no deposit are unlikety to reappearing any time soon.

    Ultiamtely if labour do have any sense (and its a big if) they'll introduce a couple of small scale schemes to show that they are doing something and let the market forces fun their course.

    One things for sure Brown must be kicking himself that he didn't call the election last year Lol!

    Lastly just so you know I own my own property and its completely paid off but I'd like to get a bigger place. So I got my fingers crossed for a decent correction. Whatever I loose on my own house will be more than offset by the cheapening of the property I wish to buy. And after the false dawn of 2005 I think I may be moving sooner rather than later!
  • moneypoohmoneypooh Forumite
    2.2K Posts
    Part of the Furniture Combo Breaker
    ✭✭✭✭
    It's getting all a bit much. Why do we choose to help some people in society but not others?
    Why do some people have to bail out others?
    Over 20 years ago you just had to get on with it. I couldn't afford a home where I grew up and moved away - so no change there then. There were hardly any 100% mortgages and you could only borrow 3 times joint if you found a lender brave enough.
    If your pension, endowment, bank or stocks failed - then tough - your choice to take a risk. These days everyone has their hand out wanting to be bailed out, or so it seems..
    The credit crunch is a warning to maybe go back to the old ways of having to save to buy not have now and pay later??
    I'll have this to come when my children try to get on the property ladder - we'll start saving now and maybe we'll help them out because I can't see the government helping in the current situation.
  • poorbutrichpoorbutrich Forumite
    1.3K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    ✭✭✭
    If Gordon Brown really wanted to help first time buyers he would have increased the amount at which stamp duty comes into play.

    He seems to want to help people who sit on their arses and watch Jeremy Kyle all day at my expense, but then penalises those who try to help themselves - it was him, not Alistair Darling who came up with genius idea of getting rid of the 10 per cent tax rate, and buried inside a policy of raising the threshold from 20 to 22p.

    I'm delighted to see the strength of feeling about his incompetence; I thought it was just me! Now let's get rid of him and replace him with Martin Lewis.
    Overpay!
  • Some people seem to be missing the point that we are talking about politics! This answers the points about helping some sections of the population and not others.

    The government are doing nothing to encourage people to avoid debt. Why? - politics. The supposed boom in the economy was helped enormously by people incurring ever-increasing debt on credit cards to fund high-street purchases. The pushing of interest-free balance transfers (not least by this site!) has encouraged people to think that they can get something for nothing. It is easy to forget that everything has to be paid for eventually.

    Giving 100% mortgages based on 5 or more times income is immoral, as is encouraging people to think that they must own their own property. I read elsewhere in this thread someone decrying affordable housing as being "no better than council housing". People should not expect that their first property will be a "dream home". My own first house was bought from a council. In the ensuing 40+ years I have moved 4 times and have ended up retired, living in a new detached property and mortgage free. I have lived through recessions, housing price slumps, and pension freezes. I have worked and saved all my life, never being a huge earner.

    None of this is anything special, I've had bad luck as well as good. However what I have done is generally to live within my means and not to take for granted that everything would be mine by right.

    The housing shortage, which has been brought about partly by the increase in single person households, must be addressed. Affordable starter homes must be provided in sufficient quantities. It is no use relying on a correction in the housing market, that just brings more misery in the form of negative equity and repossessions. Then, after a few years, when people have forgotten the traumas, the whole process starts again.
  • We are now getting old and pensioners. I do not remember the government helping us with our mortgage when the rates went up and I had to have 3 jobs to keep our house. We just didnt go out and not buy anything we could possibly do without and yet now I am expected to see my taxes used to help those who have overstretched and who wree given mortgages at a level we could not have dreamed of. We had to scrimp and save like mad to rake up enough deposit to get a foot on the property ladder.
  • ZaarinZaarin Forumite
    10 Posts
    On the topic of 'renting being a dirty word'. I agree basically with the idea that there is nothing wrong with renting, but there's a slight problem with comparing renting and buying - security. If one has a mortgage, and pays it, one basically cannot be evicted under any circumstances. Not so with renting. Some decades ago a nasty, evil little provision in law created the Assured Shorthold Tenancy - now virtually universal in residential lettings - and rental security is these days at a hideous low. Beyond a short initial contractual period - almost never more than a year - a landlord may, within two months, evict any tenant, no matter their good standing, for any reason or no reason.

    I rent myself. I was lucky enough to get a good, friendly landlord (who lets directly without an estate agent). I am single, and live in a one-bed flat. I don't necessarily want to own a flat or house - what I want, in the long term, is security, the knowledge that if I keep paying the rent-slash-mortgage, I can stay in the one place for twenty years if I so choose. That is utterly impossible with renting, and it is pretty likely that my current landlord will sell in a couple of years when his restrictive mortgage deal comes to an end.

    When I am therefore forced to move, I will face a very stressful month or two searching for a new place. I'm not sure those used to 'ownership', who usually have a little more leisure in their moving process, understand the blind fear which can result from the sudden need to find new rented accommodation or be made homeless. I was once forced to stay in university dormitories and a hotel for weeks one summer when I couldn't find anywhere to live quickly enough, supported in the cost of doing so by my family.

    In the kind of areas where it is feasible for me to live, half-decent one-bed flats (all I can hope to afford) for rent are rare - at best, on average, a single one might come available every couple of months, for which, of course, there is instant massive competition. Add to this monstrous rents (£700/month an absolute minimum for a half-decent one bed flat, often more), and you get a vicious cocktail of terrible insecurity and near-unaffordability which is genuinely frightening. You can hardly blame people - especially those with children - for stretching themselves to eliminate the security problem, even if the affordability problem remains.

    I am absolutely not going to even consider buying whilst house prices remain so ridiculously high relative to salaries. That said, I can see why some sensible people want to. The hassle of constantly moving - or, worse, of not being able to find anywhere decent to live at all - which is every renter's constant worry is in theory solved by 'buying' (i.e. mortgaging). Negative equity is, in fact, from a purely security-oriented point of view, preferable to renting provided one does not want to move. So long as you pay the mortgage, you stay. It's a terrible situation, and I wouldn't wish it on anyone, but security is tempting even when such a serious risk exists.
  • tallsamtallsam Forumite
    39 Posts
    Well said Martin. I'm 29 and most of my mates think I'm mad for not crippling myself to get onto the property ladder. Truth is I simply can't afford it right now so why stress over it.

    Besides which if I could afford it I'd hang back for a year or so anyway and save more for a deposit. No idea what the market will do!
  • CharisCharis Forumite
    1.3K Posts
    Part of the Furniture Combo Breaker
    ✭✭✭
    There used to be an expression years ago that 'rent money is dead money'. It is as true now as it was then. What will you have to show for 35 years of paying rent? Nothing. Zilch. Not even security of tenure it would seem, going by previous posters' comments.

    What happens if you are in the position I will be in a few years when my income plummets due to retirement? Housing benefit will not necessarily stretch to cover the shortfall. Moving to a down at heel area at 65 is not a prospect to relish.

    The only reason I can see for renting is because you can't afford the deposit required to buy or because you can't afford the monthly repayments.
  • baby_boomerbaby_boomer Forumite
    3.9K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    ✭✭✭✭
    Gordon is wrong. But he can't bear to let the market help, rather than central government :(.

    I was shocked to see this advert in the Evening Standard under the "HomeBuy" label - A Government led initiative

    "Now is the time to buy - [One bed] apartments from £788 pcm"

    More information about HomeBuy from its own website

    IMHO this is truly shocking. The information is wrong and people could lose out. No private firm would dare to say such a thing, because they could be sued to high heaven. But our government can seemingly sanction its wrong headed policy in this way? :confused:

    Brown should just let the housing market decline. THEN it will be the time for nurses 'n teachers to buy.

    And instead of setting up organisations to give them £1500 for part ownership rights, why not keep it simple and abolish stamp duty on homes worth £150K or less?


  • MSE_MartinMSE_Martin MoneySaving Expert
    8.3K Posts
    ✭✭✭✭
    Gordon is wrong. But he can't bear to let the market help, rather than central government :(.

    I was shocked to see this advert in the Evening Standard under the "HomeBuy" label - A Government led initiative

    "Now is the time to buy - [One bed] apartments from £788 pcm"

    More information about HomeBuy from its own website

    IMHO this is truly shocking. The information is wrong and people could lose out. No private firm would dare to say such a thing, because they could be sued to high heaven. But our government can seemingly sanction its wrong headed policy in this way? :confused:

    Brown should just let the housing market decline. THEN it will be the time for nurses 'n teachers to buy.

    And instead of setting up organisations to give them £1500 for part ownership rights, why not keep it simple and abolish stamp duty on homes worth £150K or less?



    Interesting note... where exactly on the site is the 'now is the time to buy' - i couldn't see it.
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.
    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.
    Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
This discussion has been closed.
Latest MSE News and Guides