Having the taxpayer pay deposits isn’t the answer. However having taxpayer owned rental properties with lower rates of rent could be. Used to be called council housing...
The problem is weak councils and county councils. When a developer takes on a new build area of multiple new homes, there is a recomended amount of that developement should be for social housing. This is reached by the local council and the developer. Current rules favour the developer which has a viability assessment. In it's basic terms the developer and council agree on a percentage that should be for social housing, these tend to be left mostly, towards the end of the development (although some token ones are built at the beginning) if the developer then decides there is not enough profit versus expected profit, they can reduce the amount of social housing and sell it as normal private sales. I'm sure some in the building game will clarify or correct where wrong. This part of the agreement needs to be ripped out and a clear amount built should be X% amount be social housing and that cannot change https://www.theguardian.com/housing...rent-uk-planning-policy-government-developers
And yet, lose your legs while on a tour of duty and have to rely on charity to get by. Funny old world.
Every scheme that is designed to help 1st time buyers helps a small number of them but ultimately contributes to the rise in prices of such housing. In fact, every scheme that makes housing easier to get a-hold of leads to house prices rising ... except for one. Can you guess what that scheme is?
Ah but, the taxpayer wouldn't be funding it (or at least shouldn't have to end up funding it but therein lies another thread). The Govt of the day could issue a 5 year Gilt with a face value of £10 billion, priced at 1%. Avg UK semi-d house price is currently £228K. Assuming a deposit of 20% is required i.e. £23k, the £10B raised could assist 434,000 people get on the housing ladder. Assume the borrower pays it back, interest only at 1.5% (so the Govt gets a 50% spread for the risk, which is massive) ie. £345 pa, just an extra £28.75/month over and above their mortgage. The Govt could use the 50bp spread, which would generate £50M a year to fund council housing. £10B sounds a lot, I know, but to put it in perspective it's 'just' 0.5% of the UK Govt's current debt and would 'only' add a further 0.2% to the Govt's annual debt servicing bill of £48B. It's affordable and something needs to be done because as the % of renters increases, who's going to pay their rent when they stop work through retirement or illness?
Historically, yes, because the schemes have been so woefully publicised and so complicated and bureaucratic most who would be eligible don't apply. However, IMO, these schemes don't contribute to the rise in house prices which are driven, more than anything else by two things; supply v demand and inflation. Sorry Loz but that's a little oxymoronic, if housing were easier to get hold of why would the prices rise? The easier something is to get hold of, the less price pressure there is on it. I assume you're referring to council housing? I'm an advocate of that and perhaps one of the worst things Maggie did was to instigate the selling off of council houses. All of a sudden people were made rich overnight and the council housing stock in the UK vanished, contributing IMO to the issues we have today.
Supply/demand is the largest factor, larger than inflation. More houses bought under schemes for 1st time buyers means fewer houses available for those already on the ladder and for those unable to join a scheme. Smaller supply for a given demand means higher prices and as supply is always behind demand, each single loss of an available property outweighs the numerical reduction of an individual house-hunter. Is is counter-intuitive, I agree. However, the easier it is to get hold of a property from limited stock of housing, the fewer houses are available to the rest of the house-purchase market. Thus the price rises. Furthermore, as more and more people join the housing ladder, they eventually become able to make their own way up it. With a housing stock that isn't keeping pace with the increase in demand, supply becomes short. Reduced housing supply at levels above starter homes leads to prices increases for those types of property, which then drags up the price of starter homes. The reason for increase in demand is twofold: the aforementioned 1st-time buyer schemes but also the increase in general population, the combined effect of which is supply increases through ordinary house-building cannot really cope. I wasn't thinking of that in this instance although I agree, council housing is a good way to place roofs over heads. And I am definitely with you on the Harridan Thatch - this is one of several ways she worked to destroy the social fabric of the UK. However, in the context of home ownership, there is only one way to get a grip on house prices and that is to flood the market with new properties. Hundreds and hundreds of thousands of homes, each year, until prices crash. If that is hard on home owners, it is good news for young couples. Please note, I don't advocate one group over the other, I only suggest how the ridiculous housing market in the UK may be re-aligned to suit wider home ownership. That all said, I will mention my pet peeve. Three of the absolute requirements for survival are food, water and shelter. Food is not an investment commodity for consumers, nor is water. Why is shelter an investment? Unpopular opinion but I suggest you roll it around your head for a while, see if it finds a home : o )
Loz, I get your thought process on the above points now and can see where your coming from and agree that by far the biggest issue is the lack of supply versus demand. Realistically, however, it's just not possible to flood the market with houses, either physically in building them or economically with regards to the detrimental effect a fall in house prices would have on consumer sentiment. Admittedly it wouldn't be a real economic detriment but a psychological and perceived detriment and as perception can very easily become reality IMO it would lead to a recession/depression. Therefore any dramatic improvement in the rate of supply of new houses would have to be carefully managed over what would probably be a 10-20 year period and what Government takes that view, unfortunately. Certainly the current Govt have other issues occupying their minds at present. Aside from a massive home building programme there are things that can be done in the immediate future with regards to utilising the many many vacant properties around the country which would begin to ease the situation somewhat, the thousands of redundant MOD properties were mentioned above as an example. Here in Ireland City and County Councils have begun to force owners of vacant properties to bring them back onto the market. With regards to one's home being regarded as an investment, you're right it shouldn't be but we live in a democratic, capitalist, society and as history has proven, over the long term, say 25 years, house prices have increased, permitting elders to sell up, downsize, release a chunk of cash and reap the benefits and everyone younger and further down the ladder wants some of that as well. How could we not make it an investment? You'd have to have the perfect balance of supply v demand and a continually low rate of inflation c.1%, or become a state like China.
Where do you think the govt gets its money? Taxpayer. Didn't work before, wont work now. Like the precious schemes (which made the persimmon boss £75m in bonus) it will simply drive up costs and not help affordability Council one housing, yes will be tax payer funded, but can act as a starter subsidy with low rent for the who want to own and a real home for those that dont or wont be able to afford to.
Not just from the Taxpayer Bradders. All Govt’s also raise money on the bond markets, many many more times money than they get in tax income. Some of the tax income goes towards servicing that debt (Currently 8% (£48B) of the UK Govt’s tax income goes on servicing the national debt) but after that the rest goes on the ‘running expenses’ of the country.
True, but its the tax take that guarantees to and ultimately taxpayers 'fund' any interest and serving costs
Forcing property owners to relinquish their houses is a bit of a Chinese way of going about things, I'd have to say! Add to that the fact that MOD properties tend to be unfit for purpose and I have to say, there is no silver bullet for the problem. A big bang approach to building with a view to crashing the market won't ever happen, no government would try it or survive it. A moderate plan for building will broadly preserve the market but will nrcessarily fail to address the housing shortage and the problems for 1st time buyers. Preserving values and helping 1st-timers are mutually exclusive goals, alas. The fact that properties with high-value equity allow for older parents to fund their children's home buying is lovely but of course, it too contributes to raising the price of properties. Literally anything that allows for easier house buying contributes to increasing the cost of housing, all the time that supply lags behind demand. Crazy system. The only way I see it is to break, or seriously weaken, the link between housing and investment. Which won't happen either. A true Gordian Knot!
Prices still on the rise around here... 0.6% last month and 1% up on where we were 3 months ago..... Semi around here just sold for £765k... this is a working class area... how can you afford that as a young couple?.... tiny two bed flat just sold for £285K.....! Some serious jokers around.... £550,000 offers over..... Very busy road, directly under the flight path. It's a 3 bedroom Semi-- and the polo next door is 18" onto the pavement tarmac.
People must be taking mortgages on over 40 years are they? Something that size around here would be £180k to £220k I guess, depending on condition and decoration. Edit: just checked Rightmove and the “run of the mill” are indeed £180-220k..........however in a couple of the sought after villages around Holmfirth they are up for £275-300k.
There's a small block of two bedroom flats next to ours and in one the couple there have four kids and both parents work, he's in insurance. Middle aged, just moving to there second home ever... with three bedrooms! It's tightly packed in around here... Most average three bed semi's are going for about £400,000.. There are very few detached houses in this area.. only three in our road.
This is for sale just around the corner from me https://www.rightmove.co.uk/property-for-sale/property-76144976.html Not a lot of garden though.
