Same old Tories...

[tedebear]

On that note I'm off to work to pay my mortgage.

 

[Brighton1]

Labour is for the down and out's! Rob the people who try and do OK for themselves and give it to the lazy chav's who sponge off society....Labour = Stealth Tax.

 

[Hatterlovesbrighton]

The whole fuggin sub-prime situation in the US and worldwide have been caused by lending ridiculous multiples of salaries to people who cant afford it. You may not have noticed that it led to the first run on a British bank in 150 years. And you suggest it as a solution so someone on low wages can buy an overpriced house. Good idea. :thud:

But he can afford it. Lord B's figures for his rent and his savings is very comfortably over what he would pay for a mortgage. If he can prove that he can afford to make the repayments then I don't think he's that much of a risk. Yeah, he might lose his job, but then so could anyone and maybe interest rates will go up (though the speculation is that they will come down) but most people go for fixed mortgages these days.

 

[Simster]

Tedebear, LB is plucking figures to prove a point. However, even using proper statistics, his point still stands

According to http://www.housepricecrash.co.uk/ the average house price rise is 2.4% per annum over the past 30 years. I must admit, this does seem on the low side, so lets double it to take into account the fact that the south east has higher property inflation than elsewhere. Meanwhile, wage inflation has hovered at about 3% in the past 5 years.

So as far I can see, this is how it should have read:

You earn £30,000 a year, say £24,000 after tax. You are living in a modest flat, costing £600 a month in rent. Your living expenses are £600 a month. You put the rest (£800 a month) into a savings account.

You want to buy a house costing £200,000 today. You can get a mortgage of five times your annual income (£150,000). Therefore you need to save £50,000 as a deposit. That will take you over five years to achieve.

By that time, the house you want will have increased in price to £252,834 and your salary will have gone up to £34,778. You can now get a mortgage of £173,891. Even allowing for your £50,000 savings, you are still £28,943 short of the asking price.

Not "Further away from buying than you were five years earlier" as LB suggests, but still nevertheless nearly £30k short of raising the deposit. So it looks like it's going to take a decade for a professional to buy a small place of their own, and that is before you consider the added burden which is the cost of higher education.

Unlike LB, I don't have a problem with a 5 borrowing multiplier - as I've said before, the cost of borrowing is and has always been inversely propertional to the amount of disposable income in your pocket. And since you can buy more for your pound than ever before (CDs were £15.99 over a decade ago!), it follows that we can afford to borrow more in the form of a mortgage.

My solution would be to raise the multiplier to 5 or 6 and to tax second homes to the hilt. In the current situation, we shouldn't be encouraging second homes as investments.

 

[Barrel of Fun]

That is the frustrating things isn't it, Simster? You see these brand new developments springing up with an affordable element (that invariably gets snapped up by key workers) and the rest of it is marketed as an 'exciting invesment opportunity'. The way forward from here is to tax second homes as you say.

It is also a lot easier for those on joint incomes to purchase a property. Whilst I am not saying that single purchasers should be gifted a new home, they should certainly not be pushed out of the amrket altogether.

Tede, you talk about how you sacrificed a lot to buy a property, but assuming you are of a certain age, the market was much more affordable when you dived in. You only have to look at the statistics that point towards average property prices being near to 10 times the average wage. Combined with the fact that there is a whole generation with largish debts from University to cope with, who were stung by tuition fees and so on. I think you are seriously underestimating the problem and it is not so straight forward as making sacrifices.

 

[BensGrandad]

I was talking to a chap in a pub some time ago and he told me of a German company that will give you a mortgage for any amount irrespective of your salary because if you miss one payment they reposses the house and sell it at a profit they reckon that most people pay the mortgage for the first 12 months before they start getting into trouble. Do not know if this is true but if so it is a disgrace and very irresponsible.

 

[readingstockport]

The next trend in mortgages will be ones that you bequeath to your children. Sounds silly, it's already exactly what they do in Hong kong. Mortgage terms there are in the region of 100 years I believe.

 

[Simster]

The next trend in mortgages will be ones that you bequeath to your children. Sounds silly, it's already exactly what they do in Hong kong. Mortgage terms there are in the region of 100 years I believe.

Same thing in Japan.

 

[Moshe Gariani]

The next trend in mortgages will be ones that you bequeath to your children. Sounds silly, it's already exactly what they do in Hong kong. Mortgage terms there are in the region of 100 years I believe.

is that really likely here? are "they" going to keep finding ways of enabling people to just pay ever more massive mortgages or can't they do what is being talked about at the moment which is to go the opposite way - reduce the availability of credit and bring houses gently down in price again relative to earnings...?

 

[DIFFBROOK]

The basic problem is demand for buying a home outweighs supply, therefore prices rise. However, I have a problem with the supply thing. Put it this way, there must be roughly the correct number of homes (rentable and buying), otherwise people would be living on the streets or permently living with parents.

So in order to lower the price of houses, we need to increase the supply. Either build a load more, or change the way ownership works i.e ban/tax second homes, make it harder to buying homes only to rent them out later.

I think the idea that we can continue to expect large house price rises (which middle England loves) and mortgage ourselves to the hilt, whether its 5/6 times salary or 100 year mortgages is dangerous and makes this Country susceptible to global interest hikes.

Perhaps amend inheritance tax, and have a system where house price rises are valued every ten years. If when you come to sell your house and it has out stripped the rise in inflation since you bought it, then that windfall is taxed at a fairly high rate.

That way inheritance tax is scrapped (or put up to say £1m), house rises are controlled, and the Treasury gets its cash.

 

[London Calling]

The basic problem is demand for buying a home outweighs supply, therefore prices rise. However, I have a problem with the supply thing. Put it this way, there must be roughly the correct number of homes (rentable and buying), otherwise people would be living on the streets or permently living with parents.

So in order to lower the price of houses, we need to increase the supply. Either build a load more, or change the way ownership works i.e ban/tax second homes, make it harder to buying homes only to rent them out later.

I think the idea that we can continue to expect large house price rises (which middle England loves) and mortgage ourselves to the hilt, whether its 5/6 times salary or 100 year mortgages is dangerous and makes this Country susceptible to global interest hikes.

Perhaps amend inheritance tax, and have a system where house price rises are valued every ten years. If when you come to sell your house and it has out stripped the rise in inflation since you bought it, then that windfall is taxed at a fairly high rate.

That way inheritance tax is scrapped (or put up to say £1m), house rises are controlled, and the Treasury gets its cash.

or just build more houses and flats, instead of developers restricting supply...

 

[Hatterlovesbrighton]

I think one of the biggest problems is all investors that FTBs have to compete with for one and two bedroom houses. They should be taxed higher.

 

[Barrel of Fun]

or just build more houses and flats, instead of developers restricting supply...

It is not really developers that are restricting supply. They have to jump through a large amount of hoops now - Code for Sustainable homes, Eco assessments etc. etc. The process is longer now and certainly with the affordable housing element, some sites are not viable for a certain amount of flats/houses and so on.

Less houses are being built under Labour than there were under the Conservatives.

Whilst not laying the balme at their feet, as it is important that eco/green guidelines are followed, it has made the process alot slower.

 

[sten_super]

It is not really developers that are restricting supply.

While I agree that the Government are partly to blame for the slow increase in housing supply, I'm not sure that this is correct. Developers are always very keen to delay building as long as possible.

If Labour are serious about cutting the wealth gap and allowing people onto the housing market, then they have to impose a prohibitively large tax on 2nd houses and buy-to-lets.

Buy-to-lets are the real bane of the housing market; one of my friends from university has just bought his own house... but on a buy to let mortgage. After his parents gave him money for a 30% deposit, he gets enough in rent to just about cover the mortgage, and lives with his parents. He is effectively realising an asset at no cost whatsoever to himself! How can the government allow people in this priviledged (sp.) position to do this when there are so many people eager to genuinely move into their own property?

 

[London Calling]

It is not really developers that are restricting supply. They have to jump through a large amount of hoops now - Code for Sustainable homes, Eco assessments etc. etc. The process is longer now and certainly with the affordable housing element, some sites are not viable for a certain amount of flats/houses and so on.

Less houses are being built under Labour than there were under the Conservatives.

Whilst not laying the balme at their feet, as it is important that eco/green guidelines are followed, it has made the process alot slower.

Disagree completely. And Government and private sector reports bear out the following

It is in the interest of developers, to maintain high land values, building costs are pretty competitive in the UK, new builds meeting all existing Building regulations can be built for £60,000 and even less with some prefabricated systems. It is the land value you are paying for. And it is in the interests of developers to release land slowly and bank land, to maintain high land values. The DTI report 1996 identified land banking was a major problem, but failes to identify any pratical solutions to the problem.

Plus sites under 12 housing units do not need to supply affordable housing, but what do we want. If we want a cohesive society,the best way to achieve this is a socially mixed community. Not the building of Whitehawks divorced from the middle class communities.

Councils have to progress all developments within 8 weeks!! Unless agreed otherwise by both parties.

The so called environmental "add ons" have again been round for years, we have a Victorian house, at the top of the game for minimising waste, it didn't any longer to progress building regs or planning, in fact, it flew thru building regs because we were meeting the regulations and more.

All the Government is doing, is increasing the thresholds but this is being done in conjunction with the building industry of which the main developers are all involved in the consultation.

to be honest I think you will find that the present Government is facilitating the release of more land, especially in the difficult brownfield areas, it is encouraging more social housing and setting tough housing targets for Councils. In addition it is encouraging and has set good affordable housing targets. The Conservatives left the housing market to the market, that is one of the reasons we have such a depletion of affordable housing now. The record of Labour can be improved, I would love more public sector led housing. But the Conservatives record between 1979 and 1997 was very poor indeed.

Developers will always whinge and whinge. But don't blame the state! In London the need is for family housing, so what do developers propose, high rise, 1 bed cram them in slums. Maximum money in the smallest plot of land. By reading Councils Planning Guidance, which does not take long, as long as having a pint with your building contractor. And talking to Building Regs team. The developers can easily propose a housing solution that will fly through. But Planning is not the problem to cheap housing, without mass building of housing and the price of units just will not fall.

 

[London Calling]

Actually the London Calling household is in a quandary. I am socialist green through and through. Ms LC is liberal green.

But our house has progressed through the £300,000 Inheritance Tax threshold and more.

Ms LC mum owns a house in Cambridge she is in her mid 80's, her house is probably worth £350,000 plus. Our self serving interests is to Vote Conservative. But I won't.

I believe in the principles of equality, fraternity, a class less society and whilst I no longer believe owning a house should denote you as a member of the "Wealthy". Until Labour raises this threshold to a suitable level that will target again, the real "£property" owning classes. I will have to accept the tax as a way of redistributing wealth.

 

[Dave the OAP]

With this inhertitance lark, do I take it that the IT is based on net proceeds of estate, and based on all recipitants.

ie my wife has a brother, therefore if theeir parents house was sold, it would realise about 350k if you take expenses off that, ie solicitors fees estate agents etc etc say that is 20k, then the remaining 330k will be split 50/50 between her and her brother.....presumably then there would be no IT payable!

BTW If Thatcher hadn't flogged off council houses at a fraction of the prices in this run to make everyone a stakeholder, given the proceeds to councils to build new houses instead of telling them they were not able to build more houses and not then wacked up interest rates to between 15 and 20% ( which was the rate I was paying when we first took out our mortgage) so bancrupting the very people she was so called "helping" then i am sure the public housing stock would be healthier

...so much for a "socialist" government that wont build public housing. That is the real scandal

 

[Moshe Gariani]

With this inhertitance lark, do I take it that the IT is based on net proceeds of estate, and based on all recipitants.

ie my wife has a brother, therefore if theeir parents house was sold, it would realise about 350k if you take expenses off that, ie solicitors fees estate agents etc etc say that is 20k, then the remaining 330k will be split 50/50 between her and her brother.....presumably then there would be no IT payable!

doesn't work exactly like that... on a serious point there does seem a very straightforward avoidance strategy available for most fairly standard two parents and children situations whereby the allowance is doubled by the setting up of a simple Trust Fund on the death of the first parent... meaning that unless the "family home" is worth more than £600K no tax would be paid...

 

[sten_super]

With this inhertitance lark, do I take it that the IT is based on net proceeds of estate, and based on all recipitants.

ie my wife has a brother, therefore if theeir parents house was sold, it would realise about 350k if you take expenses off that, ie solicitors fees estate agents etc etc say that is 20k, then the remaining 330k will be split 50/50 between her and her brother.....presumably then there would be no IT payable!

I'm not 100%, but as I understand it, the IT would take no account of fees payable due to the sale of the house, nor would it take account of the number of recipiants. i.e. it is a flat 40% tax on the total value of the estate at time of death.

So if the house is worth 350k, and the IT limit is £300k, then £50k would be taxable at 40%, plus 40% of any other assets.

 

[Barrel of Fun]

My grandparents both owned half the house each. When the first one died, the half was split between my father and uncle. Then when my grandfather passed on, they received the remainder.

I think it was worth about £380k, so they avoided paying £32k tax. I think the remainder of his estate was put into a charity trust fund as he was adamant that he did not want to pay a single penny of inheritance tax.