[Finance] What should the government do about the coming base rate mortgage hike time bomb?

[Mustafa II]

800,000 people up for renewal next year.

I personally know people who simply won't be able to afford the increase. They're ones of many I'm sure.

Tax breaks? Government subsidies? Or should they just allow the crisis to play out?

 

[nicko31]

Apologies I don't want to derail the thread.

This would suggest such deals may be possible. I have no idea if this is practical or reliable. Either way it is of limited use to anyone struggling in the UK
http://www.frenchmortgagexpress.com/best-french-mortgage-rate/

If it seems too good to be true, it probably....

These look like rates of 2 years ago, I'd be amazed if these were offered today

 

[Notters]

Yep, holiday homes are a scurge of communities. I like the idea of the 3x council tax they apply in Wales.

Where abouts are you?

I think this is a problem anywhere remotely nice - be it Cornwall / The Lake District or Brighton / Harrogate - so I think a national response is needed.

Can't see the government doing it though.

 

[Herr Tubthumper]

Joined up thinking you say? Investment in social housing? Investment in welfare?

Nah, it will never catch on.

Most folk in this fine nation will think that if that were to happen the people in small boats will take it all....

In Germany, and to a much lesser extent the UK, a proportion of housing is owned by socially minded not-for-profit organisations. I guess a UK equivelent is something like Peabody. Why dont these organisations get more involved with building UK housing? This is a genine question as I have no idea how it works e.g. say there a large tranch of land in Brighton, why dont the council sell/lease/give this to Peabody to build and manage apartments? It always goes to a company who builds epxensive apartments with a few 'affordable' units round the back.

 

[Horses Arse]

In Germany, and to a much lesser extent the UK, a proportion of housing is owned by socially minded not-for-profit organisations. I guess a UK equivelent is something like Peabody. Why dont these organisations get more involved with building UK housing? This is a genine question as I have no idea how it works e.g. say there a large tranch of land in Brighton, why dont the council sell/lease/give this to Peabody to build and manage apartments? It always goes to a company who builds epxensive apartments with a few 'affordable' units round the back.

Money. They won't get as much 'reward' for the land initially nor rates when built.

Rich Tory donors can make a fortune out of Tory allocations and decisions. They wouldnt donate without being sure to make a fortune from it. Other political organisations have similar, but less far reaching, arrangements.

People just want to max out on what they can make and the rabid privatisation has assisted that.

 

[Horses Arse]

Cumbria - just outside the Lake District (walking distance of the boundary).

Lovely. Space!

 

[Horses Arse]

So you want a house price crash - so those that have bought property in the last few years to fall into negative equity?

Don't worry, you're not alone - there's plenty of left leaning people on here who are landlords, who whilst professing to be socialists and Labour voters, are making substantial amounts of money from renting out second/third etc. properties.

Not what I want at all, but you could see it happening a mile off.

I don't get the argument that you're not allowed to make money AND have a conscience though. Albeit not by exploiting people. Landlords per se are not the problem, it is the system, politics and economic drivers that are.

We should all he encouraged to do well, celebrate success, but recognise that to achieve that means you are incredibly fortunate and that things could have worked out so differently.

Those that say I've made it so no reason why you can't are just excusing their selfishness. There are so many reasons why things work out differently, many very arbitrary.

That's where the state and support comes into it, plus legislation to protect people. Not the free market bollocks that this country is so wedded to.

But hey, many of those suffering vote these bellends in repeatedly - why would I turn down an opportunity to invest as a result of dickheads voting scum like Bojo and chums in?

 

[Nitram]

It’s a bubble that’s been growing for years based on being able to borrow money on low interest rates.
It’s fed the rental market where people bought buy to let’s to speculate and exploit.
The lack of council new builds and selling off of houses caused by government policy has also kept rents high feeding the buy to let mania.
The whole system needs re-setting.

 

[beorhthelm]

They love the crash. They can hold on to what they have and buy much much more at low prices before they rise again.

Feel dirty saying this, but that's what I've been waiting for. Waiting for the inevitable crash to buy somewhere as an investment that someone pays the mortgage on. Yes, I know - its shit. I've never voted for these c@nts and never will. However, I will do what's best for my familly in situations like this with broken safety nets. It's the lack of state support that increases the selfishness. Self perputuating unfortunately.

so part of the problem really, buy up investment property and raising rents.

 

[sparkie]

OK, so it seems clear a solution is needed but it can't involve tax payer money - or if it does the money should be dished out to the whole population to be fair.

So perhaps a cap on mortgage rate rises with anything over the cap automatically added onto the mortgage term ? Or making mortgage term extensions pretty much automatic if applied for ?

I'm sure there is a solution that big brains with time to think can come up with that is fair to home owners and non-home owners equally.

 

[Berty23]

You need to learn to differentiate between speculation and buying a family a home.

Throughout this I have been talking about how by to let landlords should be treated differently to home owners. Although there is a point about stress testing. I checked the mortgage application I had for a place we eventually pulled out of just after covid. I had a think about this text with the wife and we decided it was not worth the risk. The bit in bold at the bottom is the key bit.

We were in the middle of brexit and just after pandemic. Too many risks to assume rates would not jump half way to the scare figure.

 

[beorhthelm]

In Germany, and to a much lesser extent the UK, a proportion of housing is owned by socially minded not-for-profit organisations. I guess a UK equivelent is something like Peabody. Why dont these organisations get more involved with building UK housing? This is a genine question as I have no idea how it works e.g. say there a large tranch of land in Brighton, why dont the council sell/lease/give this to Peabody to build and manage apartments? It always goes to a company who builds epxensive apartments with a few 'affordable' units round the back.

planning! we wont let anyone build anything, so stuck with mostly small developers doing infill and those wanting to push the premium end. can you imagine the objections if you said you want to build a nice block of social housing? housing associations do build some, though nowhere near what they did or could if we eased up planning.

 

[Berty23]

Not sure we are talking about property speculators. I'm not anyway. My focus is on those recently on the housing market to avoid obscene rents. They will be suffering, landlords just hike to rent to cover their costs, easy.

We're renting my MILs house to assist with her care home fees of £2k per week. (Can't find anywhere significantly cheaper that does t look like a prison/mental hospital.)

We get £2.8k per month for a 3 bed modern house. Obscene. Totally obscene. Went up £400 a few months ago due to inflation, part of the contract conditions.

Who wouldn't want to buy rather than shelling that out each month?

As an aside, despite paying over £8k per month on her care fees, we get taxed on the house rent. Unbelievable.

My point is why should people letting properties expect the tenant to cover all of the mortgage? The speculator should be expected to pay down their own debt. I wonder if we are getting close to renters just withholding rent. It feels like the sort of thing that would get online traction. If everyone did it then the going rate would tumble. Renters acting like a union rather than competing with each other. This could get very messy indeed.

All because house prices are so ridiculously high and we got drunk on low interest rates allowing a massive bubble.

 

[Horses Arse]

so part of the problem really, buy up investment property and raising rents.

I guess yes. Though when you're forking out £8k a month for care of a relative it does put a different tilt on things. If it wasn't for that then we wouldn't have put the rent up on my MIL house. You'll just have to take my word for that I guess.

Regarding purchasing a house specifically to rent out I see no benefit to anyone in me standing back and saying no to buying somewhere that would increase in value. I could have bought somewhere over the last few years but the mess that this government was creating meant that I waited for the inevitable crash. Not what I want to see but that's what a bunch of goons decided to vote in.

 

[Horses Arse]

My point is why should people letting properties expect the tenant to cover all of the mortgage? The speculator should be expected to pay down their own debt. I wonder if we are getting close to renters just withholding rent. It feels like the sort of thing that would get online traction. If everyone did it then the going rate would tumble. Renters acting like a union rather than competing with each other. This could get very messy indeed.

All because house prices are so ridiculously high and we got drunk on low interest rates allowing a massive bubble.

Yes, I agree. It should be controlled. If landlords were unable to pass interest hikes on then the problems being experienced would miraculously disappear. Which is why it will never happen becuase this country is wedded to Conservative values (wealth), regadless of the cost.

Even the victims argue that a completely free market is the way forward - madness

 

[GrizzlingGammon]

Interest rates when I purchased my first property in 1988 was 16%. There are a few things to take into account though, weekly wages and cost of property. I seem to remember my mortgage was about a third of my income.

This is it. Mortgage to earning ratio has changed dramatically. I read somewhere that current mortgage percentage is equivalent to 13% in the 80s.

 

[mikeyjh]

My point is why should people letting properties expect the tenant to cover all of the mortgage? The speculator should be expected to pay down their own debt. I wonder if we are getting close to renters just withholding rent. It feels like the sort of thing that would get online traction. If everyone did it then the going rate would tumble. Renters acting like a union rather than competing with each other. This could get very messy indeed.

All because house prices are so ridiculously high and we got drunk on low interest rates allowing a massive bubble.

They shouldn't - I've said, repeatedly, that any good landlord would avoid increasting rents for a good tenant (which most are) - It's morally grubby but also bad business, look after your tenants and they'll look after you, kind of.

That said - Interest expense is a legitimate expense of running the business and some will see that as reason enough to hike up the rent. I think it's a grim thing to do though. Tenants do have some, limited, rights here. In a fixed term tenancy, the landlord could only increase the rent with the tenant's permission, in a periodic tenancy, they may only do it once a year. It's complicated, you could index link rentals but then you have rampant inflation right now, you could introduce longer fixed terms but that's potentially uncomfortable for tenants who may be transient.

 

[TomandJerry]

Rishi Sunak has ruled out extra help for UK homeowners struggling to pay soaring mortgage costs, as the average two-year fixed-rate loan rose above 6%.

The prime minister said the government should “stick to the plan” to halve inflation in its attempts to tackle the cost of living crisis.

 

[Commander]

They shouldn't - I've said, repeatedly, that any good landlord would avoid increasting rents for a good tenant (which most are) - It's morally grubby but also bad business, look after your tenants and they'll look after you, kind of.

That said - Interest expense is a legitimate expense of running the business and some will see that as reason enough to hike up the rent. I think it's a grim thing to do though. Tenants do have some, limited, rights here. In a fixed term tenancy, the landlord could only increase the rent with the tenant's permission, in a periodic tenancy, they may only do it once a year. It's complicated, you could index link rentals but then you have rampant inflation right now, you could introduce longer fixed terms but that's potentially uncomfortable for tenants who may be transient.

During the pandemic I dropped the rent on my London flat by 50% for 3 months to help our tenants who were furloughed and were struggling. They were really grateful for it and it felt nice to know I had genuinely help someone at a pretty scary time. They stayed there for the whole 3 months and then promptly gave their notice. Fuckers.

 

[Westdene Seagull]

I think this is a problem anywhere remotely nice - be it Cornwall / The Lake District or Brighton / Harrogate - so I think a national response is needed.

Can't see the government doing it though.

I'm not convinced this is as much of a problem as is made out. We're looking to move to Devon / Cornwall and been swamped with property details sent to us. Most the properties sent to us have been on the market for ages. One property we wanted to look at was in a small village that was 'protected' from outsiders such as us buying there - you had to have lived in the area for 5 years to be able to buy. It was one of the first properties we found over a year ago - still on the market now.

There might be small pockets of housing that need protecting from 'outsiders' such as Port Issac but generally I think a vast amount of property is outside the reach of many locals due to the lower wages and lack of jobs down there. I can't count how many times I've heard "My son/daughter had to move to Bristol/Plymouth/Cardiff/London to get a job".

That said it might help that we can sell our property here in Hove and buy a bigger property for less so walk away with money in our pocket despite reducing our mortgage amount and term. Lack of property to buy there is not though.

 

[dsr-burnley]

My point is why should people letting properties expect the tenant to cover all of the mortgage? The speculator should be expected to pay down their own debt. I wonder if we are getting close to renters just withholding rent. It feels like the sort of thing that would get online traction. If everyone did it then the going rate would tumble. Renters acting like a union rather than competing with each other. This could get very messy indeed.

All because house prices are so ridiculously high and we got drunk on low interest rates allowing a massive bubble.

It could get very messy indeed. The government by its policies is making rentals more awkward for landlords, especially small landlords, and if the tenants get together with a rent strike they would no doubt see plenty of landlords throw in the towel and sell up.

So what happens then? Say a million properties come on the market, and half of them are bought by the tenants living there, and the other half flood the market causing a drop in prices. But you have half a million homeless people/families. Where do they go? There certainly aren't enough council houses. Does the government buy the necessary homes thus driving prices up again? Does the government buy the homes for people that can't afford their own, in the same way as they currently pay their rent? Like you say, messy.

If landlords are driven out of business, they still have their capital. But the tenant is homeless. We need to consider the needs of the tenant first, before we work on how to bring down the landlord.