[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?

 

[beorhthelm]

If wage inflation is below inflation it's a wage deflation in real terms isn't it? And you previously suggested cost of living payments contributing to millions going into the economy - these are absorbed by a fraction of the increased energy costs?

Is the reality that energy costs, supply chain costs, have all contributed toward rising prices, if anything dropping demand contributing more than an increase demand or spending. Interest rate rises are then a double whammy because not only do people have less money to spend, less spending and higher borrowing costs for businesses will mean their prices will continue to rise.

yes, the point was its not 4-5% between inflation and wages as claimed, its about 1.5% difference. thats the numbers the BoE are working with, not people's individual circumstances.
only credits that went to energy companies can be realisitically assumed to absorbed there. cash in hand there will be going to enerery and general spending as individuals see fit. trouble is all those supply chain costs are still there, like contracted to energy at last winters prices. some people have less money to spend, there are plenty out there spending.

 

[Bold Seagull]

yes, the point was its not 4-5% between inflation and wages as claimed, its about 1.5% difference. thats the numbers the BoE are working with, not people's individual circumstances.
only credits that went to energy companies can be realisitically assumed to absorbed there. cash in hand there will be going to enerery and general spending as individuals see fit. trouble is all those supply chain costs are still there, like contracted to energy at last winters prices. some people have less money to spend, there are plenty out there spending.

Enough people out there spending to suggest that’s the thing causing the inflation?

This latest set of results is a big divergence from other major economies who are seeing their inflation fall.

 

[Randy McNob]

What profit would you tax?

From your situation it would appear you have no mortgage hence, all the rent you receive is profit, not sure if that is taxable in the UK but I would slap a 60% levy on that. That's not even considering you are taking money out of the UK economy

 

[beorhthelm]

Enough people out there spending to suggest that’s the thing causing the inflation?

This latest set of results is a big divergence from other major economies who are seeing their inflation fall.

the fact inflation is stuck is evidence there is spending. the producer side (supply) numbers are high but coming down rapidly, 0.5% last month.

 

[TomandJerry]

The Bank of England must “create a recession” to curb inflation, according to Karen Ward, chief market strategist EMEA at JP Morgan Asset Management.

Ward, who is also a member of chancellor Jeremy Hunt’s economic advisory council, told Radio 4’s Today programme there are “certainly signs” that a price-wage spiral is emerging, which the central bank “has to nip in the bud”.

 

[Westdene Seagull]

If wage inflation is below inflation it's a wage deflation in real terms isn't it? And you previously suggested cost of living payments contributing to millions going into the economy - these are absorbed by a fraction of the increased energy costs?

Is the reality that energy costs, supply chain costs, have all contributed toward rising prices, if anything dropping demand contributing more than an increase demand or spending. Interest rate rises are then a double whammy because not only do people have less money to spend, less spending and higher borrowing costs for businesses will mean their prices will continue to rise.

Or business will stop investing due to lack of cash. Remind me what the overall aim is at the moment ? Ah yes, to GROW the economy .... won't happen if businesses can't invest due to higher interest rates.

 

[Westdene Seagull]

From your situation it would appear you have no mortgage hence, all the rent you receive is profit, not sure if that is taxable in the UK but I would slap a 60% levy on that. That's not even considering you are taking money out of the UK economy

Why should he pay more than the normal corporation tax if he's renting it through a Ltd company or income tax if he's renting it as an individual ?

 

[chickens]

An excellent, if sombre article on our current predicament.

Inflation and grief

How the persistence of inflation can be explained as a process of grieving for a loss.

open.substack.com

 

[Westdene Seagull]

The Bank of England must “create a recession” to curb inflation, according to Karen Ward, chief market strategist EMEA at JP Morgan Asset Management.

Ward, who is also a member of chancellor Jeremy Hunt’s economic advisory council, told Radio 4’s Today programme there are “certainly signs” that a price-wage spiral is emerging, which the central bank “has to nip in the bud”.

Ward it clearly an idiot.

 

[The Clamp]

It is not stealing. It is doing what existing companies already do but might not have the capital to do on a large scale. There are lots of companies you can contact for a very quick sale. They are essentially the house equivalent of “we buy any car”. If lots of houses need to be sold then the government can help people do this quickly. If people are not desperate to sell them the market will decide.

Many would argue that the houses actually belong to the banks and if people can’t afford to pay their mortgages then the bank will “steal it off them”. Maybe property speculators who spread themselves too thinly when money was cheap and were happy to take the profit and have someone else pay off their debt might change their ways if they have to pay their own debt. If they can’t afford it then lose the house. If lots of people lose houses in this way then maybe we could end up with a sensible housing market where first time buyers are able to afford their own home rather than pay someone else’s mortgage. Plus it might prevent future speculators doing the same.

If people who lose money on houses get bailed out then what else? People who lose on shares? People whose businesses fail? Let’s just go the full Monty and anyone who is stung by crypto.

We bailed the banks out. Time for them to bail us out. It would still be a drop in the ocean compared to the tens of billions they’ve had off us in the past 30 years.

 

[Randy McNob]

Why should he pay more than the normal corporation tax if he's renting it through a Ltd company or income tax if he's renting it as an individual ?

Private Properties are homes for people to live in, not for speculators to profit from which inflates the housing bubble.

Tax the shit out of anyone taking advantage of other people. While we're at it, windfall tax on the banks please. Plough it all back into help to buy and newbuild schemes.

The government bang on about levelling up, thats what I call levelling up

 

[spongy]

12+ years of cheap money have led to this crisis.
If mortgages had sat at around 3-5% for the last 10 years house price inflation would have been significantly less. The value of my new house almost doubled between 2014 (previous purchase) and 2022 (my purchase) without any improvements to the house made.
If people have chosen to pull the increase in value out of their property to fund lifestyle or BTL purchases etc then they will have to adjust or face the outcome of their choices. It's those who have saved hard to buy at the peak price/low IR a couple of years ago I feel sorry for.

That be me. Looking for a deal right now and it's going up every bloody day. I'm panicking

 

[dsr-burnley]

Private Properties are homes for people to live in, not for speculators to profit from which inflates the housing bubble.

Tax the [deleted] out of anyone taking advantage of other people. While we're at it, windfall tax on the banks please. Plough it all back into help to buy and newbuild schemes.

The government bang on about levelling up, thats what I call levelling up

There would be another saving too. Lots of tenants are on housing benefit. If you take away their homes, that will save their housing benefit costs until they somehow find somewhere else to live.

What would be the plans for the displaced tenants? Hotel accommodation in the short term? What about long term?

 

[Grizz]

Very bad news today with inflation. Interest rates to go up 0.25%, possibly 0.50% tomorrow. All lenders the last month have withdrawn rates with no notice and increased them once sometimes twice a week, this looks like continuing for a while. Anyone whose fixed rate ends in 2023 or even in 2024 start preparing 7-8 months before your rate ends at the best rate on the market and then compare with your present lender at the earliest time possible. I am here to offer a free consultation before any action plan is taken out. Send a PM or contact me through my website

I'll be taking you up on that US. Ours ends end of April '24 and going to need some advice.

 

[The Clamp]

Private Properties are homes for people to live in, not for speculators to profit from which inflates the housing bubble.

Tax the shit out of anyone taking advantage of other people. While we're at it, windfall tax on the banks please. Plough it all back into help to buy and newbuild schemes.

The government bang on about levelling up, thats what I call levelling up

That just leaves less rental properties, which increases demand, which increases cost.

That’s what is happening now. Costs are high for buy to let landlords so many have got out and the tenants ultimately lose out.

 

[mikeyjh]

Private Properties are homes for people to live in, not for speculators to profit from which inflates the housing bubble.

Tax the shit out of anyone taking advantage of other people. While we're at it, windfall tax on the banks please. Plough it all back into help to buy and newbuild schemes.

The government bang on about levelling up, thats what I call levelling up

People need to rent, people will always need to rent. There is, and I know I have a bias, and always will be a need for a rental market. Not all landlords are taking advantage of people, they are providing a service.

I actually don't understand your angle, you mention that 'speculators' inflate the housing bubble but you then talk about ploughing in to help to buy. I'm sure you understand help to buy would have precisely the same outcome. Is it that you want people to have homes to live in or is that you want everyone to be 'on the property ladder'?

 

[chickens]

That just leaves less rental properties, which increases demand, which increases cost.

That’s what is happening now. Costs are high for buy to let landlords so many have got out and the tenants ultimately lose out.

Those properties (unless sold en-masse as a portfolio) should go onto the open market, correcting overheated house prices and allowing renting individuals onto the housing ladder, freeing up rental properties for those recently deprived.

In the longer term we must replenish the country’s social housing stock, so that we as a nation can’t be held to ransom by landlords in the future. I’m certainly not against the private rental market, but there must be a state backed alternative to it.

This could be done by building new properties, or by purchasing privately owned properties, such as those from landlords selling up, though I am not yet convinced that landlords are selling up to any significant degree.

 

[Westdene Seagull]

Private Properties are homes for people to live in, not for speculators to profit from which inflates the housing bubble.

Tax the shit out of anyone taking advantage of other people. While we're at it, windfall tax on the banks please. Plough it all back into help to buy and newbuild schemes.

The government bang on about levelling up, thats what I call levelling up

I'm guessing here but you have the view that if there were no rental properties then there would be more properties for people to buy rather than rent ?

a. Many people either don't want a mortgage or will never be able to get a mortgage - even if house prices halved

b. I'm in the process of selling three flats ( inherited before you accuse me of being a landlord ). One has sold to a BTL landlord - all viewings were from BTL landlords and it wasn't an expensive flat. Not a single private buyer bothered to have a viewing. The same has happened to a mid-range flat - sold to a landlord - not a single viewing by a private buyer. The third is still on the market and is VERY cheap, now have a guess how many private buyers have viewed it ? I'll tell you - ONE. And they offered HALF the asking price. The property at the right price is there for buyers - they just need to set their expectations correctly.

Anyway, there's a glut of landlords getting out the market because BTL mortgages are too expensive now so we'll see if this anti-landlord theory actually works well on the housing market.

 

[Randy McNob]

There would be another saving too. Lots of tenants are on housing benefit. If you take away their homes, that will save their housing benefit costs until they somehow find somewhere else to live.

What would be the plans for the displaced tenants? Hotel accommodation in the short term? What about long term?

don't see how that is saving anything. The object is housing for everyone and a system fair for everyone

I want a system where those struggling to get on the ladder, those who cannot afford high rents, those who are stuggling to get a mortgage, those struggling to keep up or have negative equity are supplemented by the profiteers, landlords, speculators, anyone with 2nd homes and of course the banks.

10 years ago labour and LIb dems proposed a Mansion Tax. Funny how at the time these policies receive widespread condemnation and as such those parties don't win power on these kind of policies or are rejected by the electorate, yet here we are suffering the effects of not regulating the housing and banking sector and creating a fairer system. A country run by Tory Bankers inflicting neo-liberalism ideology and we are left with sky high mortgage payments, sky high rents, sky high energy bills and rampant inflation

 

[chip]

I really don't understand why housing benefit is payed on private rentals. If a landlord can make a profit from the property rental then surely the local authority can, even if it has to borrow to finance the property purchase - then it gains an asset. Any profit could be used to reduce rents. I think local authorities should be able to do this as they have the legal responsibility to house people and it's logical that they should be able to control how they manage that. Not-for-profit organisations would make sense but it definitely shouldn't be contracted out. With some thoutght, local authorities could even involve renters in the design of properties so they better suit tennant needs.

Like water and food, stable housing is a basic human need and the state should be obliged to ensure that peoples basic needs are met.