Copy of Lib Dem coalition agreement with Tories

[Brendan]

Articled in the Guardian today.

http://www.guardian.co.uk/business/2010/mar/15/first-time-buyers-priced-out

William Griffith, spokesman for PricedOut, said: "The large tax breaks that buy-to-let currently enjoys mean that they can always outbid first-time buyers. It is astonishing that the government is seeking to further entrench this disparity in the housing market. High house prices and buy-to-let speculation have been behind a large growth in wealth inequality and have caused increased financial instability."

PricedOut calculates that high house prices, driven in part by the rise in buy-to-let, have displaced an estimated 1.2 million new households away from owner-occupation, and led to about 1.4m fewer first-time buyer mortgages since 1999.

[expat]

>30K deposit and almost 80K a year in income is not enough to get you a 2 bedroom home

I think it is. have a look at these

http://www.globrix.com/property/buy/east%20dulwich?ns=true&rd=1&hits=10&br=buy&qt=East+Dulwich&keyword_field=

[Brendan]

Yep, enough for a 1 bedroom flat or studio which are only suitable for single people or a couple at a push. Trust me I spent the better part of the last 3 months looking.

[Jeremy]

You can definitely get a 2 bed flat for under 300k. I'm not saying it's cheap, but... doable on the kind of cash Brendan's talking about.

[expat]

There were several 2 bed places on the list all for under 230K

[Brendan]

Yeah to a point but you can?t get a loan without a 20% deposit (at a crap interest rate) and more realistically a 30% or higher deposit.

Anyway it?s beside the point (we've moved on). Many of the people I know earn a lot less than we do (and in many cases do far more important and demanding jobs) and there is no reason why they should be excluded from having homes to raise their families in.

I?m not on about this just because my family has been victim to it. I don?t want to live in a place where this sort of thing happens even if I?m unaffected. Unlike our conservative wing I see myself as part of a society and regards other peoples? welfare as important as my own.

[DJKillaQueen]

Mitch what planet are you on? or do you really not care one iota for the vast numbers of people that see more than half their salaries go on rent and are living in real hardship. Your only suggestion being that they move...well where to? Do you really want a city without any key workers, retail staff, cleaners, bus drivers and so on because that's what your suggestion would mean in re#ality.

Incidently it's not only the average waged and below that are being ripped off it's many middle income families too who are feeling the squeeze of the size of their mortgages in proportion to their income.

- 1.8 million people are on council or social housing waiting lists.

- Millions of pounds of TAX PAYERS money every year is paid out to private landords in housing benefit because tenants can not afford to pay the whole rent.

- The average age of a first time buyer without parental help is 42 and rising!

- Thousands of familes live in overcrowded unsuitable accomodation because of a lack of affordable family homes

AND THE VAST MAJORITY OF THEM ARE BRITSH.........

It is the same all over the country. Average familes with both parents working with average salaries can not afford to either buy or save enough for a deposit.

Do you really think there's nothing wrong with something as essential as housing being in that predicament?

Of course there need to be landlords and of course they need to be able to make a profit and no reasonable peson would disagree with that. The issue here is the rate of rise of the market over the last 30 years. It has been too rapid and too inflated and it's the rate of rise that has to be stemmed so that salaries can at least begin to catch up and close the gap. Caps could be introduced (we already have fair rent legislation) that would not be detrimental to existing property owners. Housing needs to be returned to a long term investment opportunity if we are ever going to have any chance of sorting the dire housing needs that we currently face.

More than anything I think that anyone that works hard deserves to be able to afford to live on their income to a reasonable level. It is completely immoral that such a sizeable section of the workforce are struggling with something as essential as housing.

[expat]

Not wanting to get into the fine details but I think some of the figures are incorrect:

> The average age of a first time buyer without parental help is 42 and rising!

Not sure where this comes from. The figure I've seen is lower:

the average age of those doing it without financial backing from relatives has risen from 33 to 37 in the past two years.

http://news.bbc.co.uk/1/hi/business/8454455.stm

There is also the HomeBuy scheme:

http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/HomeBuyingSchemes/DG_171504

Cheers

[Brendan]

The presumptions with those both have so much wrong with them though. People are expected to need parental help in order to afford a home. This is regressive and makes property become hereditary. Or they need government help in order to afford a home. Once again regressive and a return to socialism. Or they have to move to Crewe.

On the other points though this site has a lot of information: http://www.pricedout.org.uk/

[expat]

>The large tax breaks that buy-to-let currently enjoys

Not quite sure what these tax breaks are?

[Huguenot]

You don't pay any capital gains tax on your 'main' home. In practice this means a couple can buy two homes and pay no tax at all on the gains made from a 'buy to let' property.

Retal income can be offset against 'allowable' expenses before tax, and all properties own are treated as a single business. This means that you can offset all tax against the capital purchase of multiple properties, or even your own furniture: the government effectively pays you to furnish your house and expand your empire. For the BTL landlord this means new property is cheaper than a first time buyer.

Interest on mortgages is an allowable expense. This means that for a BTL landlord on an interest only mortgage, the house, and the capital gains are all 'free'. Buy a house to actually live in it, and you have to pay the whole lot.

Tax on dividends and savings accounts is similar to income tax - rising to 40%. Capital gains tax on property is only 18%. This means it's cheaper/wiser to build a property empire than invest in stocks or shares.

That's a hell of a lot of tax breaks, and so much cheaper than buying a property actually to live in it.

It goes without saying that I'd like to see all of these breaks removed. Bit by bit, so it doesn't create a run on the market, but in the end I'd like to see them all removed.

[expat]

>In practice this means a couple can buy two homes and pay no tax at all on the gains made from a 'buy to let' property.

I think that is illegal and mortgage fraud.

>even your own furniture

Unlikely to get this through the tax-man.

CGT is due to go to a maximum of 40% I thought.

[Huguenot]

Yes it would be illegal, but so is expenses fraud and the MPs got away with that for decades.

Yes, CGT is scheduled for change, but you asked what the current tax breaks were?

I thnk that the most effective remedy is the removal of mortgage interest from the allowable expesnses list. That's what turns residential property monopolies into a lucrative business. You'd need to do it in stages though.

Nothing to do with 'uncontrolled immigration'. When will people grasp that our problems are not caused by fantasies about jack-booted foreginers raping rose-cheeked British innocents?

[expat]

>Yes it would be illegal

I do not think illegal acts can be counted as tax breaks

[Huguenot]

LOL! You seem to have a bizarre wish to prove that there are no advantages to BTL landlords based on a technicality!

Put it this way then: the law isn't sufficiently clear to stop this practice taking place. In a similar way to MPs, couples can flip which property they refer to as their main home almost at will.

The 'tax break' is the lack of clarity that can be exploited.

This was probably because MPs benefitted from it themselves!

[expat]

No but nor do I think BTL landlords are all evil and the only ones to blame for the so called housing crisis.

Nor do I think illegal acts are a tax break. By that token you can live virtually rent free. Just rent a place and stop paying rent after a month or two it will take them a lot of letters etc. before you are thrown out and then you rent another place or you could squat. Squatting is not actually illegal I think.

As I understand it the MP's actually followed what rules there were - flipping was allowed. It is beside the point anyway as

'They did it so it does not matter I broke the law' is no defense in a court or to the tax collector.

[DJKillaQueen]

I think Huguenot has made some very good suggestions. It is all doable without damaging the finaces of those already invested in the Housing Market and would be a gradual process.

And more importantly the free market would have stemmed the rise before now if the banks and consequtive governmets hadn't colluded to keep changing the rules so that growth could continue unhindered at that alarming pace. For example, whoever thought self certified mortgages were a good idea? Total lunacy.

[James Barber]

The full coalition agreement has been finalised and is attached.

Lots and lots of good Lib Dem policies that will radically change this country for the better. :))

[Trump]

?Change this Country for the better? So why did you loose seats at both elections?

[DJKillaQueen]

I've read the document...wouldn't call it radical. You are in a coalition James and have sacrificed many of the policies your supporters voted on or have you conveniently forgotten that?

It's a mixed bag of policy IMO. Some things for the better, some not. We'll see how much of it actually happens and what difference it makes in time no doubt.

[Brendan]

Still a lot more encouraging than what we would have got from a Labour or a Conservative government.

Although no mention on whether (and how) the new government intends to put right the fact that under the previous government an entire generation of young people have been priced out of the poverty market and are now forced to live either at home or pay off someone else second home for them under unfair, exploitative rental agreements.

Any comment on this James?

[DJKillaQueen]

See that's the poisoned chalice no MP ever wants to comment on....it's as though they are all terrified of rocking the housing market boat (probably because we have virtually no other major industry in this country anymore esp now that finance is sunk). Having said that, I did see Diane Abbot mention the issue during one interview after her announcement of running for leader. She cited it as something unmentionable but that needed serious debate and reform and I nearly fell over unable to believe that an MP finally came out and said what needs to be said.

So yes James, just what IS your position on the dire housing crisis in this country?

[Brendan]

It was deliberately pushed under the carpet by the last government a decade ago already. See this article re. information recently released under the Freedom of Information Act: http://pricedout.org.uk/News/PressReleases/GovernmentAllowedBTLtoPriceOutaGeneration/tabid/200/Default.aspx

[Loz]

She cited it as something unmentionable but that needed serious debate and reform and I nearly fell over unable to believe that an MP finally came out and said what needs to be said.

Apologies for my political pessimism, but just saying something needs "serious debate and reform" seems like a jolly good soundbite, but little in the way of actual ideas and/or impetus to do anything. A bit like the Tory/LibDems "let's have a review' line they took 28 times.

[DJKillaQueen]

You are absolutely right Loz - it needs following up with ideas and proposals. Even Gordon Brown when asked about housing by Jeremy Paxman replied that it was a private sector issue (i.e. no concern of government)..and that's Labour...the party that is supposed to care more than anyone on social matters!

Very interesting article Brendan and only confirms what most of us already know. The Housing Market was allowed to over inflate un-regulated (in spite of many warnings from well respected economists) and now look at the mess we are in. In fact it's not only reports on Housing, there were also major warnings to the FSA (which was never fit for purpose) about the level of bank investment and risk in those markets a good three years before the sub-prime began to implode. But as always, as long as the money rolls in, no-one listens.

Completely incompetant the lot of them.

So yes James, why is there no section on housing in that coalition document? :)