Copy of Lib Dem coalition agreement with Tories

[DJKillaQueen]

After tax and so on 60k doesn't leave that much for house buying and that is the real crunch I think. Middle income families, the stalwart of house buying thirty years ago, are also being squeezed out. That's when even those in denial should be able to see just how serious the situation is beoming.

You mention internal migration for cheaper properties, well we have aleady seen that happening (was formerly called yuppification). And as a result areas that were formerly very affordable become quickly unaffordable, so it doesn't really solve the problem in any great measure. The extreme of that of course being the damage done to rural communities where people who have grown up in a village all their lives can't find anything affordable to buy! Relatives are increasingly being forced to live further away from each other.

[DaveR]

Pretty much everything that has been said on this thread comes down to this, from Huguenot:

"If you have a BTL house and the tenants are paying off your mortgage, you are simply stealing their property and the proceeds of their honest labour from them for personal gain"

which is clearly b&llocks. The only real suggestion that anyone had made to deal with it is straightforward price control i.e. an imposed rent cap, which should cause capital values to fall until the level of investment returns is restored to a realistic level. And it still wouldn't work. It will make renting cheaper, but it won't make buying property significantly cheaper because demand will stay strong for as long as the economy is in OK shape and people are willing to pay lots to buy a house.

I note that there was absolutely no attempt to rationalise the jump from this:

"The fundamental purpose of property rights, and their fundamental accomplishment, is that they eliminate destructive competition for control of economic resources. Well-defined and well-protected property rights replace competition by violence with competition by peaceful means."

to this:

"The current BTL systems is just a way to replace feudal lords with modern property tyrants. Both systems rely on the existence of a massive community of disenfranchised serfs from whom self-determination is withheld."

probably because the latter is equally b%llocks. Landlords are just exercising the basic property rights that underpin our legal and economic system. Those rights are already (and properly) curtailed for various reasons re health and safety and security of tenure. I can also see a very good argument that if we are moving towards a scenario where more people are expecting to rent for longer periods then there should be greater security of tenure, but you need a balance - under the old Rent Acts, if you had a protected tenancy you were laughing, but if you didn't you were stuffed, and (unsurprisingly) there wasn't a lot of mobility in the market.

And finally, this is absolutely about left and right, because it's about economic freedom - two people saying I'm willing to sell you something for a price you're willing to pay, and vice-versa - and shouldn't involve the state unless its really, really necessary. We don't have price controls for food or clothes so why housing?

[SeanMacGabhann]

There is a rental market in food and clothing???

[Brendan]

The production, price, import and export of food are actually quite closely watched and regulated.

Regardless you seem to think that either people still have some sort of choice not to rent or that if they are forced to rent it is fine.

So is this situation ok in your eyes?

Man A (who earns ?25K) is forced to rent off man B (who earns ?100K) a house that costs ?250K for a period of 25 years. Many B already owns another house that cost ?500K. After 25 years man B owns 2 houses (worth a total of ?750K or the equivalent) outright one of them paid for by man A (plus any profit if prices have risen disproportionately). Man A is homeless and owns nothing but has bought a second home for man B.

If it is the view of the ?right? as you say that this is a satisfactory situation then it is completely hypercritical as it flies in the face of all that shit about allowing people the opportunity to take control of their lives.

[Brendan]

DaveR Wrote:

-------------------------------------------------------

- under

> the old Rent Acts, if you had a protected tenancy

> you were laughing, but if you didn't you were

> stuffed,

You're still stuffed. If people had a choice they wouldn't be renting under the current regulations. Once again you are under some sort of delusion that people are not being forced into this.

[david_carnell]

For a point of reference, average salary is a difficult concept.

The National Statistics Office, as of 2009, gives the annual median salary as ?489 per week (or ?25,428 pa). This is gross however so you can expect to lose nearly a third of this before we reach take home pay. That would be about ?17,000pa.

Using a mean average may lead to a higher figure but as someone noted earlier this is massively distorted by those very few people at the top end earning millions a year.

Rates in London are higher (?627pw or ?32,604pa or a shade over ?21k after deductions).

The average UK house price (Jan-Mar 2010) is ?234,837 according to the land registery. I don't know, but I would imagine this is a mean average but the distortion in prices of houses isn't as great as salaries so can be used with some accuracy. However, in London this rises to ?406,608. But this, I feel is likely to be distorted given the high number of very expensive properties in London.

So let's look just at Southwark. A good mix of housing - rich and poor. Average price is ?369,813.

With a two person income, on average of ?42k after deductions the ability to afford nearly 8x your income to buy a property would seem out of the reach of many. A generous deposit of ?20k would still mean a mortgage of ?350k. The repayment at 5% would be nearly ?2k a month over 30 years!

[Brendan]

Ah david I think you are missing what these arseholes are arguing which is that if it doesn?t affect them it isn?t a problem and if they can profit from it, it is a good thing and if anyone doesn?t like it they are just being petulant and should move to Dartford.

It basically comes down to this

S: Normal people should be able to own their own homes.

A: No they shouldn?t they should rent off wealthy people.

[DJKillaQueen]

It will make renting cheaper, but it won't make buying property significantly cheaper because demand will stay strong for as long as the economy is in OK shape and people are willing to pay lots to buy a house.

But it would have an impact though (it's a system used in France for example). If you can't get a rent above a certain rate then you won't want to pay above a certain value for a property. There is then an increased abundance of property for sale (that would previously have been snapped up by investment buy-to-let) with either enough other first time or chain buyers or not. The market would respond to a shortage of buyers, initially with price falls and followed by growth in line with affordability (i.e. linked to income). Demand and affordability are two entirely different things. The situation could further be encouraged by reintroducing mortgage regulation. We've had all that before. The present climate is only serving property investors - the balance is extremely unfair.

And finally, this is absolutely about left and right, because it's about economic freedom - two people saying I'm willing to sell you something for a price you're willing to pay, and vice-versa - and shouldn't involve the state unless its really, really necessary. We don't have price controls for food or clothes so why housing?

There is no economic freedom for those at the bottom and never will be while upward mobility is made increasingly impossible of which property is seen as a key factor (and the whole idea behind Thatchers policy of right to buy). So you are contradicting yourself with that statement. What you are saying is that those that have should be able to get more and damn the rest no matter how hard they work.

Secondly housing is an essential - good housing is extremely important for good health and social cohesion. If food became so expensive that people couldn't afford to eat properly the government would do somthing...it would be seen as immoral for food to be too expensive for so many people to buy. The same can be said of clothes. If someone froze to death because the cost of a jacket was so much that so many people couldn't afford one. So that blows your other comaprison into perspective too doesn't it.

[DJKillaQueen]

Dave carnells excellent post demonstrates just where we are at perfectly.

[DaveR]

"Normal people should be able to own their own homes."

Why? In lots of other countries they don't, and don't expect to. That has never been an expectation in the UK before the last 25 years, and arguably the expectation was created by precisely the 'deregulation' that you are all complaining about. And actually you are saying much more than that - that people should be able to own a home of the type they want, broadly where they want AND that being a private landlord is immoral and effectively criminal. And you are calling yourself a 'victim', although I suspect that you would accept that there are a sh!t load of people in this country who are significantly worse off.

People are not starving or freezing to death for want of food or clothes, and people are not being deprived of their health, nor rioting in the streets, because they can't buy the house they want, where they want. In terms of quality of housing, the vast majority of the UK population are better off then they have ever been, and those in real housing need are not a bunch of peiople complaining that they can't find a house they like that is close enough to the office.

[MitchK]

I think the 'interventionists' amongst you do make some good points but I think you are whistling in the wind. Labour has had its time in government and did nothing about it. The Tories and Liberals certainly won't. You have to accept that plenty of people can afford their own homes, otherwise prices wouldn't be as high as they are. It is not all being driven by buy to let. You also have to accept that you live in one of the most overcrowded regions in Europe with amongst the highest house prices. And you can't expect the government to keep coming to the rescue of people who want to have three bedrooms and a garden.

[Brendan]

I apologise sincerely if not wanting to raise my son in a 1 bedroom flat is complaining. Once again thanks for pointing out where the gateau trolley is. Again it is completely unreasonable for me not to expect to be moved on from my house at the behest of landlords every few years. When my eldest is 10 years old he will be lucky to have probably lived in about 4 different houses. We will also never be able to move into a larger house or put a stop to the perpetual upheaval because I have spent 10 years contributing to other people?s equity.

I described this situation earlier:

Man A (who earns ?25K) is forced to rent off man B (who earns ?100K) a house that costs ?250K for a period of 25 years. Many B already owns another house that cost ?500K. After 25 years man B owns 2 houses (worth a total of ?750K or the equivalent) outright one of them paid for by man A (plus any profit if prices have risen disproportionately). Man A is homeless and owns nothing but has bought a second home for man B.

This is an ok arrangement in a modern society to you is it?

[MitchK]

It's been going on since the dawn of time. Do you really expect that the government will declare that people are only allowed to own one home?

[Brendan]

No but there have been measures (and there are in many other countries) in place to discourage it from being a primary source of housing.

Most people already own their homes and have done for some years which is probably why you people are some face meltingly blind to the issue.

The problem is with new, first time buyers coming into the market. They are the ones who have to compete for the same properties the buy-to-let landlords want to get their hands on and are losing out. 60 something percent of the homes in the UK are owner occupied. This is a good thing but it is dropping off steadily when it should be rising and private landlords are the ones cashing in. Private landlords aren?t companies who are providing employment or increasing choice. They are just private individuals who are profiting to the direct detriment of someone else.

There is no way that it can be argued that it is better for the economy or society or in anyway just for a buy-to-let landlord to get their hands on the property and then rent it out to the potential first time buyer who effectively then has to buy him a second house.

[Loz]

When my eldest is 10 years old he will be lucky to have probably lived in about 4 different houses. We will also never be able to move into a larger house or put a stop to the perpetual upheaval because I have spent 10 years contributing to other people?s equity.

Whilst I understand some of the points raised here, I thought we had already established that Brendan himself has not actually been priced out of the market - in fact, his household salary is more than enough to afford a two (and maybe three) bed home. The problem he does seem to face is that he does not have enough of a deposit to satisfy the currently very nervous mortgage providers?

That is a very different problem. And one that will almost certainly right itself in time as the economy turns around.

[DJKillaQueen]

And actually you are saying much more than that - that people should be able to own a home of the type they want

No we aren't. I've repeatedly pointed out the number of people in innaropriate overcrowded accomodation. You are conveniently ignoring half the problem. Add to that, that new builds have the smallest rooms in Europe. You obviously have absolutely no idea what is going on for many hard working families in this country.

In terms of quality of housing, the vast majority of the UK population are better off then they have ever been, and those in real housing need are not a bunch of peiople complaining that they can't find a house they like that is close enough to the office.

You are so off the mark it's embarassing. The gap between the rich and poor is getting wider. The prospects for upward mobility are worse than they've been for a long time and are getting worse. That's nothing to be proud of. The quality of life in this country (linked mainly to the cost of living) is going downhill for a large section of the population.

In terms of the quality of housing, i.e. heating, sanitation etc this is true, but it should not be offered as justification for what is going on now.

Let me ask you this, do you really think it is ok for rent to be as high as it is in proportion to most people's salaries? And do you think it should keep on rising at the same rate it has for the past 30 years? Or do you really not care? Personally I'd perfer a fair country where hard work and effort is rewarded in as equal measure as in realistically possible rather than the privileged minority bleeding everyone else dry and then whinging when their gravy train is challenged. Just stop being so greedy.

Mitch

And you can't expect the government to keep coming to the rescue of people who want to have three bedrooms and a garden.

That's not what government is being asked for. A family shouldn't be expected to live in a two bedroomed flat because there is no other affordable accomodation for them. And a report given to the government (link posted earlier on here) shows that buy-to-let IS the main reason there has been no slack in the housing market in recent years. The government were warned about it and did nothing and yes you are right no politician does want to tackle it because it doesn't directly affect any of them. Labour did at least bring in decent homes legislation, although they didn't back it up with funds to local authorities to do all of the work needed.

[Brendan]

Yes, Laz. It?s not about me specifically. I?m recognising what the situation would be if I were forced to rent indefinitely. Which some seem to think is a satisfactory arrangement. And I?m recognising that it is a reality for many, many people and but for the grace of god (or an unexpected career turn or market shift) it would very easily be my reality too.

[DJKillaQueen]

Private landlords aren?t companies who are providing employment or increasing choice. They are just private individuals who are profiting to the direct detriment of someone else.

And this is the moral issue. While that private lanlord gets to profit from renting a property, councils are expected to build affordable family homes and the tax payer tops up the rent on the private property with housing benefit!

I'd say a good move would be to limit the buy-to-let market. Limit it to one property only unless you are set up as a commercial ltd company.

[Brendan]

I don?t think you should necessarily limit it. Just ensure that it is only profitable in certain circumstances, stop people who are just gambling in the property market from doing it and tax it with a direct link from that taxation into housing development.

If someone has a second home they should decide whether they are going to offer it for long or short term rent.

Short term being any period of time up to 1 year. There is always going to be a market for this.

Long term being any period from 2 ? 10 years.

In the case of long term rents the landlord should have to give 12 months notice to end the agreement. Except for proper reasons such as non-payment of rent ect. Which he will be able to do with 2 months notice.

This will stop every fly-by-night chancer from ?aving a punt in the property game and competing with first time buyers. It will also force those people who do provide housing to do so in a socially responsible way.

[DaveR]

They say you should never let statistics get in the way of a good argument, but what the heck.

"Let me ask you this, do you really think it is ok for rent to be as high as it is in proportion to most people's salaries? And do you think it should keep on rising at the same rate it has for the past 30 years?"

How high is it, do you reckon? There are stats, and they can be found here:

www.communities.gov.uk/documents/507390/pdf/14657171.pdf

(apologies, I couldn't insert a proper link for some reason)

Figure 7, page 26. Rent as a proportion of household take home income

Outside London, relatively stable, or increasing slightly, and at between 13 and 20% depending on the region, over the last 8 years.

It's not quite the tale you're telling, is it?

The whole document makes for interesting, and refreshingly non-alarmist reading. 2 key affordability factors identified - building more houses, and lenders easing their current policies, particularly as regards deposits. Not tarring and feathering private landlords then.

[DJKillaQueen]

I think the point you make on securing tenancies Brendan...i.e locking in for 2-10 years is a good proposal.

Outside London, relatively stable, or increasing slightly, and at between 13 and 20% depending on the region, over the last 8 years.

Page 7 'Estimating Household Income' begins with 'Timely household income data are not widely available'...well done!

It goes on to say 'there is a significant time lag between data collection and data availability, this is not ideal for the measuring and monitoring of affordability'....hmm discredits itself as an accurate document then before it even gets started.

The fact reamins that 1.8 million people and families in this country can not afford to rent in the private sector....and that is just those we know about....what do you suggest we do for them? I don't have figures on how many of those in social housing are in overcrowded conditions but nationally it is estimated that at least 2.6 million households are overcrowded and in some boroughs of London that equates to 30% of households. What do you suggest we do about that? Given that there are 17.1 million families in the UK (by estimate) that's around 15% of households in unsuitable accomodation.

Building new homes just delivers more of the same unless they are social landlord owned and exempt from right to buy.

[DJKillaQueen]

On further reading of that document, it suggests that the average mortgage repayment is 30% of the average income.

Well consider this. more than half of all employees earn LESS than the average income. 13? million people in the UK live in households below the low-income threshold. This is around a fifth (22%) of the population. Over the last decade, the poorest tenth of the population have, on average, seen a fall in their real incomes after deducting housing costs while the richest tenth of the population have seen much bigger proportional rises in their incomes than any other group.

The real stats are out there. For at least half of households, rents and mortgages are now at levels that are too high a proportion of income. That is the reality. And abolishing deposits will not make one iota of difference to that, but it would of course be helpful to those with out parents or inheritance to pay a deposit for them.

[Brendan]

Again that document makes the incorrect assumption that renting privately is a satisfactory situation for people to live in especially as a long term option.

You still seem to assume that because one person is less well off than another they should buy the other person a second house while never having access to their own.

That is a fundamental moral point and one that thankfully most people won?t agree with you on.

So try to vindicate your views as you like but don't use conservatism to do it because it is contrary to the much touted business of giving people control over their own lives and historical precedence holds about as much moral weight as press ganging or the potato famine.

[DJKillaQueen]

A friend just compared buy-to-let to this analogy. I take out a loan to buy a car and I let you use it Brendan providing you pay the loan off for me. Once the loan is paid off then I get to keep the car and then continue charging you to use it. That's money for nothing. And given that most buy to let properties are then passed on to letting agents who do all the work of management for the owner it really is equity for nothing. Put like that, it is pretty indefensible.

Possible solution? Limit the proportion of mortgage that can be charged as rent to ensure that the investor pays for some of the asset themselves.

[Loz]

The real problem is that this issue, in the short to medium term, is impossible to solve. If house prices stay as they are in real terms, then the change in the number of households being able to afford to buy will be negligible. If they fall, then a great many people with perilous finances are going to plunge into negative equity, creating an all new problem. And if property prices fall that dramatically, the economy will probably dip rather alarmingly as well, considering that this recession was ignited by a residential property bubble bursting.

Really, all you can do is hope for the first (stay in real terms) and come back to the issue in, say, 30 to 40 years when the average wage is about ?250K (average house price) divided by the mortgage multipler (say a generous 4x) = ?62,500.

Face it - the problem is so huge as to be unsolvable.