Copy of Lib Dem coalition agreement with Tories

[Loz]

DJKillaQueen Wrote:

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> 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.

You mean like the business model of every car hire firm?

[DJKillaQueen]

I disagree. The key is to stem the rate of rise to give salaries a chance to close the gap (which in itself would take decades). Negative equity is only an issue if the lender can no longer repay the mortgage and needs to sell. That only happens if owners lose some or all of their income, or interest rates rise above means to repay. In the 80's recession, 300,000 homes were repossessed. This time it is far less so far, thanks to the intervention of government with the banks, but it could still end up being just as bad. In that respect even, I would argue that banks don't need to reposess. There could be other options such as mortgage to rent. The bank only end up selling the house at auction at below market price anyway so I think there is definite room for something there that can keep people in their homes if their circumstances short term, change.

[Brendan]

Well that?s the conundrum Laz but the victims are millions of young people unable to buy homes of their own or even have an alternative option of renting from a housing association or similar. While private landlords*profit.

Essentially homes need to cost what the normal people who live in them can afford to pay for them without being bullied out of the market by exploitative parasites.

*Just dissect the term and think about what we?re actually advocating.

[Brendan]

Loz Wrote:

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> You mean like the business model of every car hire

> firm?

Yeah but they are homes not rental cars. Very different story. People don't have a fundamental right to have a decent rental car over their heads.

[DJKillaQueen]

Plus most cars end up getting crushed after 10-15 years. Houses don't.

[Loz]

Negative equity is only an issue if the lender can no longer repay the mortgage and needs to sell. That only happens if owners lose some or all of their income, or interest rates rise above means to repay.

That is only true if it is a temporary phase. What you are essentially advocating is a long-term lowering of house prices, leaving mortgage holders paying off loans for a home that will never be worth what they paid for it. While in this state, they can never move.

Just dissect the term and think about what we?re actually advocating.

So you are stopping (or at least restricting) private landlords. Will taking BTL investors out of the market solve the problem you are discussing? And if it does, would it - as my post would suggest - actually just create a bigger and nastier mess if it bought house prices crashing down? And if it doesn't bring house prices down significantly (of the order of at least 50%), have you actually solved anything? Mr and Mrs ?25K still can't buy a house.

[DJKillaQueen]

What you are essentially advocating is a long-term lowering of house prices, leaving mortgage holders paying off loans for a home that will never be worth what they paid for it. While in this state, they can never move.

No I'm not. I am advocating regulation to slow the rate of house values from hereonin...so that salaries can grow at a faster rate and therefore close that gap a little.

But what I would also say is that there is always the risk when you buy anything that it will go down in value...in fact most things we do buy are instantly worth less the moment we begin to use them. Again this is what is irrational about the housing market, the belief that it should never go down. People stupidly borrow at the limit of their means (and they are stupid to do so) knowing full well that interest rates can go up, and are as likely to do so within the lifetime of their mortgage as they are to stay the same or go down. That to me is even more demonstrative of the fragile and risky game we are playing at the moment by allowing rents and prices to be so high.

The only reason why many people move so much anyway, is because they don't see property as the search for a family home, but as a ladder to ever greater capital wealth - totally the wrong global attitude to something as important as housing imo.

[Brendan]

Loz Wrote:

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> Mr and Mrs ?25K

> still can't buy a house.

Well why couldn't they? Prices will just adjust to what people can afford. (using hypothetical figures) If there are 10 houses and 10 families who need to live in them. In the current situation only 6 of those 10 houses go to families and the remaining 4 are bought by private landlords and rented out to the least well off 4 of the families. Take the private landlords out of the equation and the prices adjust to 40% (or however it works out) lower and the poorest 4 families buy the cheapest of the 4 houses.

Yes it's a major drop but far more in line with the 4 x yearly salary which seems to be considered sustainable.

[Brendan]

It may also in all likelihood start out only on the bottom of the wrung properties and take a while to work its way through the entire market.

[Loz]

No I'm not. I am advocating regulation to slow the rate of house values from hereonin...so that salaries can grow at a faster rate and therefore close that gap a little.

So DJKQ is going for the 'stick a hold on prices and wait 40 years' approach.

Yes it's a major drop but far more in line with the 4 x yearly salary which seems to be considered sustainable.

... and Brendan is going for the massive drop in house prices.

So the choice is 'not really a solution' and 'economic meltdown'. Either way, there is no hope for Mr & Mrs ?25K. You can talk theory and hopes and dreams all you like, but in reality we are stuck in our present situation. Sorry guys - there is no solution to this problem.

So, to get back to how we started: why on earth would James and the Lib Dems, or Diane Abbott and Labour or the Tories or the Greens or whoever have a policy on this? It is unsolvable. You can tinker around the edges, but we are stuck where we are.

You may as well ask them for a policy on preventing rain on bank holiday weekends. Who knows, they'll probably call for a review and maybe even serious debate and reform.

[DJKillaQueen]

So DJKQ is going for the 'stick a hold on prices and wait 40 years' approach.

No I'm not. There can still be flexibility in regulation (which is what we had before in fact). But given that the 'free market' roulette wheel has only culminated in global disaster, I am astonished that anyone would think targeted regulation a bad thing anymore. After all, we had no global crash after the 1930's Wall Street crash because regulation was introduced. Since that regulation was dissolved in the 80's we've had three crashes so I think the facts are clear as to which system creates sustained growth and stability.

It's not unsolvable over time. And it is only a political hot potato because so many voters are invested or trapped in it. Politicians are scared of losing votes and THAT is their main reason for not doing anything (plus a total fear that anything but an unhindered free market is a bad thing). It's precisely that narrow view, that nothing can change, nothing can be done, that get's us into this mess.

We had working practises and mortgage regulations that worked perfectly well before - they continue to work perfectly well in other countries and they can work perfectly well here again. All that it will mean is that the rapid rises that investors have enjoyed for the last thirty years will not be repeated over the next thrity years. And it won't affect the home owner that owns a 'home' one iota. In fact the only ones whinging about the idea of change are the biggest profiteers from the current system for blatently obvious reasons.

[DaveR]

"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."

Every single f*cking penny you, I, or anyone else spends, on anything, finds it's way into someone else's pocket, and that someone may be a lot better off than you. If you rent from a commercial landlord, what you pay finds it's way into the pockets of shareholders anf probably highly paid executives. If you buy a house with a mortgage, where do you think the money goes? You want to buy a house, you can't afford what you want, boo-f*cking-hoo, frankly. Some other person, who may or may not be particularly wealthy, owns a house that they are not living in, and offers it for rent at the market rate (definition - what people are willing to pay for it) - and you can choose to live there or not. It's not criminal, it's not immoral, it's not wrong - it's life. You, together with 95% of the people in this country, and I'm betting 99.5% of the people on this forum, are so much better off than nearly every other f*cker on the planet, as well as being a shitload better off than almost everybody in this country ever expected to be one single generation ago, and what do we get - 7 pages of complaining about house prices. Half of it from someone who has been forced by poverty to move to f*cking Surrey!

I'm going to post something on the World Cup thread now

[DJKillaQueen]

Bit of rant there. Errr 2.6 millions families are not better off than those a generation ago. They live in overcrowded accomodation because they can't afford suitable accomodation, either to rent or buy (something you have made no comment on whatsoever) and that is something that has steadily risen since 1985 (absolutely linked to the rise in rent and house prices and the selling off of low rent council homes).

Similarly many young people will never be able to afford to buy the house their parents were able to buy 30 years ago either....so you are completely misguided in your belief that we are all better off.

But let me ask you this, what would be so bad about a market where prices rise slowly (in line with salaries or inflation even)?.....it would still turn a profit but as a long term investment. Because it seems to me that you don't want to see any reduction in the profitability of the market. And that can only be justified by personal greed. There would be absolutely no problem with growth of say 10% over a decade. Whether you like it or not, the current sate of play can not go on. Either regluation comes back in or the market will eventually implode on itself, and many people will lose far more.

[Huguenot]

DaveR, much as I love and respect you, you're totally out of order to suggest that no-one had any constructive ideas to deal with this.

I do.

Exclude mortgage interest as an allowable tax expense on residential property. Homes aren't business.

Fingery clickery. Over.

I'd recommend staging it to avoid a house price meltdown, and I'd probably laugh as you were forced to sell your vehicle for the exploitation of others.

I'm lucky to be reasonably wealthy, and was put under considerable pressure to enter BTL in 2002. I didn't because it was morally reprehensible.

[Brendan]

Well therein lies the fundamental difference between you and me Dave. You can?t conceive of the fact that someone sees the world from the point of view of others, not just their own. I used my situation as an example to demonstrate that even those who are relatively lucky are falling prey to private landlords and that people on an average income must be even more vulnerable. If I lived in a country manor I would still have an issue with this sort of thing going on. I don?t suppose you?re ever tried to put yourself in the position of family of 4 brining in 30K a year and tried to get your head around the realities if that.

So to recap for our listeners here are 2 possible scenarios in the housing market (very simplified to exclude savings, investments, inflation etc)

Scenario 1 where Mr A does not get access to private home ownership and rents for 25 years off Mr B who gets the chance to own 2 homes. His own worth 500K and a second buy-to-let worth 250K

after the 25 years.

Mr A 25K ? income tax = 18K

Mr B 100K ? income tax = 60K + 750K = 810K

After 25 years Mr B is approx 45 x better off than Mr A and Mr A is homeless.

Scenario 2 where each get a chance to own their own home proportionate to their salary. Mr A?s being the 250K one obviously.

Mr A 25K ? income tax = 18 K + 250K = 268K

Mr B 100K ? income tax = 60K + 500K = 560K

After 25 years Mr B is still better off by approx 2.5 x and they both own a house and their families benefit from the associated security.

I know which world I would rather live in and which would have a more stable economy and society.

Now the chances are if you have a rental property at the moment you are not renting it to people who are choosing to rent but rather to a couple or family who are being forced to and by virtue of the fact that they can afford the rent would probably be able to afford a similar property if there were enough of them on the market. So you are forcing people into scenario 2 and benefiting from it.

Unless you built the house with your funds you are not providing them with housing you are just controlling their access.

[Brendan]

That?s not even taking into account that this society is so unequal that vast amounts of people are factored out of the equation completely and have to have housing provided by the state. Which is something that the same people who vehemently object to any suggestion of equality then hypocritically resent.

[MitchK]

My suggestion to you guys would be you spend less time pointlessly debating on this forum and more time trying to save up a deposit on a house!

Incidentally, they were talking on LBC this morning about the 40% capital gains tax on second homes and how that will hurt the buy to let market. Should be welcome news for you lefties! You see, 13 years of a Labour government and the situation only got worse. The Tories have only been in power for a few weeks and already your worries are being addressed. Add a cap on immigration to that and they'll soon be giving houses away.

[Brendan]

ha ha. You wait until now to make a valid point Mitch.

But still allowing people a fair go in this world free from exploitation isn?t left or right wing it?s just common decency.

[Huguenot]

That post was quite fun until you pointlessly brought up immigration. Then I realised you weren't being fun, and wondered if your family actually likes you. ;-)

It really is only from a retarded 'big me' perspective that one could possibly view the disenfranchisement of a generation as a party political issue.

Do people really want a generation to have no access to property just so they can crow about petty political jibes? What a waste of space.

[MitchK]

My family love me and I was joking about immigration. That will make zero difference, being non-EU only.

It shouldn't be a party political issue I guess but the only people with the power to address it are politicians. And Labour didn't.

Go on, say it: I love the Tories.

[Brendan]

Perhaps a bit churlish there Huguenot.

As an aside, has anyone else noticed that politicians seem to be using the word churlish a lot at the moment?

[Huguenot]

I guess churlish means resembling a churl. However, one rarely hears someone describe as as a churl. It means 'peasant'.

Apparently churlish means vulgar, boorish, surly and intractable. In this case I think I was being spiteful rather than churlish.

However, it's somewhat disappointing that someone could ascribe a whole sackful of negative prejudices that whitewash violence against foreginers and be regarded as 'not the boor' in this conversation.

It's entirely possible that MitchK was being ironic in his post, but a quick search on his posts suggests he has form on allocating society's ills to 'immigrants'.

Here's one he did earlier: "Well you could ban foreign ownership of properties if you want. That would probably wipe off 30% on London prices at a stroke. If you have an uncontrolled immigration policy, and Labour did, then there will be excess demand for property.

You lefties didn't want to discuss or control immigration, you don't want to build on green sites because of the damage to the environment and then complain that property prices go up. "

So apparently not hating foreigners is a left wing disease? I imagine MitchL rarely leaves the sceptered isle, and when he does he considers his hosts to be less than human.

I don't think MitchK gives much of a monkeys about the housing issue, so long as he can use it as yet another vehicle for stoking unfounded prejudice.

[Brendan]

A churl, wiktionary defines it as: From the Old English ċeorl, meaning a free man. Akin to Old Norse karl (Danish karl) and German Kerl.

So behaving as one of the liberti which could just as well be interpreted as acting up above one?s station. Which may be part of what?s annoying some people here.

[MitchK]

Can't be bothered with a slanging match between two people who don't know each other. But to neutralise your bile a little, let me tell you that my wife is foreign and an immigrant so clearly I am not what you think.

No, but I do think you have to look at the London market and see the massive amount of overseas investment in it. Personally, it does not worry me as I can afford my own house no problem. But a lot of people cannot and you have to ask why that is. Clearly there are many reasons for that, but one of them is the growth of the population, especially in the south east. Has that all come from the English having more kids? No.

And nor does it bother me much. But if you encourage immigration, you must do so responsibily which means building more homes and expanding public services. Otherwise prices and waiting lists go up.

I know three couples who have moved to Dulwich in the last year or so. Not one is English. Again, I am not criticising it - we encouraged them to do so as they are friends. Better them than some of the riff raff round here. But this pushes prices up, which is what this debate is about.

The Australians have a very buoyant property market, which rocketed once they reduced restrictions of foreign investment. Even the governor of the central bank was worrying about this and they reimposed the restrictions recently. This does not make Australians racist or xenophobic or anything.

Huguenot, I expect you have a poster of Harriet Harman in your loo.

[Brendan]

I agree with you that the blame can be laid on Labour and would gladly join in an anti-labour party slagging session. I just won?t do so if it means buying into default sectarian support for a party which harbours some of the most wilfully antisocial bastards it has ever been my displeasure to meet.