Gordon Browns Tax Plans,

[switchmode]

chicken I for one do not think it is buy to rent that has made property hard to buy for young people today.

It has always been very hard for people to buy their own home in mine and my fathers case we both sublet part of the property to make ends meet. We had a lodger or I must say several over the years to help finance the purchase.

I dont think it is possible unless you have a high income to buy on your own and never has been. Both my mum and dad worked fulltime with a lodger to get by.

Renting property is no easy game I tried it with my old flat and you only have income when its rented no one helps when you are paying out your mortgage and have to finance an empty property as well, you need time effort and good business skills as well as taking a gamble. I found it too hard.

sorry if this has been taken off topic.

[Rave]

Agreed, it's easy enough to buy a house if you aren't unemployed, plan for it, aren't single, and don't insist on living in Kensington.

Oh yeah? The house I currently rent is worth about £200,000. You can't get a family home for less than that round here. If my wife got a full time job our combined earnings would be £35000-40000 a year (before tax). We'd need to borrow about five times our joint income to buy it. I suppose we might be able to afford the mortgage if we stretched, but we wouldn't have much of a life and we certainly wouldn't be able to afford to have any kids.

I don't think I have a god given right to a house, but I do think that having house prices as high as they are is very bad for the country as a whole- and there very clearly is a great deal that the government could do about it. For a start, they could reverse the ludicrous policy that VAT is payable on refurbishments but not on new builds- if they did that, more of the 750,000 currently unnocupied houses in this country could be brought back into use. They could approve far more new housing developments, and insist on a more sensible mix of properties in them- 3 and 4 bed family houses, rather than 2 bed "Executive Apartments". As chicken says, they could end tax relief on buy-to-let mortgage interest, so that landlords compete on a level playing field with buyers. And finally, they could have raised interest rates and regulated borrowing to prevent the banks throwing money around like water and inflating prices left right and centre.

[greektony]

chicken, check out the forums at www.moneysavingexpert.com

I am sure you will find something there which is helpful if you are looking to buy

[badass]

Hi, I'm a person in my twenties and I believe that the government should "do something about it", not because it's my God-given right to own a house but because there is something that they can do.

Totally disagree with that. Just because they can do something does not mean they should.
No one is suffering or is in any danger here.

More and more people today are jumping on the landlord wagon, which works something like this: You have property, you rent it, use the money to buy more property, rent that, buy more, rent that and so on...

Yep. Substitute property for anything that makes money for owning it and you have a business. Why should property be any different?

The amount of people buying multiple properties pushes the price up, making it harder for us "people in our twenties" to afford it. The only other option is to rent, meaning the tenant is paying out money that could be going into a house for them, to the landlord who then uses this to buy more houses which keeps the prices higher than they would be if people settled for 1 house each, making it harder for the tenant to get out of this loop.

Its always been like this, and always will be. When prices are this high, rent does not increase as fast as house prices. As the prices increase further, profits drop. Any smart landlord will find something else to risk their money on and many will as profits keep on dropping. Then there's affordable houses. The market will ensure that.

What we need is for the government to tax higher for owning a lot of properties. This will keep the prices fairer for first-time buyers and anyone with multiple properties bringing in rent already has a hefty income.

Income is not the same as profit. There's maintenance and management to pay for.
Why should landlords that manage their business properly be penalised just because this country's full of impatient twentysomethings that think its their right to be able to own their own house?
Also, the attitude of "people that do things I dont like should be taxed more" is another example of selfishness. Unless of course you think you should pay more tax for petrol, road tax, fatty foods, congestion, being ill and playing sports.

I'm not asking for a free house, just a better chance against the people who have many. I'm fed up of paying someone else so that they can buy more.

Thats life. If you want something, you have to sacrifice something else to be able to afford it. Twentysomethings (like me) on an average wage CAN afford to buy a house. it just requires discipline, sacrifices and saving.
It just seems that most of the rest seem to think they have a right to have their cake and eat it.
If you can save up £15-£20K for a deposit/repairs and buy a house that needs work, you can afford to buy a house. It'll be a bit smaller than you like and may not be in the perfect area that you dream of but everyone had to start somewhere.

Of course I'm too lazy for that and will continue saving untill process are corrected. It'll require a few more years patience, but I dont fancy losing 30% of the largest purchase I will ever make in my life.

[Rave]

chicken, check out the forums at www.moneysavingexpert.com

I am sure you will find something there which is helpful if you are looking to buy

....yeah, loads of people advising you not to buy now, because property is way overpriced.

Totally disagree with that. Just because they can do something does not mean they should.
No one is suffering or is in any danger here.

People who have bought recently at high multiples of their income and/or with little deposit are in danger of losing their homes if they lose their job. Bad for them, worse for their kids if they have them. Plenty of other people are in danger if being trapped by negative equity in homes that are too small for them.

Yep. Substitute property for anything that makes money for owning it and you have a business. Why should property be any different?

Because having somewhere to live is a fundamental human requirement. Ultimately, if the government is going to exercise control over housing supply through planning laws, then it is their responsibility to ensure that there are enough homes to meet demand (because people can't just build themselves a house if they need one). They have manifestly failed in this responsibility.

Given that they've failed, they could at least ensure that speculators don't bid the price of a scarce commodity up into the stratosphere, by laws that discourage multiple property ownership. Renting has its benefits (not least now that renting a house is cheaper than paying the interest on the mortgage required to buy it), but ultimately most people are better off owning their home- not least because then you're not at risk of being turfed out if the landlord decides not to renew your tenancy.

Its always been like this, and always will be. When prices are this high, rent does not increase as fast as house prices. As the prices increase further, profits drop. Any smart landlord will find something else to risk their money on and many will as profits keep on dropping.

There are a lot of landlords who are in no way smart- the continued influx of new BTL investors into the market, and consequent continuing inflation of the bubble demonstrates that. But yes, rental yields are now fairly pitiful, and the market is delicately balanced enough that IMO any economic shock will precipitate a major crash.

Why should landlords that manage their business properly be penalised just because this country's full of impatient twentysomethings that think its their right to be able to own their own house?

Because they've ended up with a de-facto monopoly on something that's a fundamental human requirement. If there was a water shortage, and the price of water spiralled up so that it was out of the reach of some of the population, would you shrug and say 'that's the market', or would you demand government action?

This continued reference to twentysomethings is a bit wide of the mark, too. The average age of a first time buyer in this country is now 34.

Thats life. If you want something, you have to sacrifice something else to be able to afford it. Twentysomethings (like me) on an average wage CAN afford to buy a house.

In most of the country you cannot afford to buy a house on the average local wage. You can buy a 1 (or if you're lucky 2) bed flat, which is not the same thing.

it just requires discipline, sacrifices and saving.
It just seems that most of the rest seem to think they have a right to have their cake and eat it. If you can save up £15-£20K for a deposit/repairs and buy a house that needs work, you can afford to buy a house. It'll be a bit smaller than you like and may not be in the perfect area that you dream of but everyone had to start somewhere.

I have no problem at all making sacrifices and working hard like my parents had to. I have a big problem with having to work twice as hard to get a house that's much smaller than the one they managed to buy when they were my age.

Of course I'm too lazy for that and will continue saving untill process are corrected. It'll require a few more years patience, but I dont fancy losing 30% of the largest purchase I will ever make in my life.

Quite, me too. I say however that the boom (and forthcoming crash) could have been prevented, and should have been, because it is causing problems now (100,000+ familes homeless I think?) and will cause problems in the future (negative equity leading to stress, relationship breakups etc. etc. etc.).

[badass]

People who have bought recently at high multiples of their income and/or with little deposit are in danger of losing their homes if they lose their job. Bad for them, worse for their kids if they have them. Plenty of other people are in danger if being trapped by negative equity in homes that are too small for them.

The gov't has a legal responsibility to put a roof over peoples heads. If you get kicked out of your home, they have no choice but to provide you with a roof over your head. I know that in reality thats not what always happens. but i do think thats an argument for the gov't to have enough houses to house people that need a roof over their head, rather than penalising those that have a property business. I expect you'll disagree with that so its probably best to agree to disagree on that point or this will end up as a 3 page post discussion

Because having somewhere to live is a fundamental human requirement. Ultimately, if the government is going to exercise control over housing supply through planning laws, then it is their responsibility to ensure that there are enough homes to meet demand (because people can't just build themselves a house if they need one). They have manifestly failed in this responsibility.

Yes, having somewhere to live IS a human right. I agree with that.
Owning it, however is not

Given that they've failed, they could at least ensure that speculators don't bid the price of a scarce commodity up into the stratosphere, by laws that discourage multiple property ownership. Renting has its benefits (not least now that renting a house is cheaper than paying the interest on the mortgage required to buy it), but ultimately most people are better off owning their home- not least because then you're not at risk of being turfed out if the landlord decides not to renew your tenancy.

Yes, people are generally better off owning their own home, and I won't disagree that the gov't shouldn't discourage speculators from bidding up the prices to silly amounts. imho the way to do this is increase stamp duty for houses that are bought and sold less than X years after buying.

There are a lot of landlords who are in no way smart- the continued influx of new BTL investors into the market, and consequent continuing inflation of the bubble demonstrates that. But yes, rental yields are now fairly pitiful, and the market is delicately balanced enough that IMO any economic shock will precipitate a major crash.

Agreed

Because they've ended up with a de-facto monopoly on something that's a fundamental human requirement. If there was a water shortage, and the price of water spiralled up so that it was out of the reach of some of the population, would you shrug and say 'that's the market', or would you demand government action?

Yes, we have a large number of investors that have priced people out of being able to own their own homes. However owning your home is not a fundamental human requirement. Having one to live in however is. If the landlords were pricing people out of being able to rent homes, then I would be demanding government action.

This continued reference to twentysomethings is a bit wide of the mark, too. The average age of a first time buyer in this country is now 34.

That I did not know, however its the twentysomethings that are most vocally demanding action and moaning about the situation.
Anyone that is thirtysomething and moaning cant moan either. House prices were not this silly 10 years ago. in fact 10 years ago house prices were very reasonable since they had crashed 5 years before. In fact I've just checked prices. Just under half what they are now. If a 30something had the money then and wasted it, then its tough luck - they missed their chance this cycle through their own stupidity. If they didn't have the money to buy a house in their mid twenties, then its just tough luck. They missed their chance this cycle. There will be another chance.

In most of the country you cannot afford to buy a house on the average local wage. You can buy a 1 (or if you're lucky 2) bed flat, which is not the same thing.

the average national wage is impossible to find it seems, however it was £20,000 4 ish years ago. Wage inflation has been huge even since then and I suspect its around £25,000 now, maybe more (i've heard £28K quotes but seen nothing to back them up)
2 people with the average wage each can save £15K for a deposit and get a 3x income loan to borrow for a 2 bed flat for up to £165K
If they want kids, thats their choice. Own the house or have kids. Life is full of such decisions. However if they did decide to have a baby, that 2 bed flat would be fine untill they have more.

I have no problem at all making sacrifices and working hard like my parents had to. I have a big problem with having to work twice as hard to get a house that's much smaller than the one they managed to buy when they were my age.

I know you are convinced of a crash on the horizon, so you will be able to get your house for reasonable money.

Quite, me too. I say however that the boom (and forthcoming crash) could have been prevented, and should have been, because it is causing problems now (100,000+ familes homeless I think?) and will cause problems in the future (negative equity leading to stress, relationship breakups etc. etc. etc.).

Sometimes the government have to let people make their own mistakes. Lives are not at risk here, nor are people safety.

EDIT: Just got some back upable figures. The national average wage this year is £28K
www.housepricecrash.co.uk has both a house prices graph and a house prices:earnings ratio graph. I divided the price graph with the earnings ratio to get that rough figure. It is £28k as a minimum, it may be more like £30K

[JPreston]

....yeah, loads of people advising you not to buy now, because property is way overpriced.

...

They were saying exactly that three years ago too, when we bought ours . Since then we've seen a capital gain in excess of the 30% or whatever the doom-mongers are prophesizing will evaporate in the impending crash, and we are still enjoying low interest rates. Believe it or not the UK housing market is nowhere near as over-heated relative to average earnings as other places in Europe, eg urban Spain, and with no signs of easing over there we may well have a long continued period of un-affordability here as well. You won't get a balanced opinion from housepricecrash.co.uk though!

There will never be an obviously right time to buy a house if you think about it as a pure investment (that's how markets work - especially for those with low purchasing power eg first time buyers) but medium- to long-term you will always come out ahead whenever you buy. Plus you can't really put a price on having a place of your own .

I have no problem at all making sacrifices and working hard like my parents had to. I have a big problem with having to work twice as hard to get a house that's much smaller than the one they managed to buy when they were my age.

WAAAAAH!!!!! WAAAAAAAAAAAAAAAHHHHHHHHHH!!!! You want the moon on a stick you do; the UK has a rather higher population now and more people tend to work hard and live alone than they did in the 1970's hence the apparent shortage of houses. But, seemingly everyone who 'cannot afford' to buy can afford to rent in the private sector (or else qualify for social housing) - those houses belongs to someone...the problem (as pointed out above) is one of increasingly unequal wealth distribution. You can call for more houses to be built but it won't help, because only those with existing equity will be able to afford to buy them, and will buy-to-let. Heck, I'd even buy one.

We are able to choose our own lifestyles to a much greater extent than in the past, but even today we should not expect ideal job A supporting desired lifestyle B in perfect location C. Most homeowners have had to make compromises (I know I did), if we all had instead sat around waiting for the gods of market forces or govt regulation to drop property in our laps we would all still be renting

[JPreston]

...
Yes, people are generally better off owning their own home, and I won't disagree that the gov't shouldn't discourage speculators from bidding up the prices to silly amounts. imho the way to do this is increase stamp duty for houses that are bought and sold less than X years after buying.

Or, I reckon they should stop exempting principle private residences from capital gains tax. Maybe have some kind of long-term taper relief so that you only get the gain tax free after many years of ownership. Not completely sure that this would work, it might be counterproductive and disincentivise people from selling at all rather than just at inflated prices.

I'm a big fan of redistributive tax in general and inheritance tax in particular because of it's effect on the housing market, certainly the limit should not be raised to take higher house prices into account.

[dangel]

Yes, having somewhere to live IS a human right. I agree with that.
Owning it, however is not


I know you are convinced of a crash on the horizon, so you will be able to get your house for reasonable money.

Well put.
The 'doom mongers' have been predicting a house crash for years now - it doesn't come simply because the economy is stable and the demand for housing is just as. Rave should probably ease off on the Daily Mail reading

[badass]

Well put.
The 'doom mongers' have been predicting a house crash for years now - it doesn't come simply because the economy is stable and the demand for housing is just as. Rave should probably ease off on the Daily Mail reading

Not so much doom mongers as people reading the signs. There WILL be a correction on house prices, however the question i how severe it will be. The "bubble" is awaiting something to trigger the burst. Since the economy is strong, that trigger is a while away yet. If the economy were to remain permanently stable, I doubt there a crash ever - just stagnation in prices for a few years.
However anyone thats waiting will be waiting longer than a year for a correction - more like 3 or 4.

[dangel]

Not so much doom mongers as people reading the signs. There WILL be a correction on house prices, however the question i how severe it will be. The "bubble" is awaiting something to trigger the burst. Since the economy is strong, that trigger is a while away yet. If the economy were to remain permanently stable, I doubt there a crash ever - just stagnation in prices for a few years.
However anyone thats waiting will be waiting longer than a year for a correction - more like 3 or 4.

Oh come on - i've heard nothing but predictions of a massive implosion in the market for the past 5+ years - every year there's someone saying 'the end is nigh' and yet all we've seen is the market stabalise and cool once prices peaked. Even if prices dive the rental market is always strong and property investors in it for more than short-term gain aren't likely to worry themselves. People act like property is stocks and shares - something that can evaporate at the whim of the financial market (or collapse of a company) but at the end of the day it's a tangible 'bricks and mortar' investment that you don't necessarily have to sell if the market's despressed. Look longer term and property _always_ increases in value (in general market terms).

[badass]

Oh come on - i've heard nothing but predictions of a massive implosion in the market for the past 5+ years - every year there's someone saying 'the end is nigh' and yet all we've seen is the market stabalise and cool once prices peaked. Even if prices dive the rental market is always strong and property investors in it for more than short-term gain aren't likely to worry themselves. People act like property is stocks and shares - something that can evaporate at the whim of the financial market (or collapse of a company) but at the end of the day it's a tangible 'bricks and mortar' investment that you don't necessarily have to sell if the market's despressed. Look longer term and property _always_ increases in value (in general market terms).

What you've said - is an exact repeat of the last house price crash - people predicting doom too early, doom not happening, people saying that the doom mongers are therefore wrong and everything will be fine for ever after. Prices then momentarily slowed for a bit - everyone confident thats how things will stay and them bang! black wednesday and everything collapses.

[dangel]

What you've said - is an exact repeat of the last house price crash - people predicting doom too early, doom not happening, people saying that the doom mongers are therefore wrong and everything will be fine for ever after. Prices then momentarily slowed for a bit - everyone confident thats how things will stay and them bang! black wednesday and everything collapses.

Well if you say "the sun will set", eventually it does. What's your point? I say that eventually house prices will rise by 200% and i'm just as right as you

[5lab]

This continued reference to twentysomethings is a bit wide of the mark, too. The average age of a first time buyer in this country is now 34.

it may be 34, but has anyone got proof that it was ever significantly less??

as for not being able to afford - i agree with the figures above. you don't *need* a 3 bed house to have a family, a 2 bed flat will do - i know several familys in 2 bed properties. additionally, while a big mortgauge may stretch you (however, not especially tightly - on a 25 year mortgauge the most they will lend you is 5x your income. total amount you're paying back : about 9x your current income (give or take), so total amount you're spitting out - 9/25ths of your income. say you're on 30k between you, getting a 180k house with a 30k deposit, thats 2,500 per month income you've got, and £900 of that goes on the mortgauge. that leaves £1600 for tax (as theres 2, thats less than if it were 1 of you earning 30k), shopping etc.. lets say £800 for tax/nat ins, £300 for food/bills. still gives you £500 per month play money. not so hard up). at the start of your mortgauge, as your income increases (by, say, 6% per annum, a very reasonable amount), after 5 years you'll be earning 33% more, so your after-tax income is over 50% more, you've now got plenty for kids and its cheaper than renting..

so.. buying does make sence, and its not out of most people's budgets. single people, yeah..

final point - someone says we should penalise the buy-to-let market. all that would ever do is decrease the number of properties available for rent, and increase the rent on each one. baaaaaaad.

[Tom Scott]

Well if you say "the sun will set", eventually it does. What's your point? I say that eventually house prices will rise by 200% and i'm just as right as you

His point is that house prices are far more likely to crash now than they are to go up by 200% (lets say in the next 5 years).

[dangel]

His point is that house prices are far more likely to crash now than they are to go up by 200% (lets say in the next 5 years).

...and mine was that long term they only go up Which way do prices go post-trough? Safe as.. ?