So the conclusion to the conversation is that banks are not the only people to benefit from house price rises. That was my whole point and we agree in that case.
House prices rose 7.3% this year, average now almost £250k
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Firstly, let's face facts. Hardly any boomers had the 'foresight' to invest in property, they just did what was (and should still be) natural which is the buy a home of their own to live in. What happened afterwards was nothing more than luck.
I'm not seeing any benefit to boomer parents sitting on expensive homes. For the most part they are staying there well into retirement and that means their millennial kids won't see that probably until their fifties/sixties. That is absolutely useless. Are we forgetting the whole point of having a larger house is to raise kids in? How is that going to work in your fifties? Obviously you'll turn around and say 'well boomers can remortgage/borrow on their house earlier in life' but tell me who wins with that? Oh yes... the banks... lol
The people who win are those with more than one house, e.g. property investors and mega landloards. The people who lose are those who want to buy their first home who now have to pay 2.5x the price they used to 20 years ago, just to have a roof over their heads.
Imagine if prices had only rises at inflation levels, tens of millions of people would have had tens of thousands more every year to spend in the economy, improving their own quality of life and supporting their communities and the economy.
I'd say only the boomers who actually want to downsize really benefit in monetary terms. I'd still agree with the principle posted above that the only real winners are the banks. It's a bit like an ongoing poker game, only those willing to cash out actually win. But it's hard to cash out in this game, because everyone needs a roof over their head. (Yes I've just started playing Red Dead 2
)Agree.
If they inherit a house, they inherit a house. The rising price only shows itself if they wish to liquidate money from the house. In which case they will either have to buy somewhere else, which will be more expensive. They can rent, which will also be more expensive as the landlord invested more and will need a higher rent to see return on investment.
They could always buy a bus and convert it....
Also inheriting a house, you only really ever inherit half a house as you would split it with siblings etc. So you will generally need to mortgage the second half.
Life expectancy is also increasing, meaning you may not see any of that inheritance until you are 60....I don't know many 60 year olds looking to get on the ladder.
Associate
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Not now but give it a couple decades and I'm sure you will.
Sad state of affairs but waiting for your parents or grandparents to die may soon be the only way some people can get on the ladder.
Yeah but that's not really the point is it, you said only the banks would benefit from rising housing prices.
Soldato
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Will be like that unless we do something about it. Given the how the financial system is at the moment I can see a huge change coming at some point. There's part of me that thinks passing on wealth should be discouraged through taxation, ie, a pretty low inheritance tax allowance.That would encourage people to spend more too, boosting economic growth. It'd then put generations on a more level footing, rather than being privileged and born into wealth, or disadvantaged. I can see lots of pro's to it. Feels good in my head anyway and seems more appropriate in a future environment where many may be unemployable, ie, when univeral basic income becomes the norm. Die and leave too much behind and it goes to the state....
yes, then I said you were being pedantic, the VAST majority of people will not benefit.
Why are people so happy that the price of their house is increasing? As I see it, almost the only way to realise the increase in price is to sell up and move abroad? Or into a caravan?
If you're moving within the UK it's pretty hard to find anywhere where prices aren't increasing at a decent rate. Prices are inflating all over the country now. Even the "cheap" places with no jobs aren't staying cheap and are starting to see increases of their own; starting to catch up.
So other than screwing over first time buyers, what's the real worth of house price increases? You aren't going to sell up and go live with your kids/parents/cousin.
High house prices are a boon to BTL, because rents are linked to house prices, so if you're BTL I guess you'll always love rising house prices.
The whole market is just so completely ridiculous, and I'm not really sure who is benefitting most from the madness.
If you're moving within the UK it's pretty hard to find anywhere where prices aren't increasing at a decent rate. Prices are inflating all over the country now. Even the "cheap" places with no jobs aren't staying cheap and are starting to see increases of their own; starting to catch up.
So other than screwing over first time buyers, what's the real worth of house price increases? You aren't going to sell up and go live with your kids/parents/cousin.
High house prices are a boon to BTL, because rents are linked to house prices, so if you're BTL I guess you'll always love rising house prices.
The whole market is just so completely ridiculous, and I'm not really sure who is benefitting most from the madness.
Why are people so happy that the price of their house is increasing? As I see it, almost the only way to realise the increase in price is to sell up and move abroad? Or into a caravan?
If you're moving within the UK it's pretty hard to find anywhere where prices aren't increasing at a decent rate. Prices are inflating all over the country now. Even the "cheap" places with no jobs aren't staying cheap and are starting to see increases of their own; starting to catch up.
So other than screwing over first time buyers, what's the real worth of house price increases? You aren't going to sell up and go live with your kids/parents/cousin.
High house prices are a boon to BTL, because rents are linked to house prices, so if you're BTL I guess you'll always love rising house prices.
The whole market is just so completely ridiculous, and I'm not really sure who is benefitting most from the madness.
banks
Pretty sure the monkeys swinging at the top of the tree, the one making the decisions, don't want their millions squandered on the poor.
Who'd empty their bins if everyone was equal.
Soldato
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Robots
. Automation is going to speed up. Even that useless old GP who has grown cold to his patients (been doing it too long) will likely be replaced someday.
Caporegime
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It's very much area dependent. I can show you areas within Glasgow where house prices have tripled in the past 20 years and others where they have stagnated or even went down slightly.
Again I could show you an area with the best school where house prices have went up 15 times their original value in 30 years. Yes that's 15 times their purchase price.
It's harder to buy in certain areas for sure. Your solution is for house prices to decrease. I'm saying that's not a workable solution. Wages need to increase. However you cannot realistically pay everyone a high wage so even with the increases someone frying french fries in McDonald's realistically shouldn't be able to afford a 5 bedroom detached house in the west end.
The average wage is what £25k? Realistically in a country like the UK it should be more like £35k arguably £40k. As an average. Minimum wage should be around £25k full time.
Again someone earning that isn't going to magically be able to afford a mansion or anywhere in London and other areas with high demand. But it will get them a decent flat in an okay area if they can get a deposit together.
You seem to be fixated with house prices with no real solution on how you can actually make them cheaper.
You should be advocating ways to keep money within the UK. Get more people abroad to buy from Britain and more people locally to buy British.
I'm guessing though that you drive a German car, have swedish furniture made in china and use Korean and Japanese electronics.
There is a massive elephant in the room but you seem to be fixated on the problem which will never be fixed without tackling the elephant first.
It is area-dependant, however, statistics tell you that as a whole, prices have gone up 200% while wages have gone up 76%.
"I can show you X" doesn't disprove statistics.
That's not my solution. I want sensible policies (which I've listed before) that other countries do to manage the cost of housing, such as land value taxes, taxes on second homes, non-profit building, taxing foreign ownership of residential housing, rent control, banning no-fault evictions, going away with landlord subsidies and tax breaks, etc, and I want money raised from this to go into investing for more social housing, affordable houses for young people and education.
I don't disagree.
The solutions are obvious, they exist and have been implemented in many countries. The outcomes are also quite clear, they improve housing prospects for younger people and help the economy, at the expense of mega landlords and property tycoons.
You can advocate for that,
AND
Advocates for sensible housing policies that exist in most other modern countries.
Actually no. I don't drive a car at all (use public transport for the environment even though sometimes it costs more), I cycle using a British bike and my furniture is made in the UK.
You may think the solution to the housing crisis in this country is "buy British chairs and tables", but actually, some of us want actual policies that directly help with this sort of thing, such as non-profit building, land value taxes, etc etc.
Yes, that elephant is the housing policies of this country.
Caporegime
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That's not my solution. I want sensible policies (which I've listed before) that other countries do to manage the cost of housing, such as land value taxes
So council tax?
, taxes on second homes
So stamp duty and land tax? Which doesn't have any 0% rate on second homes.
, non-profit building
Which countries do this? Also don't housing associations already do this here?
, taxing foreign ownership of residential housing
Like non resident landlord tax?
, going away with landlord subsidies and tax breaks, etc
What subsidies and what tax breaks? They have all been removed. Keep up. Thy have been completely eroded over the past 5 years.
, and I want money raised from this to go into investing for more social housing, affordable houses for young people and education.
So you want an additional £0 to go to this because everything you have said above is already in place.
So council tax?
, taxes on second homes
So stamp duty and land tax? Which doesn't have any 0% rate on second homes.
, non-profit building
Which countries do this? Also don't housing associations already do this here?
, taxing foreign ownership of residential housing
Like non resident landlord tax?
, going away with landlord subsidies and tax breaks, etc
What subsidies and what tax breaks? They have all been removed. Keep up. Thy have been completely eroded over the past 5 years.
, and I want money raised from this to go into investing for more social housing, affordable houses for young people and education.
So you want an additional £0 to go to this because everything you have said above is already in place.
LOL no.
1. Council tax is paid by the occupier, land value tax is paid by the owner. And put rent control in place to make sure the cost is not passed down to the renter. Even the US does this in many places.
2. Yeah stamp duty on second home, just make it annual instead of one-off, and double it for every new property. That should be on top of the existing land value tax. Or increase it to a one-off 50% rate instead.
3. They have non-profit building all over Europe. Housing associations in the UK hire builders to do the building, builders have profit margins of 30% or even more. I'm talking about committing to building 500,000 non-profit houses every year for the next 10 years and selling them only to first-time buyers. Not 10 houses every year.
4. Non-resident landlord tax is a tax on rental income, taxing foreign ownership is a tax on ownership. Chinese guy who doesn't live here and wants to buy flats in London? They currently only pay stamp duty. We should put a 500% tax on it.
5. Lodger rental income is currently tax-free, landlords have a tax-free rental allowance, the 20% mortgage tax-credit, and more. All of them should go. Also pretty easy to just run the rental through an Ltd and keep full mortgage interest tax relief, that should also go away. I would also put a 2% tax on the mortgage balance of all second homes (including all rentals), as it's proposed in several European countries, to avoid people buying all properties on leverage to dry up the supply.
I mean, as you are someone who I'm sure has and continues to benefit tremendously from the current system, I don't expect you to support these policies. After all most people look for their own self-interest and pretend like that's in the interest of everybody, however, to pretend like these already exist is just pure comical.
UK property market is currently worth about £7.5 trillion. The tax revenue from this wealth is about £45 billion per year (over £30bn of it from council tax). That's 0.6% per year. In the US, this is about 2% per year. Even if we implement everything that I said, we won't reach US-level taxes. So my proposals are still quite conservative and benefit home-owners compared to the rest of the world.
Bringing this up to 2% (similar levels of taxation to the US), would raise an additional £105 billion every single year. That's enough to build 500,000 new houses (£200,000 each) every single year, while putting hundreds of thousands of young people to work, earning good money.
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Amen. The current system is unsustainable and whilst some of the policies you suggested might look extreme to some, we do need a sea change from the status quo. It makes me feel uncomfortable thinking about financial gain from property when we have an entire generation of young people who are mostly, except for a privileged few, locked out of home ownership.
I'd also say that the lack of housing supply point is massively overplayed. The problem is insufficient supply AND single individuals owning multiple properties, all charged by massive amounts of debt facilitated by easy monetary conditions, insufficient taxation and speculation. This is why I think many of your points above have merit as they go about addressing this imbalance.
Even if the Government don't do anything (which I doubt they will) the market will eventually crash, just as it has done time and time again both here and abroad when valuations start getting too stretched.
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UK house prices see highest growth in six years in 2020
https://www.bbc.co.uk/news/business-55483432
In the worst economic year in a few hundred years, we have record property price growth. A few million people are probably permanently priced out of the market this year alone.
If the government did nothing, the market would have crashed long ago. If they didn't do anything this very year, the market would have crashed as well. When the government does something, it's always to make it much worse.
Every time there's a slowdown in the market and growth returns to near zero (let alone a crash), government does something to make sure that prices continue to rise. Whether it's lowering interest rates (mortgage interest rates and BoE interest rates don't have to be the same, they're not in the US, but they are here), HTB loans (which caused massive inflation of new builds, also trickled onto older builds), or stamp duty holiday, shared ownership, or other plans.
I have no doubt that as soon as we get close to another crash, we'll see another stamp duty holiday, government-backed mortgages (which Boris Johnson said will happen), higher than 5x salary multiples, etc, to make sure that prices continue to rise.
After all, most MPs, almost all Tory MPs, and a huge portion of senior civil servants and their families are mega landlords and have huge property portfolios. They're not going to let it crash.
https://www.bbc.co.uk/news/business-55483432
In the worst economic year in a few hundred years, we have record property price growth. A few million people are probably permanently priced out of the market this year alone.
If the government did nothing, the market would have crashed long ago. If they didn't do anything this very year, the market would have crashed as well. When the government does something, it's always to make it much worse.
Every time there's a slowdown in the market and growth returns to near zero (let alone a crash), government does something to make sure that prices continue to rise. Whether it's lowering interest rates (mortgage interest rates and BoE interest rates don't have to be the same, they're not in the US, but they are here), HTB loans (which caused massive inflation of new builds, also trickled onto older builds), or stamp duty holiday, shared ownership, or other plans.
I have no doubt that as soon as we get close to another crash, we'll see another stamp duty holiday, government-backed mortgages (which Boris Johnson said will happen), higher than 5x salary multiples, etc, to make sure that prices continue to rise.
After all, most MPs, almost all Tory MPs, and a huge portion of senior civil servants and their families are mega landlords and have huge property portfolios. They're not going to let it crash.
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Quick solution;
95% LTV 2.5% mortgages fixed for the lifetime of the mortgage for first time buyers.
everybody would have access to a roof over their heads that they own.
upgrades / moves / rental / etc would then call in higher rate mortgages / tax etc.
95% LTV 2.5% mortgages fixed for the lifetime of the mortgage for first time buyers.
everybody would have access to a roof over their heads that they own.
upgrades / moves / rental / etc would then call in higher rate mortgages / tax etc.
Soldato
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Was saving up cash, bracing for a crash, but instead I've upped my stash 
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