Help to Buy Scheme Should Really Be Named Help For Bankers Scheme - Discuss

[radderfire]

Hi Guys

Below are some thoughts from me that I made on another thread. The gist of it is that the so-called "Help to Buy" scheme is a misnomer, it should actually be called the "Help for Bankers" scheme, as it keeps technically bankrupt money lenders operational. Feel free to discuss the points made below.

The property market is way overpriced in the UK, as most people find it tough to afford a house now. The banks were bailed out with public funds in 2007 instead of letting the property market correct. What this means is that public funds were basically given straight to bankers, and is in fact the biggest type of social security payment ever, to keep the bankers going.

So, now we have an "artificial" price for houses, as in reality most people find it difficult to afford them. Hence the Help to Buy scheme, which is actually just to keep the banks going, as they are all overcommitted to the property market and without the massive government assistance they have had, would all have major problems. Hence mortgages are more expensive at their current "artificial" price than they should be.

The property market should have corrected in 2007 when a number of big banks went technically bankrupt and the government was forced to step in. The banks should not have been allowed to get so large, as smaller banks could be allowed to go bankrupt (as they should have) in a real market economy.

What we have now is not a market economy, but a big wealth transfer from the poor to the bankers, especially concentrated on the property market. The original problems were not addressed and there will be further major economic problems soon.

 

[radderfire]

Ignoring the OP's rant against the hated bankers a lot of what is said is pretty true, the housing market in this country is badly broken and the prices stupidly high but the main reason for this is simple lack of supply even living in the north in nice areas there is nothing for sale and when stuff does come up it sells in a week with sealed bids.

A lot of the reason is it's hard to buy a house is Buy to Let landlords, who have been given mortgages by the banks to expand and speculate in the property market. The physical number of houses in the UK is not the problem, it's the fact that the finance community has been allowed great control over housing and especially has been allowed to promote/enable Buy to Let landlords, again artificially boosting property prices. If it was left to real market conditions and natural economics, this wheeze would have been scuppered years ago, but instead the Government has used taxation to give money to their friends in the finance community to keep them going. This is why the UK is experiencing greater inequality, because those in power seem to have no qualms about taxing the poor and giving the cash to the wealthy to continue in their rentier ways. The people of Britain need to wake up to this fact and start complaining about it.

 

[radderfire]

If the banks had of gone bust, and we ignore the other massive issues that would have caused, the banks themselves going bust wouldn't have directly impacted the house prices. The mortgages would have been sold to another financial institute, as going concerns.

When the Government bailout was done, the wrong people were bailed out. That is, the Government bailed out their friends in the banking sector, when it would have been better to give the money to UK industry or the UK consumer. The bankers have just used the money to cancel out their major debt problems from their unrealistic lending practices, and will now just continue on, until they create the next crisis, which is coming. The bankers used the money to delete a few numbers on their spreadsheets, and can now continue on in their favoured parasitic activities of syphoning money off from the UK citizen.

 

[radderfire]

You've done a pretty big U Turn on your stance there radderfire? I totally agree that Buy to Let has been a significant contributor to the current housing market mess in the UK, but Buy to Let Landlords are not eligible for any of the Help to Buy schemes?

Buy To Let landlords have already bought their investment properties and therefore restricted supply for those just looking to buy their primary residence. This has pushed up prices. Buy To Let mortgages are just the greedy finance sector, this is not the kind of thing government money should have bailed out. The Help to Buy scheme is a different type of assistance but it still helps the finance sector as it supports an artificial property market.

 

[radderfire]

They built ~25 new homes behind where I live - most of them are being rented out at ~£1100/m - I was slightly tickled by the fact that they sold as fully furnished and are being rented out as unfurnished. I really hope the whole market crashes badly....... so I can cash in with the money I've been putting away until I really need to buy a house.

A major crash is unlikely on the current UK political scene. I mean look at the huge crony capitalist measures that have been undertaken so far to maintain the status quo.

Personally I am hoping the whole thing will come crashing down but it's clear that natural market forces are being manipulated, so I'm not expecting it.

 

[radderfire]

The whole concept of new Buy To Let mortgages being offered now is a joke. The UK taxpayer is funding institutions so that said institutions can bill them to live.

 

[radderfire]

Ok, I am totally lost now. Are you saying that Help to Buy is a bad thing, or Buy to Lets which were already there are the bad thing? Or (as I suspect is the case) is this just a poorly formed "Bankers are all greedy *****" rant?

Help To Buy - I don't like the way it's being marketed. It's billed as "helping" people, but all it is there to do is prop up money lenders and let them continue in business. It's using tax money to allow financiers in the private sector to continue to operate and feed off people, when these financiers should have gone bust long ago, because they were prepared to lend people unrealistic amounts of money ... through greed mainly I think. So yes, I don't like Help To Buy, it's just a load of drivel to help people in the finance industry keep their jobs.

Buy To Let - This is OK if done by the private sector, but not when the private sector needs public money to carry on doing it, then it's just crony capitalism.

 

[radderfire]

Using quick figures in mortgage comparison sites, I'd be £116k better off by using the HTB equity scheme, than without, that's £116k the money lenders are missing out on, so how is HTB propping them up, when I'm borrowing less off of them, and subsequently paying back less in interest? Surely they'd want me on the higher LTV and paying them back more.

The Help to Buy scheme will allow someone to buy a house that they otherwise could not afford. It is allowing lending to continue at artificially high property prices. The property market is not being allowed to correct to natural market forces.

When you use the Help to Buy scheme, because you have to or it seems like a good deal, then on an individual level it may appear to be helping you. In reality it's just a way to allow the money lending elite to continue tapping the UK population for as much as they possibly can. When you look at the Help To Buy scheme in the wider economic perspective, it is just a way to support the money lending sector.

 

[radderfire]

Not one took me up on the offer.

It's not the landlords fault at all.

Is it actually realistically affordable for them though? Unlikely.

 

[radderfire]

If the banks were not helped out in 2007 just maybe capitalism as we know it would have ended and riots would have been on every street corner. I know I would not have taken lightly to my savings being wiped out.

Well, there probably would have been a high likelihood of civil unrest. However, my objection is that the money lenders were given public funds, taking from the very people who they charge interest to and live off on a daily basis. People were being made to support institutions that were already parasitic on their lives. This was the first time that creditors have been bailed out by public funds. Creditors are supposed to assess risk before lending, that's their business, and that's why they get to charge people for a loan. If they get the risk wrong, then that's just tough. People should not be made to support other people that feed off them. That's crony capitalism, and that's what we now have. This is also why we have an increasingly inequal society. I am getting a bit sick of it.