Please correct me if I'm wrong here but using your 100k example and my house is worth that. If tomorrow it was decided my house was worth 50k I stil have a mortgage for say 80k but a house that isn't worth that. I would never be able to afford to sell and essentially be stuck in a property forever. Is that not correct?
Help to Buy Scheme Should Really Be Named Help For Bankers Scheme - Discuss
- Thread starter radderfire
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Please correct me if I'm wrong here but using your 100k example and my house is worth that. If tomorrow it was decided my house was worth 50k I stil have a mortgage for say 80k but a house that isn't worth that. I would never be able to afford to sell and essentially be stuck in a property forever. Is that not correct?
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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.
Soldato
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Agree the main problems with housing prices and rent prices lie with buy to let. Increased competition in the housing market created by buy-to-leters is responsible for a considerable increase in the cost of accommodation renting or buying.
Taking houses off the market and forcing first time buyers to rent only increases rent prices and property values. Renters are throwing their hard earned cash away that would otherwise go towards their first property making purchasing a house more difficult and therefore increasing the number of people renting, making buy-to-let more appealing.
People buying to let would not be a problem at all if only those who could afford to buy these second/third/nth houses took properties out of the housing market but unfortunately buy-to-let mortgages have so little restrictions and are so profitable that they hand them out like nothing. The whole scheme only profits the middle class+ and preys upon the young and those with low income. The effect of immigration on the the housing market pales compared to the effect of buy-to-let mortgages.
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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.
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?
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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.
Agreed. When I looked at it I worked out I'd be paying around £1.3k in year 5. If managed properly it shouldn't be a problem, but you know you'll get some idiots complaining to the 'Fail that they can't afford to go to Benidorm this year because the government has taken their holiday money.
Possibly. But that doesn't really have much to do with my post. I'm just pointing out that for most home owners house price increases aren't actually a positive (even though many people think they are). I'm not suggesting that I think house price declines are a positive.
The best situation would be house price stagnation or increase at or just below wage increases. That means no deflation but also the ability for today's and future generations to buy at a similar level to their parents. It would be a positive for most normal people, but a negative for pensioners and investors, who the government really like.
Edit: that said, if you don't have a particularly high LTV then house price decreases can be a positive. That more expensive house you want to buy, after selling your cheaper house, will have decreased in value more than yours. That's if you can sell and get a decent mortgage however.
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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.
Its a pet hate of mine as the housing market doesn't have quite the same supply and demand based drivers of other commodities as at the end of the day people kind of need a roof over their heads then add in other factors like that propping it up :S almost any other market would have seen a dramatic reset by now.
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.
Ah ok apologies, I misread and thought you were commenting on a price fall being a positive.
I probably shouldn't get sucked into this thread as I will waste a huge amount of time and effort debating it. As some of you may know I'm a bit of a campaigner (well, hardly) but I follow groups such as Priced Out and Shelter and try to keep up with the arguments.
The first step with any government is to admit that houses are overpriced. Some people still seem to be in denial even though it's not hard to find sources that show houses regularly 'earn' more than their owners. I can't find the source but the average home went up in price by £4,000 odd in a month. Who earns that?
The issues are BTL, RTB and HTB. These are all nonsense. Gideon bless him, has at least made a start on the landlord tax relief that was putting them at a massive advantage to FTBs.
HTB needs to die asap. It's another bizarre method of propping up the market. The proof is the fact that when you sell your house the government gets back their 20%. But at the sale price! So if you're house value goes up, so does their 20%. Essentially HTB is a taxpayer-backed investment fund for the government. Madness.
BTL landlords can just die. I'm so bored of talking about them I just wish them all a slow painful death, preferably with some bankruptcy first. Hopefully once Gideon's tax measures come in the morons that are leveraged up to their eyeballs will finally understand that they're losing money and sell on mass. That will be the start of the next property crash.
Don't even get me started on RTB. Why does a council tenant; who has paid well-under market rate for their longterm-assured home suddenly get a massive discount to buy it? It really makes me angry. Private tenants are so shafted in this country and RTB is just a kick in the teeth. If they really wanted to make 'everyone a home-owner' they should bring in RTB for private tenants. That'd really be hilarious.
Sensible point; private renting needs to be sorted out. Whilst private renting sucks such hard balls, everyone is going to fight tooth and nail and do anything they can (such as using crazy schemes like HTB) to own their own home. If renting goes back to how it was -- cheaper than mortgage, long-term tenancies, more freedom with the house, it would indirectly really help the market.
Meh.
EDIT:
The first step with any government is to admit that houses are overpriced. Some people still seem to be in denial even though it's not hard to find sources that show houses regularly 'earn' more than their owners. I can't find the source but the average home went up in price by £4,000 odd in a month. Who earns that?
The issues are BTL, RTB and HTB. These are all nonsense. Gideon bless him, has at least made a start on the landlord tax relief that was putting them at a massive advantage to FTBs.
HTB needs to die asap. It's another bizarre method of propping up the market. The proof is the fact that when you sell your house the government gets back their 20%. But at the sale price! So if you're house value goes up, so does their 20%. Essentially HTB is a taxpayer-backed investment fund for the government. Madness.
BTL landlords can just die. I'm so bored of talking about them I just wish them all a slow painful death, preferably with some bankruptcy first. Hopefully once Gideon's tax measures come in the morons that are leveraged up to their eyeballs will finally understand that they're losing money and sell on mass. That will be the start of the next property crash.
Don't even get me started on RTB. Why does a council tenant; who has paid well-under market rate for their longterm-assured home suddenly get a massive discount to buy it? It really makes me angry. Private tenants are so shafted in this country and RTB is just a kick in the teeth. If they really wanted to make 'everyone a home-owner' they should bring in RTB for private tenants. That'd really be hilarious.
Sensible point; private renting needs to be sorted out. Whilst private renting sucks such hard balls, everyone is going to fight tooth and nail and do anything they can (such as using crazy schemes like HTB) to own their own home. If renting goes back to how it was -- cheaper than mortgage, long-term tenancies, more freedom with the house, it would indirectly really help the market.
Meh.
EDIT:
It's taxpayer funded. See my point about the 20% the government gets back on their 'investment'.
Firstly, as I pointed out right at the start, Help to Buy isn't just the Equity Loan scheme. There are a number of other schemes too.
And secondly, the Help to Buy scheme primarily benefits housing developers, not banks.
Your coming across as just having a massive issue with "evil" banks stealing all your money.
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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.
Help to Buy reduces both the loan amount and the rate on Mortgages. How is that helping the lenders?
Your choice of language in this whole thing is quite telling.
My parents both worked while I was growing up in Surrey in the 70s/80s, my dad had three jobs (postman in the morning, mechanic and then barman) and they struggled to afford a three bedroom semi. In the 90s I rented pokey flats above shops despite earning what I would consider to be a good wage at the time.
I think half the problem these days is the unrealistic expectation of first time buyers and a credit generation who are used to getting exactly what they want immediately.
I don't think any of us on here could delve deep enough into the mathematics to figure out how the banks 'win' from HTB but his point about it allowing lending to continue at artificially high property prices is correct.
And you could argue that a bank lending 70% to an overpriced house makes them more profit than lending 80% to a correctly priced house. But either way does the governments 20% not sit with the bank anyway?
"They struggled to afford a 3-bed semi" is a bit of a contradiction to the point you're trying to make, isn't it? I don't think many FTBs are really expecting to buy a 3-bed house, most in the SE are struggling to afford a 1-2 bed flat!
You only have to look around briefly online to show house prices versus earnings in relative terms to see it used to be 3-4x salaries, it's now 8-14x. The facts speak for themselves and the argument of 'expectations' is usually used by old baby-boomers that swiftly follow it up with "well I never had an iphone when I was 16yrs old".
Yes, but the benifit of the artificially high prices goes to the new build developers, not the banks.
And you could argue that a bank lending 70% to an overpriced house makes them more profit than lending 80% to a correctly priced house. But either way does the governments 20% not sit with the bank anyway?
Its the difference between 75% and 95%. The Governments 20% is effectively a cash loan thats given to the buyers and used as a deposit, so no it doesn't sit with the bank, it sits as equity within the house.
Having been through this recently, it was cheaper for me (and therefore earn the bank less money) to buy a £400k house on HTB Equity Loan than it was to buy a £300k house without. HTB Equity Loans benifits the developers primarily, as thats exactly what it was setup for, to sustain building houses at a time when developers were going bust.
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