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idun
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Following on from the 'First Time French Buyer' thread, I was just wondering about house prices.

Why the prices are going up anywhere is actually beyond my comprehension. It actually offends me in some way that prices are not gently falling. I dread the world ahead when a few will own all and the rest at the mercy of rich landlords. Because bit by bit, that is how I see the future unfold. I know an awful lot of young people who really should not be given mortgages, including professionals, simply because their loans and mortgages well exceed reasonable limits on their limited income. And yet, they have to live somewhere and a three bed roomed home can be very expensive to rent and if they are paying out huge rents, how can they afford the huge deposits to buy.

So it is all madness to me and leaves me just about depressed and very saddened. I feel that my generation is leaving an absolutely disgraceful legacy for the young. If they let us all rot in our dotage, it would not surprise me, my generation probably deserves it. My Dad after all, fought in the war, my generation made life 'hard' when we didn't need to, such is avarice.

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To be fair, it's always been that way. Many moons ago, the parents of my best friend from school oop north moved from Bolton to Fleet in Hampshire. keen gardeners, they bought a new garden shed. We visited them not long after this, and my BF's mum pointed out that the shed ( nothing that special, just a garden shed) had just cost them more than their first house. In London, my son's mortgage costs him several hundred pounds a month less than he would be paying in rent, and his classmates, many of whom began their courses two years ago living in trendy areas like Islington or Hoxton, have now had to move out to Finsbury Park or beyond because they could no longer afford rents closer into London.

The first home my folks bought , having lived with my grandma till I was about four, cost them £1600. That wouldn't pay a months rent around here, and even back in my hometown it would barely cover four months rental.

It's a sad fact, but property does just keep inexorably creeping up in value.
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Your second post is a bit harsh Wooly as I would guess several members here own BTL's so the inference that they are 'scum' for daring to legally own property in order provide themselves with an income or future pension is somewhat offensive.

We have four children and the chances of any of them being able to buy their own home before they hit thirty is zip. However that doesn't stop them renting and maybe that's the way to go for the future.
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I see the situation is difficult but I think we all had a different viewpoint. When my parents, and certainly when I, were buying a house we saved like mad. Went without. Walked places, didn't buy stuff. That 10% deposit was hard to get but really got you into saving and making economies so that you were already prepared to pay the mortgage.

The first year that I had a mortgage (difficult to get as well, single woman ... I was turned down by 3 companies because they didn't do loans to single women because we kept getting pregnant, apparently!). Where was I? Oh yes, the first two years I had three jobs, my daytime job, working in a restaurant in the evening, and in a pub at weekends. Oh, and I took in home typing as well. That was what you had to do. I started off with sticks of furniture from my parents and a secondhand B&W TV. Eventually it got easier.

But my friends, whose children are in their 20s and 30s. Well they're earning good money but cannot save. They want the house now ... without having to save up the deposit. That's why the £99 down and you can move straight in is such a killer. Kids pay less than they would for the deposit on a sofa, and then get hit for a huge mortgage. But they want the lifestyle - my friend's daughter is having trouble paying for her house, but she still takes 3 weeks off in the Indian Ocean for a holiday each year, has a Sky+ package, a new car every 3 years, goes out clubbing, etc.

I see nothing wrong with buy-to-let - it's a good investment. There will always be owners and there will always be renters and that's how the market operates. A with pension rates so low, investing in property as your pension is probably the smartest way to go.
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Buy to rent is fine for the investor but it stops people accessing the property ladder as prices are pushed up. I find it deplorable that buy to let investors are able to access Mr Osborne's latest mortgage scheme which was designed to get people out of rent slavery and give them a stake in something of their own.

I withdraw the word scum, it is a bit too strong.
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I think that there is some shortsighted thinking (what a metaphor) going on here. Here is Woolly going on about house ownership and the property ladder when he lives in France where (according Wiki) only a little more than half the housing stock is owner occupied.

Wikipedia shows the following owner occupier statistics:

UK            69%    (2002)

France       55%   (2000)

Germany   42%   (2002)

Ireland       83%   (2002)

My parents never owned their own house and never wanted to. As far as they were concerned home ownership was about problems. They were quite happy for the landlord to do repairs and maintenance, all they had to do was pay the rent.

I have never been certain of the advantages of a property-owning democracy. I'm sure that home ownership reduces labour mobility, ties up capital and gives people unrealistic perceptions of their own wealth. If people want to buy property and then let it to others they should not be categorised as scum but as enablers of flexibility for others.

 

Edit - I note that Woolly has withdrawn the objectionable word. Perhaps we would be better to follow the German model of house purchase where it seems mainly to take place at a late stage in life.

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What angers me, no I won't use the word I am thinking, is that the banks in the UK and the USA made loans of 125%. These loans were unaffordable for many and property surveyors that the banks and building societies in the UK depend on, were valueing on a drive past, they did not even enter many properties. Yet they put an imaginery value on them and the myth and excessive price rise culture born and and sadly nurtured by one and all.

I doubt either of my kids will ever be able to buy anywhere. Houses are simply too expensive. Eventually I hope that the market implodes, crashes completely and a three bed home in even London is no more than £100k and around £85k elsewhere. That is what I want, as a property owner. My wish will not come true, but there you go.

Re the young, well, when were they encouraged to be thrifty really??? When did they know that the meal in front of them on an evening was 'the' food in the house for that day and there were no snacks or crisps or biscuits, and breakfast would be on the following morning. The young were brought up in an atmosphere of 'easy' money and I understand well, their feeling it 'normal'.

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[quote user="Clarkkent"]

My parents never owned their own house and never wanted to. As far as they were concerned home ownership was about problems. They were quite happy for the landlord to do repairs and maintenance, all they had to do was pay the rent.

[/quote]

And without the landlord, who did buy the property - or the local council - what would people like your parents have done? Someone had to buy the house they lived in.

It's odd, really, as I'd totally forgotten this, but this discussion rekindled a memory. I come from quite ordinary stock. No stacks of wealth, lots of hard work, normal people. I do remember on rare occasions my mum telling me that she'd occasionally accompany my grandfather to help collect rents from tenants of houses owned by....I don't know quite who: a great-grandmother, great-aunt or uncle. This would have been back in the 1930's or thereabouts, so I'm assuming the buy-to-let landlord was alive and well and doing his (or her) thing even that long ago. I'm also assuming that then, as now, these people were just ordinary folk who had some money to invest and saw bricks-and-mortar as a canny investment.

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[quote user="You can call me Betty"]

And without the landlord, who did buy the property - or the local council - what would people like your parents have done? Someone had to buy the house they lived in.

[/quote]

Exactly. Landlords were then considered to be members of a respectable trade. Mass home ownership is a very recent development. L S Lowry's day job was collecting rent. I seem to recall hearing that Sir Edward Elgar never owned his home. Before WW2 home ownership was very unusual. It was the post-war insistence (I won't blame Margaret Thatcher - but I won't exonerate her either) that a home owning democracy was a healthy democracy that is responsible for a large part of our present economic state.

 

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[quote user="Hoddy"]The government encourages the young to get into debt. If my grand daughters decide to go to university they will have no alternative to borrowing.

Hoddy[/quote]I can't see a problem with borrowing money if it is going to benefit you and you are able to repay the debt.

With the large expansion of university places it would be impossible to provide grants as was done formerly. There just isn't the money available. The situation with student loans is not as black as it is sometimes painted.  You don't start to repay it until you earn over £21000 per annum (this figure is adjusted for inflation) and any debt still out standing after 30 years is written off. So there may well be a debt timebomb waiting for future governments.

Also student loans are handled differently to other debts by credit rating agencies.

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Having a stake is what matters to create a healthy democracy. And, no, I don't for a minute think that ownership created the current UK mess. What did, however was the failure of government to control house buying profits, by not having a sliding scale of gains tax based on time lived in the property.
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[quote user="Rabbie"][quote user="Hoddy"]The government encourages the young to get into debt. If my grand daughters decide to go to university they will have no alternative to borrowing.

Hoddy[/quote]I can't see a problem with borrowing money if it is going to benefit you and you are able to repay the debt.

With the large expansion of university places it would be impossible to provide grants as was done formerly. There just isn't the money available. The situation with student loans is not as black as it is sometimes painted.  You don't start to repay it until you earn over £21000 per annum (this figure is adjusted for inflation) and any debt still out standing after 30 years is written off. So there may well be a debt timebomb waiting for future governments.

Also student loans are handled differently to other debts by credit rating agencies.

[/quote]

However, as recently as last week, it was mooted that there are moves afoot to increase the interest rates charged to students on these loans. So, for those already stuck with the repayment of some, if not all of their student debt, depending on future earnings, there's an additional time bomb: that of not knowing when and by how much the government of the day may decide to hike up the interest they're expected to pay on their debt. This comes not all that long after it was also mooted that there may be penalties imposed on students who chose to pay off their student debt early (a scheme which was subsequently scrapped, but that doesn't mean it will not resurface). It is almost as uncertain and treacherous as having a payday loan.

[url]http://www.thenationalstudent.com/News/2013-06-14/Secret_Whitehall_proposal_could_raise_interest_on_old_student_loans.html[/url]

[url]http://www.guardian.co.uk/education/2012/feb/16/cameron-early-student-loan-repayments[/url]

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Rabbie I posted in response to to what seemed to be Idun's criticism of the young for getting into debt.

I have no problem with "if it is going to benefit you and you are able to repay the debt", but with the job market so uncertain and the possibility of changing rules and interest rates I can't help but feel wistful that they can't have the funded university education that I had.

Hoddy
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Ah, how to keep quiet after all the responses and I hear no word about public sector housing?

Right then, into the breach, and I am attempting to answer several posts at once.

To begin with, the idea of selling off council houses at HUGE discount was, to my mind, a monumental mistake.  The houses were built and owned by local authorities for decades.  They cost very little to build but, with the rising cost of living, council rents, low as they were, nevertheless represented a return on investment for the LAs.

With the profits, they could have gone on to build more houses for future generations.  They could keep rents in line with the cost of living because, for example, a house buillt in the immediate post-war years would bring in rent in excess of their original building costs and one built in recent years might well bring in less than the open market rent but, overall and averaging out, the LAs could have consistently retained a reservoir of housing stock and which they could add to from time to time.

Of course, there were always private landlords and, as someone has said, nothing wrong with that.  However, in the old days, the landlords were more likely to have owned their properties outright and could let them out at rents comparable to public housing; no mortgage to upkeep after all.  They didn't make massive profits by borrowing money based on one existing property and using the rent from that as down payments for another 2 or 3 or 4 mortgages.  Also, building societies used to charge extra percentages for buy-to-let, if they lent you anything at all.

People renting property came from across the social spectrum; no stigma attached to not owning your own place of abode.  They do not, in large part, depend on housing benefit to pay private rents.  The present system allows buy-to-let landlords to collect rents based on houses on which they have mortgages and to collect their rents from LAs who pay housing benefits.  With time, there is a whole class of people who are growing rich on borrowed money and money that rightly belongs to taxpayers.  Nice if you could swing it!

I could see, in a few years time, a whole swathe of people who would be discontented and resentful as they see their hard-earned money going to buy-to-let landlords whilst they themselves have little stake in their own future.

If council housing had been retained, we would also not have the situation whereby essential workers such as doctors, firemen, etc are unable to work in the South-East of the UK because they can't afford to live there.

I won't be controversial and will not mention the prime culprit who wanted to sell off council houses for unrealistically low amounts, thereby making some people who'd lived in a council house all their lives suddenly standing to pocket hundreds of thousands of pounds just by buying and then selling off their homes which had become very nice windfalls.

OK, off my soap-box now.  I was reluctant to contribute for fear of starting to shout and rant but I was after all able to give voice to my thoughts calmly and, I hope, reasonably.  

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Council housing was abused, though by many people (not all) who could and should quite well have bought their own which was not its purpose. And its management left much to be desired, as in the fictive tenants who sublet and sublet etc.

By all means, keep it as a starting point but with limited tenancies.

Your point about buy to let living off the back of the taxpayer is a good one Sweets. Time it was sorted.

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But, Wools, if the concept of council housing is basically sound, you do not need to throw the baby out with the bath water!

OK, if the fonctionaires are not capable of managing the housing stock efficiently, you bring in independent managers and you have a body of overseers who are answerable, for example, to the Home Secretary.

Personally, I have no problems with people having a good income and parking their jags outside their council houses.  If that's their choice, fine.  What you could do is charge rent on a sliding scale so that the poorest pay a small amount and those with money pay more.

Surely has to be better than taxpayers' money being spent on B & B or even hotel accommodation because there are no council houses for the most vulnerable.

Selling off council houses is a regressive step because it benefits only those who are able to buy and gives them large sums of money which they have not earned and for which they have not risked anything, unlike for example, people who start their own businesses.

Certainly, when I lived in St Albans many decades ago, I would have loved to have bought a 3 bed-roomed spacious council house with a nice little garden front and back for little more than a couple of luxurious holidays.

No good politicians talking about the redistribution of wealth when the redistribution is a one-way traffic system. 

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[quote user="sweet 17"]

What you could do is charge rent on a sliding scale so that the poorest pay a small amount and those with money pay more.

[/quote]

That is how it works in some countries (Australia being one). The more you earn the more your rent creeps up to market levels until finally it goes beyond making it a better choice to leave your social housing to either rent or buy in the private sector freeing it up for those who really need it.

I have some properties let out in the UK via housing trusts. I get less rent than the private sector but I don't have any problems with tennents plus they are maintained very well. These associations don't always have the money to buy properties or have them built so this works well for everyone.

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[quote user="Hoddy"]Rabbie I posted in response to to what seemed to be Idun's criticism of the young for getting into debt.

I have no problem with "if it is going to benefit you and you are able to repay the debt", but with the job market so uncertain and the possibility of changing rules and interest rates I can't help but feel wistful that they can't have the funded university education that I had.

Hoddy[/quote]Sorry Hoddy if I didn't make i t clear. The point i was trying to make was that in my mind there is a big difference between having a study loan and having massive debts on your credit card. As I said earlier Study loans are a special case as they are not repaid until you are earning  a reasonable salary and they are written off after 30 years. I agree with you that it is a shame that they no longer can get grants at least for the tuition fees but because of the expansion of further education that would be prohibitively expensive. Perhaps  the government should pay the tuition fees for certain courses like for example medicine which are beneficial to society

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Perhaps the system for LA or social housing is wrong. I know of girls who have got pregnant 'and now they will give me a house'. This is a total abuse of the system and means that instead of responsibility, i.e. obtain accommodation before having children the irresponsible way is to have children to get accommodation - then there is the case of keep bashing out the kiddies for more and more benefits.

With council housing come maintenance commitments for the LA so the rent is not all income some is then spent on maintenance - if you own the property then it is down to you.

There is the problem of funding the building of LA housing - LAs do not have the money so have to borrow it or use PFI and look where that has got the Health Service.

Housing Associations can help the situation without causing the LA to borrow money.

Private landlords can also provide a useful service. Normally buy to let mortgages have a higher interest rate than a 'buy to live' mortgage. Repair obligations are with the private landlord. It is not profit and nothing else - those who bought prior to the banking crisis may well find that their property is not worth what was paid for it. In addition, the private landlord may buy properties that require refurbishing / updating and thereby bring sub-standard properties back in to use.

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I obviously lived in France far far tooooooooooo long, because the HLM's in my region were for people on low incomes and if their income increased above a certain limit then they were obliged to find somewhere else to live. And that sounds fine to me, having affordable housing for those on poor incomes. It isn't as if every one is unemployed and non professional workers often do jobs that are imperative for the rest of us and the pay is lousy.

So yes, council houses should not have been sold off. Council houses should always have been for poorer families and as I grew up in a council house, I have nothing against that idea at all. And as my parents had more income, then they bought, but the idea that if property had been 6 or seven times annual income would they would have even  considered buying, I do not believe that they would. And yet today's young are left before this situation. Even around here in the poor north, I know professional young people with what I call decent jobs and their earn under £20k a year, so no, they don't pay back their student loans, and they cannot afford to buy anywhere either, they are stuck, with big rents.

Sad, as I say, what a terrible legacy for my generation to leave.

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I'm sorry Sweets but I do object if someone has their Jag parked outside their council owned home.I'm sure we'd all like that sort of luxury but some of us who took on responsibility for their own housing can't afford it.

Generally I think the current conditions regarding getting a mortgage are creating a time bomb. My daughter has a good job, but in this area would be looking to save a £40k deposit, if she rents, what happens when she retires? Her pension won't pay the rent so will she be on the streets?
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[quote user="Russethouse"]I'm sorry Sweets but I do object if someone has their Jag parked outside their council owned home.I'm sure we'd all like that sort of luxury but some of us who took on responsibility for their own housing can't afford it. Generally I think the current conditions regarding getting a mortgage are creating a time bomb. My daughter has a good job, but in this area would be looking to save a £40k deposit, if she rents, what happens when she retires? Her pension won't pay the rent so will she be on the streets?[/quote]

But, RH, in MY Utopia, there would be plenty of council houses to go round![:D] They wouldn't be ghettos for the poor and destitute.  If you chose to live in a council house and had bags of dosh, you could but you'd pay a high rent in proportion to your income.

I feel very sad for those people who have young children and are put up in B & Bs because there are no houses or flats for them to live in.  After all the council (aka the taxpayer) is paying the B & B owners for accommodation which is totally unsuitable for the families who are condemned to live in them.

I know someone near me here in France who has a child who has no job and is put up by the council where he lives in the UK in some tiny shared flat and where the rent is nearly £600 a month!  I tried not to look horrified when I was told this but the person is apparently reduced to being subsidised by the parents as their benefits didn't cover the rent as well as food and other expenses.  When I say "child", I mean a very fully-grown adult.  As for why this person is jobless, I wouldn't know as I didn't want to ask and didn't want to offend sensibilities.

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