B B C Radio 5 Live 15.04.08

[macfarlan]

bemused40.

I think the majority of people on this site are fed up with the policies of the govermnent that have allowed the property market to get into this state.

Personally I'd like to think that the site was started because the signs were that this couldn't continue, and to inform people of the situation and offer an opportunity to discuss the matter away from the opinions trumpeted by the press and other VI's screaming 'buy now or regret it for the rest of your lives!' I know property porn's only entertainment, but there is a bigger picture here that has encouraged a mentality that suggests property only ever goes up in value, so best stretch yourself to the limit to get on the boat before it leaves, like lots of people have. This has only served to raise prices further to the extent that people have made irrational and reckless decisions about their finances that many are probably regretting. There has been little in the way of regulation to protect these people, and now it seems that the reckless must be bailed out by the tax payer. So we all lose out to bail out the reckless and financially naive.

Perhaps the site has become what it is (yes there is a degree of bunker mentality from some posters) due to the fact that people here are accused of being doom mongers or cultists when all they really want is affordable housing. A price crash would hopefully provide this for the majority of those here.

People have been predicting a crash due to the fundamentals of the market, it's not an act of faith, it's looks long overdue, and it also looks like it will be very painful. Really, how long have you been reading the posts on this site? Aren't you slightly concerned about what our politicians have done to the economy? It looks screwed to me.

And regarding your maths, 40% off a house worth £200,000 is £80,0000. I took the decision to stay out of the market a year ago because buying would have left me very little money to live off after paying the mortgage, a 40% drop would make a house much more affordable for me, and would mean that I would have escaped the nightmare of negative equity and probable repossession. Not so sure about my job tho.

If i were you I'd ignore the abuse and stick to rational arguments, or it might come across like you're only here to have a pop. You're not a gloater are you?

[crashmonitor]

Ruth Lea peddling the usual myth that interest rates were in double digits throughout the early nineties.Damn right to pull her up on that one FP,they actually fell to 5.5% by 1993.Transmission to the Market?No, three more years of inflation -adjusted falls and prices did not recover their 1989 peak in inflation terms until nine years later,2002.

Edited April 19, 2008 by crashmonitor

[Bloo Loo]

There's actually a number of questions I'd like to answer - I'll start with geneer.

No, I'm not shitting myself. For what its worth my mortgage is well covered and I don't intend moving for a long time, so I lose no sleep whatsoever about what's going to happen to the market over the next year or two, nor have I ever posted on a property website before. I first visited after seeing Jonathan Davis on Channel 4 news, and was curious to find out why such a site existed. I have to say, I've found it both absolutely fascinating and utterly bewildering. Its like a strange religious cult, where JD is your guru, the notion of a house price crash is not so much an opinion as an act of faith, and anybody who doesn't agree is a heretic who should be burned at the stake!

That's why I've chosen the quote above. Why do you regard me as a "scum bag" because I happen to disagree with you (slightly - I still think we're in a downturn) on the subject of house prices? I disagree with lots of people about lots of things,but I don't hate them for it. Calm down a bit - its not like I insulted your mother or anything!

Moving on to "macfarlan", yes, there is a lot of what you would term "property porn" on the telly, but its for entertainment - don't take it too seriously! But newspapers have been screaming "property crash" every time one of the major indices shows any sign of slowdown for years. And that programme on Monday was far from the first time Jonathan Maitland has told us we're all doomed. And none of you can claim to have been right regardless of what happens in future - you've just proved that if you say something for long enough you're bound to be right eventually. This site was founded nearly 5 years ago. Even if you get your "30-40% crash" you'll still only be back roughly to where you started.

So "slumpmonkey" as currently resident "VI (vested interest?) scum bag" I will try and answer your question. Yes, I have genuine sympathy with those who find themselves priced out of the market, but to blame it on Property Ladder-inspired amateur buy-to-letters is just daft. That's just the froth on the capuccino. The bulk of the property boom is due to people making rational decisions about their own circumstances - taking advantage of cheap credit in a low interest/low inflation environment to take out mortgages they can afford, to buy their own homes rather than rent. There is a shortage of (the right type of - I exclude city centre flats from this) housing, so prices are forced up. For most of these people, it has proved to be the correct course. Now that credit conditions have changed, an unfortunate minority will find that they are struggling to keep up payments. Why do you wish on them the misery of negative equity?

And what about the BTLs? What would you have done - banned people from becoming landlords? Its a free country, and as many people choose to rent, there clearly is a need to be catered for.

Anyway, I think I'm starting to get it now. The vitriolic attitudes on this board seem to be the result of envy of those who are on the ladder, by those who've been priced out or, worse still, took a concious decision to stay out a few years ago because they thought then that prices would fall. Now that would really hurt.

1. Who cares the state of your bowels

2. Who cares how well you are doing

3. This is not a cult., it is a forum just like the tens of thousands on the web

4. BTLs- they have a very unfair tax advantage over provate occupiers- this could have been easily addressed with TAX at source.

5. assume away about peoples motives.

6. If a market was not falsely inflated the majority would not be priced out. The two just dont exist in nature.

7. Prices are falling, the banks arent even half way through finding losses and the UK subprime and ALT-A debacle has barely started.

8. I am enjoying nice glass of wine too, whichever VI needs to impress.

[bemused40]

1. Who cares the state of your bowels

2. Who cares how well you are doing

3. This is not a cult., it is a forum just like the tens of thousands on the web

4. BTLs- they have a very unfair tax advantage over provate occupiers- this could have been easily addressed with TAX at source.

5. assume away about peoples motives.

6. If a market was not falsely inflated the majority would not be priced out. The two just dont exist in nature.

7. Prices are falling, the banks arent even half way through finding losses and the UK subprime and ALT-A debacle has barely started.

8. I am enjoying nice glass of wine too, whichever VI needs to impress.

1. I was asked about the state of my bowels.

2. That was to prove the state of my bowlels - that's why I said "for what its worth"

3. It is like a cult - not for the views you espouse, but for the way you put them forward, and for the way you treat people who don't agree.

4. BTLs are taxed on their income, and on realised capital gains. What would you do? Tax them on unrealised gains which you are certain are about to be wiped out anyway? How do you tax rental income at source - trust the tennants to send it to Gordon Brown?

5. People have made lots of assumptions about me!

6. The market is not falsely inflated. It is unsustainably inflated by a natural process of supply and demand. The same forces are now bringing it back to its "natural" equilibrium, but I suspect that will be at a level much higher than you think.

7. You may be right in the short term, but equally I'd bet that a lot of the write-downs will be written back in time.

8. I wasn't the bloke drinking the wine in the first place - that was some bloke called Dominic who you apparently erroneously mistook for a daytime TV presenter.

[Bloo Loo]

1. I was asked about the state of my bowels.

2. That was to prove the state of my bowlels - that's why I said "for what its worth"

3. It is like a cult - not for the views you espouse, but for the way you put them forward, and for the way you treat people who don't agree.

4. BTLs are taxed on their income, and on realised capital gains. What would you do? Tax them on unrealised gains which you are certain are about to be wiped out anyway? How do you tax rental income at source - trust the tennants to send it to Gordon Brown?

5. People have made lots of assumptions about me!

6. The market is not falsely inflated. It is unsustainably inflated by a natural process of supply and demand. The same forces are now bringing it back to its "natural" equilibrium, but I suspect that will be at a level much higher than you think.

7. You may be right in the short term, but equally I'd bet that a lot of the write-downs will be written back in time.

8. I wasn't the bloke drinking the wine in the first place - that was some bloke called Dominic who you apparently erroneously mistook for a daytime TV presenter.

Thank you. The wine comment was not aimed at you, as you rightly pointed out.

As for tax, well it would seem to me that a tax at source on business loans for a BTL borrower would level the playing field (residential homes only).

An OO pays tax on his income then the mortgage costs go onto net. The BTL pays no tax on the interest and so has an immediate advantage in that tax is deducted After interest costs.

Furthermore, banks USED to take potential rental income into account, it appears along with other criteria they stopped caring from about 2005 onwards, along with 100% IO loans etc, making the FTB even more at a disadvantage.

I do beleive the lending situation has changed now though, but also that something needs to be done about the tax situation as when all is recovered, the same thing will happen again. I for one could do with the madness

[Killer Bunny]

The market has boomed because we live on a small island where property is in short supply, the planning process restrictive and the population growing rapidly, fuelled by a strong economy and easy credit. Its weakening now because of the credit crunch, but that is a short-term problem which will pass, whilst the demographics won't change. That's why I doubt the correction will be anything like as bad as you all think,

[bemused40]

Thank you. The wine comment was not aimed at you, as you rightly pointed out.

As for tax, well it would seem to me that a tax at source on business loans for a BTL borrower would level the playing field (residential homes only).

An OO pays tax on his income then the mortgage costs go onto net. The BTL pays no tax on the interest and so has an immediate advantage in that tax is deducted After interest costs.

Furthermore, banks USED to take potential rental income into account, it appears along with other criteria they stopped caring from about 2005 onwards, along with 100% IO loans etc, making the FTB even more at a disadvantage.

I do beleive the lending situation has changed now though, but also that something needs to be done about the tax situation as when all is recovered, the same thing will happen again. I for one could do with the madness

If BTL is his business, then interest is a legitimate cost and he is entitled to treat it as such in the same way that any other business can deduct legitimate cost from his gross income. You wouldn't tax a retailer on his gross sales - you tax him in the profit he makes after deducting the cost of his stock and overheads.

If BTL is a sideline, then the capital the BTLer puts up is also coming from taxed income in the same way as it is from an owner-occupier. And if you treated them any differently, amateur BTLs could easily set up as companies.

The problem is that you're all looking for someone to blame for the state of the housing market, but it isn't any-specific-body's fault - its just economics. Markets go up, get overheated, and come down again, but in the long-run, they tend to go up. Its just nature, its not anybody's fault.

Oh, and thank you for that informed comment, FP.

Edited April 18, 2008 by bemused40

[macfarlan]

I think you're the one who's looking for someone to blame bemused40

5. People have made lots of assumptions about me!

8. I wasn't the bloke drinking the wine in the first place - that was some bloke called Dominic who you apparently erroneously mistook for a daytime TV presenter.

Was it Bloo Loo that 'erroneously mistook a bloke called Dominic for a daytime TV presenter', or was it the all knowing mind of the entity that is the forum?

Or was it merely another poster?

Really, why do you visit the site? I don't get it. Is it simply to tell us all off, tell us we're all wrong and that it's nobodys fault? If you're so annoyed with the site just leave, instead of firing off the kind of random accusations to individual posters about everyone on the site that provoke the kind of response your complaining about. No ones forcing you to be here. I know you feel like you need to defend yourself but your initial posts werent the most polite were they?

Besides that, your argument is contradictory. You suggest that property porn has no bearing on the market as it's just entertainment and no one should be upset by it, yet you get upset about the fact that Jonathan Davis is on an entertainment programme giving an opposing view to the one you like as if it has a bearing on the market.

Edited April 18, 2008 by macfarlan

[Bloo Loo]

If BTL is his business, then interest is a legitimate cost and he is entitled to treat it as such in the same way that any other business can deduct legitimate cost from his gross income. You wouldn't tax a retailer on his gross sales - you tax him in the profit he makes after deducting the cost of his stock and overheads.

If BTL is a sideline, then the capital the BTLer puts up is also coming from taxed income in the same way as it is from an owner-occupier. And if you treated them any differently, amateur BTLs could easily set up as companies.

The problem is that you're all looking for someone to blame for the state of the housing market, but it isn't any-specific-body's fault - its just economics. Markets go up, get overheated, and come down again, but in the long-run, they tend to go up. Its just nature, its not anybody's fault.

Oh, and thank you for that informed comment, FP.

A sideline is a business. BTLS: If tax evasion is your bag and i find out you are up to it, Im the face of doom for you.

Its not beyond the wit of man to sort out this problem of an army of amatuers, about to be bust themselves, helping to overinflate a market for a vital living necessity.

Speculation should be done with post tax income in this product class.

[Killer Bunny]

The problem is that you're all looking for someone to blame for the state of the housing market, but it isn't any-specific-body's fault - its just economics. Markets go up, get overheated, and come down again, but in the long-run, they tend to go up. Its just nature, its not anybody's fault.

So, you'll next tell us that shares will always go up - Just like in Japan since 1989?