Independent - It's Time To Give Up The Dream Of Home Ownership, Says Minister

[OnionTerror]

Looks like a possible change in tenancy laws. This is probably what the chap from the Independent was on about..

http://www.independent.co.uk/news/uk/politics/its-time-to-give-up-the-dream-of-home-ownership-says-minister-1838189.html

It's time to give up the dream of home ownership, says minister

By Andrew Grice, Political Editor

People should get used to idea of long-term renting, housing spokesman argues

The era in which all Britons aspire to own their own home may be coming to an end, according to the Housing minister, John Healey. In a controversial speech, he suggested that Britain may be moving towards a European model, with renting on a roughly equal footing with buying. He said home ownership had fallen from 71 per cent of households in 2003 to 68 per cent today, noting that this trend began in 2005, well before the recession. "I'm not sure that's such a bad thing," he said.

Mr Healey, a close ally of Gordon Brown, challenged the assumption behind housing policy under both the Tories and Labour since Margaret Thatcher introduced legislation to allow council tenants to buy their homes 30 years ago this month. It led to two million homes being sold to tenants. "You don't need to be a grocer's daughter to know it is not a good idea to have all your eggs in one basket," Mr Healey told the Fabian Society. "Yet not even a drop in the housing market can convince people not to use their home as a store of wealth." He said almost a third of people rely on their home to top up pensions. "The property piggybank is unsustainable and unfair," he added.

The number of first-time buyers getting parental assistance has doubled in just three years to four out of every five.

"Increasingly, those without the property-funded 'Bank of Mum and Dad' are finding it hard to buy homes of their own," Mr Healey said. The gap has widened in the recession, during which the average age of first-time buyers getting parental assistance has stayed the same but the average age of a first-time buyer without parental help has risen from 33 to 37. "As housing wealth is passed from parents to children, inequality is compounded over the generations," he said.

Mr Healey stressed that a similar status between forms of housing tenure did not mean hostility to home ownership, and emphasised a need to find new ways to support those who wanted to become homeowners.

A new model with greater flexibility is needed, he argued, allowing people to change from buying to renting without moving home. "Not all or nothing, but a flexible system which suits the different stages in people's lives," he said. "In the future, I'd like to see it be just as easy to sell equity in your home back to the council, housing association or co-operative, allowing people flexible tenure in the same property that adapts to their circumstances. People may choose to release equity whenever it suits them and build it back up when they can and if they want."

The pre-Budget report, announced on Wednesday, included commitments to consult on how to increase the supply of housing for private rent. Mr Healey said decisions "about new institutions through tax changes and incentives" were likely to be made in time for the Budget next March.

The Government has recently started to allow more building by councils, while housing associations rent 2.2 million homes. Mr Healey wants to expand the number of homes built for private renting by encouraging smaller housebuilders, and seeks a greater role for co-operatives, mutual societies and other third sector providers.

The minister said: "We need new choices in tenure - more opportunities for everyone to have a decent, secure, affordable home. That means increasing the diversity of tenures, allowing people to move more easily between tenures and putting them on a more-equal footing with home ownership, as they are in other European countries."

Gains from rising house prices were tax-free, encouraging people to make their home their main investment, he said. He floated the idea of allowing people who rent tax-free savings bonds "to build assets and store wealth".

He went on: "Renting will be more stable, more secure, of a better standard, and probably more common an option. There will be more and new options for those on lower and middle incomes, those who are less likely to get access to social housing."

Martin Gahbauer, Nationwide Building Society's chief economist, said he did not think the era of people aspiring to own a home had come to an end, but added it would be "no bad thing" if renting became a stable alternative. "In Germany, over 60 per cent of the population rent their homes and stay in one rented property for many years, whereas here most people stay in one for six months to a couple of years. If renting makes sense in the long term, it's not necessarily a bad thing," he said.

Case study: 'Renting is my only option'

Owen Armstrong, 27, rents a property in Dalston, east London. The projectionist agrees that many people no longer aspire to buy a house, because the costs involved make it little more than a pipe dream

"I don't intend to buy a house, because it is actually cheaper for me to rent. The amount of money you have to raise to put a deposit down is ridiculous. A lot of people have to depend on their parents. I can't even imagine having the sort of money required - just the admin costs involved in finding a place are scary.

"I would appreciate the security owning a house brings, but the mortgage is prohibitive. Once you have a mortgage, you are tied down - I still harbour dreams of moving abroad so tying myself to a particular place is not necessarily a good idea; that is a generational difference.

"Trying to find something suitable in a large city, especially if you have a young family in tow, is very prohibitive. In order to afford something, you have to rely on someone else's income and move out towards the fringes of the city, which I would not like to do. In certain areas you are looking at £500,000 to buy somewhere; even then you are not always even getting a whole house. I don't want to lay out that kind of money for part of a house.

"Living in London, I would agree with John Healey's sentiments - it is just too expensive to buy and there are better things to spend my money on. But for a lot of people outside the city, I think the situation is different. They can afford to look around for a place and invest in something they really want to buy."

[Mammon]

Yep, the greedy Buy To Let Landords will eventually buy up all the housing stock in the UK.

[porca misèria]

Already posted here: http://www.housepricecrash.co.uk/forum/index.php?showtopic=132383

If it is the same article, it missed the human-interest bit of a FTB story

[Toilet-Currency]

Yep, the greedy Buy To Let Landords MPs will eventually buy up all the housing stock in the UK.

Must be some naked self-interest there. Anyone know how many MPs rent their 1st and all subsequent homes rather than own them outright? If flexibility is the issue, you would''ve thought MPs would be quite likely to do so, moving from safe consituency to safe constituency etc

Or Labour has ditched any attempt to sound aspirational to the middle classes.

Or John Healey will shortly be sent to the gulag for re-education.

[Guest sillybear2]

I wonder if they also own 8 homes like that good old socialist Michael Meacher MP.

The problem is of the governments own making, they control the planning system, they refuse to grant enough permission to built at levels that match household formation levels hence the current pile up. It seems like they it that way, and nobody really protests too much either.

[Misanthrope]

This is very important. Too late to comment coherently. But I will not let this go.

[Dubai]

The era in which all Britons aspire to own their own home may be coming to an end, according to the Housing minister, John Healey.

Why do we take any notice of pr1cks like this any more? He has obviously been tasked with ushering in a change in gumment 'policy'.

The gumment can kiss my ar5e. They're incompetent tossers, and should be ignored at every opportunity.

Edited December 11, 2009 by Dubai

[Georgia O'Keeffe]

Looks like a possible change in tenancy laws. This is probably what the chap from the Independent was on about..

http://www.independent.co.uk/news/uk/politics/its-time-to-give-up-the-dream-of-home-ownership-says-minister-1838189.html

It's time to give up the dream of home ownership, says minister

By Andrew Grice, Political Editor

People should get used to idea of long-term renting, housing spokesman argues

The era in which all Britons aspire to own their own home may be coming to an end, according to the Housing minister, John Healey. In a controversial speech, he suggested that Britain may be moving towards a European model, with renting on a roughly equal footing with buying. He said home ownership had fallen from 71 per cent of households in 2003 to 68 per cent today, noting that this trend began in 2005, well before the recession. "I'm not sure that's such a bad thing," he said.

mmm, nobody could see this coming at some point in the future, not

A)Taxpayer funded 2nd property is on the way out of westminster - no financial reason for politicians to keep the AST model

B ) Long term falling property prices and millions of homedebtors losing their home of the next few years - political motivation for getting rid of AST and reverting to old stable model.

Its a cycle and everything that has been done to benefit owners over the last 30 years (council prop sales below value, AST, favourable property taxation) will be reversed so the majority of benefit will go to rental stability as in europe, the reason Britian is a nation of homeowners is purely a 50 year credit induced bull market tht has been encouraged by successive govts who have used the credit expansion for political gain, nothing more. This is why BTLs and propertee pensions bought in the last decade will get rinsed over the next decade. No fool like those buying at the top of the market, at least they will be able to look back at their paper wealth in fond reminiscence

In 20 years people will look at propertee investors with the same stupidity as they have done renters over the last decade, it may be time to start investing in property again then

Edited December 11, 2009 by Tamara De Lempicka

[spivT]

Yep, the greedy Buy To Let Landords will eventually buy up all the housing stock in the UK.

Yes, with housbuilders being incentivised to build more stock for BTL landlords.

Did i get that right ? He wants housbuilders to build more houses for private rental, not affordable ownership.

What a bunch of bell ends. European model my a*se, we don't pursue a french or other european

model in many other aspects of the british economy, so why should ministers do nothing and letting

the housing market going the same way. I suppose

they must be desperate for nimby votes, and really believe that debt of the housing variety really is

wealth. The millions of six and seven figure piggybanks that drive the economy and must be protected at all costs.

:angry:

Edited December 11, 2009 by spivtastic

[pete.hpc]

******ing boomers trying to pull the drawbridge up behind them.

Want us renting like Europeans? Give us European rental laws then or the same secure tenancy contracts you all had access to?

No, didn't think so.

NuLabour scum. This is a dangerous approach to play, because if they want us renting long term, then maybe, just maybe, someone in a European court will say we should benefit from the same rental benefits as our European cousins, and the filthy *BTL dream is over.

*I'm talking specifically about the BTL mortgage product.

[The Ayatollah Buggeri]

******ing boomers trying to pull the drawbridge up behind them.

Agreed.

Want us renting like Europeans? Give us European rental laws then or the same secure tenancy contracts you all had access to?

To be fair, he was hinting that this would be the inevitable result in that interview.

I think two things are going on here. Firstly, the drawbridge is being pulled up, because he knows full well that the only thing which will enable the majority of today's 20-35 generation to buy is a house price crash that would significantly more than decimate (in the literal sense of the word) the value of properties currently owned by the 50-65 generation, and it's the latter who are most likely to vote. Secondly, he also knows that the older today's renting generation get, the more politically aware they're likely to get and sooner or later the result will be campaigning for a more secure form of tenure than the AST, which the politicians won't be able to ignore.

[justthisbloke]

As always, government manages to make a simple problem dangerously complex.

We certainly don't new style of ownership that allow equity to be sold back to "coops, housing associations and councils" (or whatever the quote was). More bureaucracy, quangos and general paternalism.

Just let the bubble deflate. Simple.

Don't keep houses unaffordable by propping up prices with (a) cheap money, ( "affordable" housing subsidies.

Maybe also, change the rental legislation. Although, I am fully aware that it is the deregulation of renting that allows us all to have so much rental choice and pay so little. Prior to deregulation, renting was so unattractive to landlords that it was very hard to find places.

[pete.hpc]

Agreed.

To be fair, he was hinting that this would be the inevitable result in that interview.

I think two things are going on here. Firstly, the drawbridge is being pulled up, because he knows full well that the only thing which will enable the majority of today's 20-35 generation to buy is a house price crash that would significantly more than decimate (in the literal sense of the word) the value of properties currently owned by the 50-65 generation, and it's the latter who are most likely to vote. Secondly, he also knows that the older today's renting generation get, the more politically aware they're likely to get and sooner or later the result will be campaigning for a more secure form of tenure than the AST, which the politicians won't be able to ignore.

Yep, fair points, I'll read the article in full when I get to work.

I have no specific goal of home ownership, I simply have a goal of having the freedom to live as I want and can afford for as long as I want, without meddling hormonal 50 something women and their petty, vindictive rules who can turf you out every year and inspect your home like the stasi.

If that comes via secured rental contracts, that's fine by me.

Edited December 11, 2009 by pete.hpc

[winkie]

This is very important. Too late to comment coherently. But I will not let this go.

I agree...ast should only be the choice of last resort, more secure with flexibility rental options are urgently required.

[pete.hpc]

Prior to deregulation, renting was so unattractive to landlords that it was very hard to find places.

It was also cheaper to buy.

[Guest sillybear2]

We certainly don't new style of ownership that allow equity to be sold back to "coops, housing associations and councils" (or whatever the quote was). More bureaucracy, quangos and general paternalism.

Just let the bubble deflate. Simple.

Quite, the government creates problems then sets about making things even worse by trying to solving them, creating lots of jobs for do-gooders in the process. This simply means more of a role for parasitic Housing Associations hovering up the housing stock and acting as unwanted middle-men.

Shared ownership helps no one, it's purely inflationary and a catch 22, if prices inflate a lot it simply means the half you don't own is even further out of reach. It's even more insidious than plain old owner occupation with a mortgage from the usurers. Basically they don't want people to own assets or have any independence, they want people on the hook forever.

Edited December 11, 2009 by sillybear2

[porca misèria]

It was also cheaper to buy.

If you could get a mortgage .... the two-and-a-half-times-salary limit wasn't as flexible as it is these days.

In my first job after graduating, a mortgage at 3.5* income would've got me a basic flat, and at about 12% interest would've been a lot cheaper than renting. And this was after the first round of liberalisation! I'm sure it's my generation's (and older's) experience that sowed the seed of the british obsession with a "property ladder".

[Bloo Loo]

Yes, with housbuilders being incentivised to build more stock for BTL landlords.

Did i get that right ? He wants housbuilders to build more houses for private rental, not affordable ownership.

What a bunch of bell ends. European model my a*se, we don't pursue a french or other european

model in many other aspects of the british economy, so why should ministers do nothing and letting

the housing market going the same way. I suppose

they must be desperate for nimby votes, and really believe that debt of the housing variety really is

wealth. The millions of six and seven figure piggybanks that drive the economy and must be protected at all costs.

:angry:

If the banks can afford to lend to BTLs, who rely on people earning an income to cover the mortgage, then they can afford to lend to the the people paying the rent.

[Georgia O'Keeffe]

If you could get a mortgage .... the two-and-a-half-times-salary limit wasn't as flexible as it is these days.

In my first job after graduating, a mortgage at 3.5* income would've got me a basic flat, and at about 12% interest would've been a lot cheaper than renting. And this was after the first round of liberalisation! I'm sure it's my generation's (and older's) experience that sowed the seed of the british obsession with a "property ladder".

Twas set in the 60-70s when mortgages were inflated away by wage rises, was reinforced in the 80s through HPI, took a mild hit in the 90s with neg eq which the rises in the noughties only reinforced that even if it falls it is a one way bet because it will soon come back and make even more money (leading to the its ok , ill just rent it out until it comes back crowd). Its a perfect bubble phsychology that has been built up and created a totally unshakeable belief in the asset class to keep evryone participating in it involved, in short it has created the crystal perfect mentality from which to do what unshakeable asset class belief does and completely and utterly wipe out everyone involved in the delusion. Its an absolutely perfect storm

[Pindar]

But if speculators hadn't flooded the market between 2001 and 2007, the "dream" of owning the roof over your head might still be a reasonable aspiration.Saying that "we need" this and "we need to go more towards a european model" where long term renting is more common is actually a communist idea where the notion that all property is theft prevails. If it's a simple supply and demand thing then the market would sort things out. As it happens, planning and other restrictions are kept in place to artificially constrain supply and hence cost. Couple this with banks' willingness to lend as much as somebody says a house is worth and you are positively socially engineering the "european" model.

[Mikhail Liebenstein]

Agreed.

To be fair, he was hinting that this would be the inevitable result in that interview.

I think two things are going on here. Firstly, the drawbridge is being pulled up, because he knows full well that the only thing which will enable the majority of today's 20-35 generation to buy is a house price crash that would significantly more than decimate (in the literal sense of the word) the value of properties currently owned by the 50-65 generation, and it's the latter who are most likely to vote. Secondly, he also knows that the older today's renting generation get, the more politically aware they're likely to get and sooner or later the result will be campaigning for a more secure form of tenure than the AST, which the politicians won't be able to ignore.

Seems like a reasonable analysis. The problem may only get worse until we get wage inflation without corresponding rises in house prices. The economy needs the 20-35 year olds to be earning an average of say £60k and house prices to remain relatively flat. If all other prices also double, eg fuel, food and Council tax, there are then the means to drive the boomers from their homes. Whilst I am generally anti tax, I do quite like to see Council Tax rise as it hits the boomers more disproportionately.

The only other alternative is a wealth tax. A wealth tax does seem like a fair idea. Why should a young couple with a joint income of say £60k, not be able to buy a £200k with ease. The answer is because so much of their income goes in tax, meanwhile a boomer can sit in such a house on a pension and pay very little tax.

Before any boomers pile in and criticise, I am not arguing the above from a self interested perspective. I actually own a very nice house, but I consider myself to be very lucky amongst my generation as between myself and my wife we gross about 6 times the national average salary, but it seems that is the sort of money you need to buy a decent house which does seem plainly wrong.

Edited December 11, 2009 by mikelivingstone

[tegan]

As always, government manages to make a simple problem dangerously complex.

Just let the bubble deflate. Simple.

This.

But its too simple for this bunch of *****, since they decided to base our entire economy on debt and house price speculation, regardless of how ruinous that is for our standard of living.

[xux42]

the only thing which will enable the majority of today's 20-35 generation to buy is a house price crash that would significantly more than decimate (in the literal sense of the word) the value of properties currently owned by the 50-65 generation, and it's the latter who are most likely to vote.

I don't understand why they care so much. Almost all have little or no mortgage. A lot of them have good pensions.

Lower prices would negate the need to draw equity to support offspring house purchase.

Are they thick or what?

[xux42]

I actually own a very nice house, but I consider myself to be very lucky amongst my generation as between myself and my wife we gross about 6 times the national average salary, but it seems that is the sort of money you need to buy a decent house which does seem plainly wrong.

Well said that man.

[Bloo Loo]

I don't understand why they care so much. Almost all have little or no mortgage. A lot of them have good pensions.

Lower prices would negate the need to draw equity to support offspring house purchase.

Are they thick or what?

because....almost all have MEW and Credit card debt, and expected the house to provide the pension.