Friday, Oct 09, 2009
Woooah! Taxpayers now paying for NEW home loans at top of price cycle! New Labour criminals!
Bloomberg: No-Money-Down Property Loans That Sank U.K. Housing Return
Stuart Heathcote and his wife never intended to buy a house this year. Then the U.K. government offered an incentive that changed their minds: a no-money-down mortgage.
Posted by tyrellcorporation @ 08:56 AM (1876 views) Add Comment
32 Comments
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1. Neil B said...
This is hardly sensational the house is only valued at 130k and one of the buyers is a key worker
2. tenyearstogetmymoneyback said...
The highlight of the article
“Every scheme in history the government has tried to implement in the housing market has gone completely toes up,” said Alastair Stewart, a London-based analyst at Investec Securities. “It perpetuates the high prices. The best way to increase demand is to let homes fall back to their natural prices.”
3. will said...
Is it home ownership or just renting from the banks?
4. alan said...
HomeBut Direct say:
"If you are a first-time buyer who can’t afford to buy a home without help, find out about the ‘HomeBuy Direct’ scheme. You could get an ‘equity loan’ for up to 30 per cent of the cost of a home". A mortgage will cover the other 70%.
http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/HomeBuyingSchemes/DG_171504
I say:
If you are a first time buyer who can't afford to buy a home...start saving, don't buy the place with my money!
ps: you won't Bloomberg's style of comment on BBC...why is that ?
5. alan said...
oops
ps: you won't find Bloomberg's style of comment on BBC...why is that ?
6. alan said...
oops
ps: you won't find Bloomberg's style of comment on BBC...why is that ?
7. alan said...
oops
ps: you won't find Bloomberg's style of comment on BBC...why is that ?
8. Cozza said...
This is an absolute disgrace. I can't wait for Labour to get the boot.
9. mark wadsworth said...
Like I said in the penultimate chapter of my Brief History of UK Tax, we have moved from a historic position of the government raising most revenues from land taxes (see famous Richard Cobden quote, h/t Jock Coats) to raising most revenues from income/turnover/employment/profits and a smidgeon from land/property.
We are now moving to the next logical phase - increasing taxes on income etc (i.e. 50% top rate of tax, extra 0.5% Employer's NIC, Tory plans to hike VAT to 20%, ridiculously low personal allowance) and not only reducing property taxes (both major parties have promised a "council tax freeze", Tories want to exempt main residence from IHT, subsidise care for wealthy home owners etc) but are using tax receipts to subsidise house prices and land values.
The ultimate goal of Home-Owner-Ism must be to scrap all property taxes (Council Tax, Business Rates) and introduce direct subsidies for owners thereof, which may sound far fetched but that's what we already have for agricultural land (single farm payment scheme), it's just a question of extending it; and for the government, i.e. the taxpayer, to fund zero-per-cent-interest loans for buying land and property.
And the South West Lib Dems and the SNP are seriously touting scrapping Council Tax and replacing it with 4% extra "local" income tax.
10. mark said...
a little off topic but this might be of interest, I got a letter from halifax this morning, they have lower both my OD limit and Credit card limit, no i rarely use the OD but it is useful to know it is there, the CC limit i use every month and pay it off in full, this to me stinks of something more serious in the financial system, in fact my credit score is near perfect yet they are almost implying it is not...
go figure this is the future of government owned banks
11. Robbie said...
I thought that there was a class action against lenders sharing in the price gains of a property. Is it wise to enter into an agreement which may soon be considered illegal?
12. 51ck-6-51x said...
From HomeBuy Direct's web site:
"""
HomeBuy Direct will help:
* First-Time Buyers
The scheme is targeted at First-Time Buyers who cannot afford to buy a suitable property on the open market without assistance in the area where they live or work. This may be due to the higher cost of borrowing at present, or other factors.
* House builders
Current market conditions and lack of mortgage liquidity are impacting heavily on the house building industry. There is a long-term public interest in maintaining the capacity of the industry to respond with increased supply when the housing market recovers. The scheme will help participating house builders by enabling First-Time Buyers to purchase their properties (by offering purchasers a better deal than they would otherwise have received).
* The housing market
First-Time Buyers are one of the key drivers of the housing market. By assisting First-Time Buyers to purchase, HomeBuy Direct will provide a targeted boost to the market. This will encourage developers to build more to meet the extra demand.
"""
1) By "first time buyers" do they mean, all the ones they are lending a deposit too? Sure, they may be, so long as they keep up payments ( therwise it's lost savings). OR do they mean all the others who must wait longer for prices to come down?
2) "house builders" yes, certainly!
3) "the housing market" - helping? Well, yes if by helping you mean distorting.
4) didn't they miss "financial institutions"?!
13. 51ck-6-51x said...
mark,
Give them a call and tell them you want to keep those limits in place and see what they say then - they'll probably just say, "certainly sir".
14. debtfree said...
By helping a few, they are making it almost impossible for a large majority to never get on the housing ladder (without getting into huge amounts of debt). What sort of lunacy is this ?
Are they trying to make home ownership almost impossible for our future generation ?
15. mark wadsworth said...
@ debtfree "Are they trying to make home ownership almost impossible for our future generation ?"
You touch on yet another flaw in the ideology of home-owner-ism - that home-owners are immortal, that future generations (for whom the NIMBYs are selflessly preserving The Hallowed Greenbelt) will never be born and that they can stop the clock of economic development to their own advantage for all time (in a very literal sense, i.e. no new runway at Heathrow, because that might depress the value of a few houses - even though all the extra jobs that it would create in the area would, on the whole, increase house prices).
But the short answer is "yes".
16. tyrellcorporation said...
@Mark 'Tory plans to hike VAT to 20%,'
Perlease! Do you consider for one moment that Labour won't do this also if they were elected? With 20% VAT throughout the Eurozone its a no-brainer as they can spin it as harmonisation.
Please don't forget Mark that Labour have heaped tax upon tax over the last decade and most of the money has been wasted. If you're happy with this then keep your blinkers on and keep voting Labour.
The difference between Labour and the Conservatives right now is that the Conservatives have had the courage to actually outline the cuts that are needed and that the bill for the last decade of hedonism has landed on the table and must be paid. Meanwhile labour have denied anything has changed and that the best way to pay down debt is by borrowing more. Reality has to kick in Mark, even for die-hard socialists.
17. icarus said...
mark w @ 10.25. Interesting Richard Cobden quote - but how did the landowners of old obtain the money to pay their taxes except by collecting rents/taxes from productive peasants?
18. mark wadsworth said...
@ Tyrell, AFAICS Labour and Tories are just as bad as each other (proposed Tory cuts are next to nothing). It is just as likely that Labour will hike VAT to 20% if they stay in power. I vote UKIP, as it happens (although I'm still wrangling with them over housing policies).
But which hedonism do you mean? Government debt hedonism or housing bubble debt hedonism?
19. mark wadsworth said...
@ Icarus, of course the landowners charged market rents to peasants. So what? There's no harm in charging market rents (why would they charge anything less?), and what this amounted to was a very high tax on rental income and little or no tax on earned income.
20. tyrellcorporation said...
Debt hedonism in general - spending what you haven't got - Labour's casino culture.
Apologies for assuming you were a Labour voter - pretty below the belt really ;)
21. icarus said...
@ mark w 11.35 - Is tribute from land secured by military occupation a market rent? Were the rents paid by Irish peasants to absentee English landlords simply market rents? What's the difference in such cases between rentals, taxes or just plain pillage?
22. mken said...
None of the parties are prepared to go after the real villains and causes, banks, bankers, pyramid systems, because they are all so deeply involved. Instead they target the post service or public services or the army or teachers or whatever next. Even politicians are now held to some kind of account.
This all serves to deflect attention away from the "no price too high" bailing out of privileged banking jobs. When Cameron talks of the private sector taking pain which part of the private sector does he mean? By pain does he mean a reduction in glasses of champagne?
23. Smasheroonie said...
@13 "Reality has to kick in Mark, even for die-hard socialists."
I would not say this administration is a Socialist one. There has been little to differentiate the policies of Labour from Conservatives since 1990's. They are both centre-right.
24. letthemfall said...
tyrellcorp
It seems you categorise people on the assumption that they are enthusiastic supporters of one political party (because you are yourself perhaps?). Remarks like "Labour's casino culture" betray your straightforward views, in a world where little is straighforward, especially when it comes to economics and politics. That so many people have gone wild with debt has less to do with Labour than the corporations who've found that lending is a way of generating large sums from borrowers - that is until it all went wrong in 2007/8. The only real blame you can lay at the Govts door for this is allowing it to continue. But as I've said before, if the Govt had stamped on it there would have been a great outcry about socialist interfering govts restricting value-creating business.
The debt binge was part of the Western global economic culture (US even worse). To think that simply electing another govt will make things so much better is naive, especially if that govt tries exactly what it did 30 years ago.
25. mark wadsworth said...
@ Icarus, well, yes, the landowners originally stole the land.
But as long as they then have to hand over the bulk of the rental income as tax, and if the tax is spent wisely (that's a big "IF") on the peasants/workers/entrepreneurs (delete according to taste) who created all the wealth in the first place then it doesn't really matter that much. Actually appropriating land and handing it out to people is a recipe for disaster (see Zimbabwe, or Home-Owner-Ism in the UK), it's better to leave legal ownership where it is and transfer economic ownership (via the tax on the rent = land value tax) back to the community.
26. Sara said...
Yep, leave the ownership of all the land in the UK with it's legal owner: The Crown. All Queenie needs to do is charge rent to the squatters at a rate proportional to the market value of the land.
End of.
27. tyrellcorporation said...
@letthemfall.
I'm in the predicament I'm in (and many on this blog) because of policies pursued by the Labour government. The UK Labour government, like many others (but not all) turned a blind eye to excesses within the financial sector to create this current crisis. I also believe they have mismanaged the economy on so many levels as to be almost criminal. You suggest that any government would have done the same thing - well that's something we'll never know will we. My comments and observations are based on the facts before me and not dogma.
Also, per capita, I think you'll find our personal debt is far worse than in the US.
28. waitingfor hpc said...
here here tyrellcorporation
29. letthemfall said...
tyrellcorp
Well, many of us have not benefitted from Labour policies. I'm guessing your predicament is related to housing; I can certainly sympathise with you on that score. Many people - and not just the young - have had their lives disrupted by the bubble. But the only way that could have been prevented would have been to curtail the actions of the financial services sector. Do you really think a Cons govt would have acted any differently, especially when we have the past evidence of them allowing exactly the same thing in the 80s?
As for US debt, well I have no figures to hand, but I'd be surprised to find lending there less reckless than here. The fundamental issue is inequalities of wealth. Labour, despite admirable policies such as minimum wage and tax credits, have presided over growing inequalities it's true, but that is primarily a consequence of how globalisation has played out. Will a Cons govt change all this? You could knock me down with a feather if they do.
30. tyrellcorporation said...
http://buttonwood.economist.com/content/gdc
UK Public debt per capita - $22,717.60
US Public debt per capita - $22,256.30
Organization for Economic Cooperation and Development, total consumer debt in the U.K. stood at 164% of annual disposable income at the end of 2006, In the U.S., that number was 138%.
Can't find any more recent stats.
31. Leeds-bozz said...
Great article. Truly appalling, shameful system.
32. nickb said...
MarkW,
But we DO need to preserve the hallowed greenbelt, I reckon. Been to Holland recently? One town just grows into another; horrible, no wildlife left almost. & with peak oil & climate change measures on the way we'll need all the farming land to grow food on. Pressure on housing stock can be alleviated by legalising squats, taxing gains from property trading and taxing second homes; let the pips squeak. We should build better flats too so families won't mind living in them, like on the continent, as they take up less land.