Unmoderated

I actually had second interviews lined up at Thames Water when I was leaving practice. The only way they increase revenues is if more houses get built or legislation allows them to increase charges. Therefore everything is focussed on opex and capex and how to minimise costs. Water is sold so cheap that even if a third of it leaks they don't care. The cost of fixing leaks exceeds the savings realised. The sewerage discharge issues are blended with times of heavy rainfall (mostly). Rainwater should not be discharged into the sewerage system but I hear so many stories of people draining their poorly draining gardens or gutters into it because they CBA to do it properly. People do not poop more when it rains do they!?

Only if you want to never ever pay that debt off. 18bn would roughly service and repay a debt of 300bn over 40 years if it were to be repaid. Borrowing an additional £300bn in one year would significantly move the debt markets and make servicing that debt more expensive. That would mean a deficit of over 6X the pre covid run rate. You couldn't borrow that at 5%. Building a million houses in one year would also dramatically increase costs. Wages of trades and costs of materials would go through the roof. We simply couldn't do it. My concern with doing this would be that you end up making social housing nicer than people can afford through work which doesn't really stack up in any fair society imho. I honestly don't think politicians are looking that far ahead. They all have elections to win. Perhaps if the opposition is incredibly weak but collapsing house prices is almost always accompanied by a recession and this almost always results in a change in leadership.

I think from my perspective what this shows is that £18bn isn't a lot of money when trying to solve this problem. Councils do own land but do they own enough to build 300K+ houses? Is it in the right location? How much would they spend fighting legal challenges on planning? Bat surveys (even I had to have one FFS utter joke!)? Wildlife surveys etc? CPO doesn't make it cheaper to acquire the land. It just means they can force a sale. If you're buying a plot adjoining a main road next to a town then that's not going to fetch a bargain £10k/acre.... though I do get the semantics. I'm also wondering if you build it then they will come would apply. If you build £18bn of houses in one year then that's 73.5K houses out of the estimated 1.162M receiving housing benefit. It wouldn't generate a savings at all. That's 6.3% of the total houses. Over a very long period it might help but that would require a political party looking more than 5 years ahead.

I guess, it depends on lots of factors. Cost to build from scratch is about £1,750 per m2. Reasonable house would be 70m2 to 100m2 (2 to 3 beds). I stated an average of two per house so let's build two bedders at £122,500 a pop. This would build 147K houses per annum but this would also exclude the land and CIL charges. Conservatively would add the same again for the land and scrap the CIL since it's a racket for local authorities. we're down to approve 73.5K houses. However, £18bn saved could finance a much higher debt (say a loan of 5X that value and therefore build 5X the houses. You can see though that we arrive at £367.5K houses. Not even close to touching the existing stock of housing in PR and SR sectors sadly. The other reality is you'd have to install all the infrastructure, roads etc around these houses (building a one off on an existing plot excludes those costs). There may well be efficiencies if the government is building en masse but I wouldn't say that, in general, the government procurement systems are especially efficient. Certainly no more efficient than someone building their own house which is where that £1,750 m2 figure comes from.

Another great post! Guardian's proposal is simply to chuck in more money for these dossers so they push up prices for everyone. Red beret wearing 🤡s

In my view if rates are higher for longer and inflation is, as you say, higher for longer too I wouldn't bank on lower nominal values in a few years time. At 7% inflation nominal values double every decade. I don't think that's likely with higher rates but assuming even flat prices they would have halved in real terms.

Really only those who bought their first house. Anyone else should have sufficient equity to take the hit on values. The problem though is servicing the debt pile. That will get much more expensive for everyone with mortgages as they fall off their fixed rates.

I agree. That 10% drop in prices is only getting back to pre-covid. Protecting that, artificially inflated, price only services to exclude the non-propertied from building a stake in their own future. It's hard to believe this is the conservative party isn't it? Once the champions of the home owning democracy they're now pulling the ladder up. I'm in the wilderness politically too now. LibDems and Greens seem not to want to build anything anywhere but as someone who has bored everyone to death with how important I believe it to vote I have to vote for someone.

It's also a nonsense article. There are 2.6 million housing benefit claimants in the UK. There are 4.4 million private rentals (19% of housing units) housing over 11 million people. Social housing is another 3.9 million (17% of housing units). I can't find figures for the exact number of people in social housing but a Guardian article states that 43% are single occupiers and another 25% have two people. 32% therefore have more than 2. Roughly speaking then we could average 2? So another 7.8 million. 18.8 million in private or social rentals 2.6 million claiming housing benefits 14% (approx.) of tenants are therefore funded by housing benefit. but this is an underestimation given it doesn't correct for children nor pensioners in housing who don't qualify for housing benefit as they get other benefits. I also found this article quite interesting. I wasn't looking for ethnicity but it flagged the report when I was searching for a number for the total number living in social housing. https://www.ethnicity-facts-figures.service.gov.uk/housing/social-housing/renting-from-a-local-authority-or-housing-association-social-housing/latest#:~:text=Summary of Renting social housing,local authority or housing association)

Agreed! I think it would make a lot of sense. Existing schemes seem to rely on wealthy (property wealth at least) retirees selling and downsizing into a compound. It's safe, well thought etc for older people. Makes sense. The issue is down the line when people without property wealth come to this age. Chucking up these towns/villages in cheaper areas would potentially be a source of regeneration. They'll need all manner of ancillary workers to support these places. Perhaps it's the return of council housing but you have to be in your 60s to qualify?

If God had not wanted them fleeced he would not have made them sheep.

The sense of entitlement is off the charts. Poor guy having to stay in Woking, Surrey so he didn't have to relocate and take his son out of school! The heck has this country come to when this gets a sympathy vote FFS.

It will have to be addressed at some point. The % of retirees is forecast to continue growing and that's got to be funded. The real crunch is going to come over the next two or three decades as many of the people in my generation (early 40s) retire without a property. Tax payer is going to be coughing up even more to house these people when they stop working. I can imagine them building masses of bungalow estates for them eventually. NI was originally an insurance scheme and was contribution based but over time that was deemed 'not fair' so now I think there's relatively little anywhere that is contribution based. Even the state pension, in theory, requires 39 years of NI contributions but in practice this is waived for any number of reasons. You could have claimed benefits for 39 years and you'd still qualify - for example. When you think that many retirees on the old final salary schemes were at least as well off when they retired and then got an extra £10K per year at state pension age they likely have never earned more. They likely have no mortgage and far fewer costs. Then they enjoy lower marginal tax rates on income! It's so crazy that when you say it out loud it sounds like you've made an error.

No clue why you even started with me if that's how you want to end it. Had a lovely night thanks. Couple of lovely single malts, a few posts on here and 10mg melatonin so I sleep like a baby. Today is a new day. Perhaps you might find fault with my argument rather than failing to critique the way I made it. If not, I wish you a pleasant day ahead.

Where I am suggesting base rates should be 0.5%? When Liz Truss kicked off her mental 'budget' (ironic to call something that's not costed a budget - anyway) can you tell me what happened to the pound and why? Did it have more to do with interest rates or more to do with investors increasingly concerned about Britain's ability to service its debts? Despite fairly strong and consistent rate rises the pound isn't much higher than one year ago. What do you imagine might happen to GBP if Britain falls into a recession? I am well aware of what the base rate is and what else it impacts. The point is I don't think it's enough. Rise rates to 10%. What do you think would happen to GBP? Compare that to what you think might happen if we made half the boomers who are exempt from NI pay NI and maybe slapped 1% on the higher rate? You also cannot escape the inherent inequality of burning some people who have bad timing with mortgage renewals while others (potentially even more reckless borrowers) avoid or delay the burn for a while longer. Deficit down, borrowing down, GBP up, inflation down.

Then why did you lol? How is my argument chaotic? I thought it was well structured? How is it a scattergun? It's clearly tracking the original point which is fiscal policy would be a fairer method. It might, perhaps, have been a bit insulting. I'm sorry. It's hardly ignorant. I know what I'm talking about (Economics degree, IMC charter holder and Chartered Accountant at your service). Please, let's hear your rebuttal or are you less familiar with macro economics and fiscal policy than you first led me to believe? Please tell me how fiscal policy wouldn't work, or how it wouldn't share the burden more equally? In particular by the very cossetted group all the Covid measures were protecting who are getting a fairly easy ride out of this? Let's face it, that's what's caused most of this. I'm always open to learn and change my views. I've done it publicly on this forum several times. "I was wrong" is in my vocabulary. But, if you can't think of anything you can ignore me. It seems you're keen to punish people who borrowed 'irresponsibly'. Fair enough, whatever turns you on. I fail to see though how someone borrowing to buy their first home or struggling as a single parent has caused CPI inflation to rocket. If anything their saving for a deposit is deflationary? Perhaps the argument is too good for you to know where to start? But I'm open. going to bed now though so you've gota btou 8 hours to come up with something. Or not. Either way. Have a wonderful night.

People borrowing with a change in circumstances... death of partner, loss of job and unable to find a new one of similar earnings. I'm sure you're bright enough to work it out. Like I said, BTL over leveraged clowns can take a running jump but the reality is there's a lot of pain being taken by normal people in normal jobs in normal houses who are unfortunate enough to be coming off fixed rates. People like me don't have that until 2027. I've far wealthier friends with £500K+6 mortgages on 10 year fixes. They'll be just fine. How will a rate rise get them to curtain their spending any time soon? People are stress tested. They should be able to cover fairly big rate increases. It seems you're of the view that everyone should just 'do the right thing' and borrow 3X darling husband's salary to ensure they've enough should the worst happen. When did that ever pay off? When was that ever realistic? Yes, raising taxes to control inflation. It's smart because it can lower public debt which contracts GDP which means recession which lowers spending. High inflation also means higher costs of servicing debts. What about when inflation falls? What do you actually think? Or do you think at all? When inflation falls you can lower taxes. Your costs will have fallen since about half government debt is index linked (so too are boomer benefits) so that requires less funding. How is that in anyway chaotic? even if it was (it's not) how would it be more chaotic than interest rates jumping about and making planning for business investment uncertain? Oh, here's another little nugget, having public spending under control would improve the relative value of GBP making imported inflation lower. That's a good thing since we live in a global world and almost everything in the inflation basket is a globally traded commodity. Please, just think about it instead of trying to have a pop.

It might affect everyone, but not all negatively. Some people will be very happy with that. I'm also not saying everyone affected, I'm saying some people are going to lose everything (get hammered). Now, BTL spivs can lose the lot and I'll be drinking to that. Others will be paying a huge price to control inflation for everyone. As a portion of the population how many people have been 'hammered into the dirt'? I'm willing to bet not so many as yet and I'm also willing to bet the cossetted demographic have felt nothing despite their protection from the batflu being a huge element of the cause of al this. When I say a few I clearly do not mean three. I mean a slim segment of the population. Raising taxes would make everyone pay to control inflation.

Amen! They don't even pay NI!

imho this is the no.1 reason they wont. Govt would then have full responsibility for it. Although I think we both know it would be a better scenario. Right now BoE using monetary policy to control inflation in a global economy doesn't make much sense to me. Fiscal policy would be a more sensible and far fairer way of dealing with things. Problem is that doesn't win elections. Hammering a few people into the dirt to control inflation far better politically. Let's also not forget which segment wins most from this. Those without mortgages, with savings and index linked pay rises each year. I will concede that the very young and unhoused will stand to win from this too if it plays out as you think.

Are you wanting to trade up or down?

You do own the house though... and you own the debt. Thing is even a 5% IO mortgage right now is bad for the lenders. Inflation is higher. Over the space of a couple of years you should expect your salary to broadly keep pace and/or catch up with inflation. The debt to income ratio steadily becomes more favourable. It doesn't work out quite so well in the current interest rate regime but if you are earing over £100K after existing pension contributions there's even a case to be made to switch to IO and use the cash flow savings each month to bulk up your pension contributions. Take the PCLS when you can and clear the debt. A self managed endowment policy. Works especially well at the insane marginal tax rate. We're not all in that bracket of course but it buys people time and free cashflow. There's nothing stopping people making 10% overpayments on IO either as far as I'm aware? So you can chip away at the principle if you have a volatile income stream (or expect it to be in the future) while maintaining solvency. I'm sitting on a pile of cash right now. I know it's not the best place to keep it but I know that if I were to lose my job I could live off it for up to three years without working and that's without any redundancy pay out.

There are two categories of credit card users: Transactors: those who pay off their balance every month and play the lenders at their own game, including 'Stoozing' where initial offers are used to convert debt in a credit card to a cash deposit in a higher yielding account Revolvers: There are the poor guys who pay for the perks the transactors enjoy. They rotate debt from card to card and can't/don't pay off the loan in full each month. Transactors can become revolvers due to a change in circumstance or just by screwing up their Stoozing plans.

Interesting. The inflation rate in 1975 was 24%. The highest mortgage rate in that same year was 12% so real interest rates were -12%. £10K was the rough average house price (I get high £9K to low £10k depending on where I look). Struggling to find wages though. Just interested in comparing then with now. I don't think it's even been easy to buy a house. Always required work and sacrifice unless very fortunate.

It's, of course, a simplistic scenario. Putin's finished either way. Russia will have a new leader in the next few weeks. Not sure who but I'm willing to bet he'll have a good head of hair.