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Response To Email: C4 Interview 11Th October (Btl)

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I emailed Grant Shapps commenting on an interview he gave to C4 on BTL. I pretty much said that we needed a HPC as it was the best way to improve affordability for FTBs, and that BTL are scum that should be taxed to extinction.

I just received a reply...

Dear Mr ******,

Thank you for your email of October 12, 2010 to the Minister for Housing and Local Government, The Rt. Hon. Grant Shapps MP, regarding the housing market and specifically, Buy To Let (BTL) mortgages. I have been asked to reply.

I appreciate the concerns that you raise regarding the current housing market. The Government wants to establish a market where house prices are stable and predictable. People should be able to buy a home that they need and want, where they can feel safe, comfortable and happy.

Achieving this depends above all on the return to economic and financial stability which the Government is seeking to achieve through debt reduction and its commitment to abolish the structural deficit. This will help to keep interest rates low, improve credit availability and free up lending to FTBs and others. Ensuring responsible lending and borrowing practices will also be vital to the stability of the market.

The Government is committed to supporting homeownership but we also recognise a strong private rental sector is required to provide a flexible alternative and Buy to Let (BTL) properties make an important contribution. The Government wants to retain incentives to save and invest in capital assets (such as BTL properties) while ensuring a fairer tax system and so raised the top rate of capital gains tax to 28 per cent in the last Budget.

The Government wants to encourage everyone involved in the housing market to work together to ensure that the conditions which created the recent housing bubble are never repeated and we move back to a more sustainable and stable market.

Yours sincerely,

Eleri Jones

Eleri Jones

Housing Supply

Department of Communities and Local Government

1/A6 Eland House

Bressenden Place

London SW1E 5DU

030344 44054

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As per usual it's 'low interest rates' and 'free up lending' as the best answer. Interest rates couldn't be lower and banks have now returned to 'normal' lending (i.e. pre boom - you actually now need a deposit and your income is checked) and yet still no one is buying.

This tells me that people simply cannot afford current prices and they need to come down. Why is it so hard for people to admit this?

EDIT: Are you going to reply to Eleri's 'answer'?

Edited by hpc-craig

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Rather wet and predictable.

Would have been nice if he said "we need prices to fall 50% so people can afford to buy a house and we plan on using taxes to prevent multiple home ownership", that would have been nice ......

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"free up lending to FTBs and others. Ensuring responsible lending and borrowing practices will also be vital to the stability of the market"

Yeah. So free up lending and at the same time ensure responsible lending. That works.

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The Government wants to encourage everyone involved in the housing market to work together to ensure that the conditions which created the recent housing bubble are never repeated and we move back to a more sustainable and stable market.

This could be the first evidence I've seen of the government admitting it was / is a bubble and not 'market fundamentals'. Happy to be proven wrong with lots of other evidence that the govt has used this term in official communications.

* 100th post!!!! :D *

Edited by rantnrave

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My reply:

Thanks for your reply.

The problem for you is that "ensuring responsible lending and borrowing practices" is not compatible with "improve credit availability and free up lending to FTBs and others". It was irresponsible lending that created this mess, and further lending against such overpriced assets is madness. Those that made money from the credit boom are the ones that should be made to pay for the problems. Instead the govt and the BoE seem determined to maintain asset prices at all costs. There will be no recovery until asset prices are allowed to reset - Britain will remain an uncompetitive place to live and work until they have.

Multiple home ownership is a social problem and should be addressed in the interests of fairness.

I'm encouraged by your admission that the housing market is a bubble. All bubbles burst - it cannot be prevented.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved".

- Ludwig Von Mises, 1949.

Regards.

Edited by Constable

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Interesting.

I note that your argumentative technique employs logic and reason, backed up with verifiable facts. This does nothing but draw the reader to the conclusion that you are right - and the matter will be closed in the eyes of Shapps's lackey.

It is an old-fashioned, out-of-date form of argument that only ever really worked in ancient Greece.

I would advise you to rewrite your letter but tell Shapps that David Beckham thinks that high house prices are, like, "totally uncool".

Say that you've seen "FaceBook" on "the internet" and it says that "low house prices are totally cool".

Also mention that Jade Goody asked for a house price crash on her deathbed and the popular "Sun" newspaper supported her views in their fine editorial section.

It also will help if you suggest that Margaret Thatcher supported your views (Tony Benn if you're writing to a left-footer kleptocrat) and that lower house prices will support lighter-touch regulation of MPs expense accounts.

And, why not discuss the inevitability of Shapps's getting noshed off in the back of his Bentley by hordes of nubile first-time buyers desperate to demonstrate their appreciation to the heavyweight political high-flier that helped make a home available to them without taking on a dangerous amount of debt?

Yours Sincerely,

TBM

PS. Do you really think I'm kidding? I'm not.

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Key points from the letter:

Dear Mr ******,

The Government wants to establish a market where house prices are stable and predictable.

Achieving this depends above all on the return to economic and financial stability. This will help to keep interest rates low, improve credit availability and free up lending to FTBs and others. Ensuring responsible lending and borrowing practices will also be vital to the stability of the market.

The Government wants to encourage everyone involved in the housing market to work together to ensure that the conditions which created the recent housing bubble are never repeated and we move back to a more sustainable and stable market.

=====================================

I read this as wanting no steep fall in prices, no increases (as he says there is a bubble he doesnt like), but in order to support current homeowners he wants wages to catch up with current prices. How many years will this take, and do we think these aims are achievable?

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It occurred to me today that if the government wanted to increase tax revenue and reduce the deficit they should begin with housing. That is the largest sector of the economy that could contribute substantially.

Taking tax from income just removes discretionary spending from the economy. But reforming the favoured capital gains status of housing would have no associated detrimental affect. Allowing housing to reach a sustainable value quickly (by falling) ensures that the recovery would come quicker, along with increasing revenue from capital gains. A 5-year plan could achieve this rebalancing of the tax burden and result in a much healthier economy, where land/housing speculation would not interfere with capital formation in the business sector.

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  • 246 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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