How Osborne Could Kill Btl

[Neverwhere]

As said before Venger, some things are written for discussion's sake and questioning my own view. I think I have a fairly good idea how land and real estate work generally, but this was about particular aspects.

On payment strike - if even a minority of renters and mortgagees stopped paying it would bring the land price game to an abrupt halt. Just like the 'if you owe the bank £100 it's your problem, if youe owe them £1bn...', if 25% of the population decided they'd had enough with spending a lifetime's work on accruing a stake in the rentier game then what exactly would be done about it? The situation perpetuates because people play along - whether that's due to greed or just time and life realities. I don't think one needs to be an anarchist to understand that. How we dealt with that could be a societal choice, not an inevitability.

Getting a bit off-topic, but you suggested once that I'm maybe 'more hpc' than you. I probably am, in that I'm talking about overhauling/killing the whole game, not just getting prices 20% down. I don't care whether that would also stuff every creditor and homeowner (including me), if it forced society to move forward from a culture of socialised wages and privatised rents to socialised land and resource rents and privatised wages. You're right that there would still be a gulf between haves and have-nots, but unlike today the haves would have to compensate the have-nots for mutually assured societal rights rather than the other way round as now. That's not a view I'm apologetic about, although I also give it a 0% probability of happening.

Have I read 118 etc? You keep going with this assumption of apologists for prices and borrowers. Nowhere, probably ever, have I inferred that. BTL is a symptom of a disease, not the disease. BTL is a boil that needs lancing but that won't cure the disease without greater core action and general public understanding.

I think you're conflating two different arguments about credit and taxation.

If mortgagors (the mortgagee is the lender) en masse went on payment strike and this was accepted it wouldn't result in a Land Value Tax, it would just allow people who had excluded others from access to land through their own reckless borrowing to shore up that position and keep those people excluded. No debt jubilee could be at all ethical without a commensurate ownership jubilee, forcing everyone to rebuy their assets out of actual earned income (if they were both able and inclined to do so).

I don't think that there would ultimately be a gulf between the haves and the have nots under a resource focused taxation system, and I don't think Venger was implying this as it wasn't something that was noticeably raised up thread (rather I think he was referring to the true inequity of allowing the overindebted to permanently lock the priced out out of land use through a debt jubilee). True wealth is access to resources. If there were a holding cost to hoarding said resources then over time, possible even successive generations, the inequality of a productivity focused taxation system would likely come out in the wash.

In relation to reckless and unsustainable credit, assuming the current focus of taxation and basic system of purchase is unchanged (so dealing with the world as it is, rather than as we would like it to be), buy-to-let lending is the disease as it currently stands. It is the last bastion of interest only lending. The last subprime infection site. And it is rampant.

[Neverwhere]

I think causality matters and your counterpoint is wrong. The article focuses on the why not the how & applying the alternative approach would always work with a lag - transacting when the news is in or when it's too late.

Trends and cycles are expressed through policies and practices, but in retrospect. Cracking down on interest only lending may be an expression of bearish sentiment, but what comes first - the crack down, or enough sentiment change to justify it.

I'm not saying price analysis is any easier than policy analysis, but the former involves making a future judgement call, while the latter can only be founded in a judgement call about the now. i.e. agreement on price disagreement on value. Whether the driver of all that is circular-psychological or something else driven, rather than evidentially or pysically driven doesn't override the fact that concluding on direction of lead-lag relationships may matter.

I disagree on all counts. You may as well say what comes first - the new price someone paid, or enough sentiment change to justify it? The two are indistinguishable. Equally policy has a direction of travel as much as price does. In both cases that direction is an expression of the trend in sentiment.

[Venger]

I think you're conflating two different arguments about credit and taxation.

If mortgagors (the mortgagee is the lender) en masse went on payment strike and this was accepted it wouldn't result in a Land Value Tax, it would just allow people who had excluded others from access to land through their own reckless borrowing to shore up that position and keep those people excluded. No debt jubilee could be at all ethical without a commensurate ownership jubilee, forcing everyone to rebuy their assets out of actual earned income (if they were both able and inclined to do so).

I don't think that there would ultimately be a gulf between the haves and the have nots under a resource focused taxation system, and I don't think Venger was implying this as it wasn't something that was noticeably raised up thread (rather I think he was referring to the true inequity of allowing the overindebted to permanently lock the priced out out of land use through a debt jubilee). True wealth is access to resources. If there were a holding cost to hoarding said resources then over time, possible even successive generations, the inequality of a productivity focused taxation system would likely come out in the wash.

In relation to reckless and unsustainable credit, assuming the current focus of taxation and basic system of purchase is unchanged (so dealing with the world as it is, rather than as we would like it to be), buy-to-let lending is the disease as it currently stands. It is the last bastion of interest only lending. The last subprime infection site. And it is rampant.

Great post Neverwhere. Fully agree.

[Guest_northshore_*]

I stumbled on the post which led to that observation. You're very HPC in a way that concerns me.

I don't want to go back to some form of communism, control economy. You've not outlined what occurs after this (below). Do those who own outright (who have £Tn in equity) stay where they are? Or do they get forcibly resettled? People's savings like my own...? (Eg Renter saver). What happens? Those with huge mortgages who outbid my family? What happens after the game is killed in your way? Wipe their mortgage debt away? There's still only a certain number of houses, and then all those wanting a home.

My view is that BTLs and OOs paying £2.85m a few months ago / last year, all got what they wanted via free will. Same for any BTL buyer of OO buyer.

So that markets should be allowed to play out (with no more interventions like QE). Free-will on the way up from buyers/BTLer buyers, to bubble upon bubble prices, stomaching the losses in value if and when they come. And if prices fall 30% it doesn't mean mass repos. It's just life, and a market. Your general public understanding, is for me, other market participants on other side of equation mostly. I won't pay these prices. Their understanding is often hard on the way of forever HPI. I don't want their understanding. Just for markets to prove things; that prices can go down as hard as they can go up.

It concerns me that you can still believe there's a magic middle ground without government intervention where markets just play out at these levels of leverage. Land and property are probably the most heavily subsidised markets in existence so I'd also give that a 0% probability of happening.

It wouldn't be 'some form of communism, control economy'. It would be closer to the opposite. An economy where people get to not give the output of their own efforts to the State or forcibly to rentseekers at markup, amplified by credit, but social goods like welfare and infrastructure are funded via the stuff that nobody did any work to produce or create (land, natural resources). I don't know at what point in history both the right and left concluded that socialised incomes and privatised rents is more or less the right thing.

In that link I was referring to homeownerism, like landlordism, being socially subsidised. Primarily by those who don't own a house or land.

[Neverwhere]

it is a big risk and a series of big bills and I don't think the result is quite the panacea soome are mooting

correct me if I am wrong

the scheme must involve an LLP to enable relief / avoidance of SDLT on incorporation (SDLT on £5m would be over £500k)

http://www.hmrc.gov.uk/manuals/sdltmanual/sdltm24500.htm

and, a more detailed analysis that highlights the risks, specifically

"It may appear possible for an individual or co-owners to transfer property to a connected company free of SDLT by initially transferring it to a partnership (including a limited liability partnership), which can be effected without an

SDLT charge if the partners are connected individuals, with a view to the partnership ultimately transferring the property to a company owned and controlled by the individual partners.

However, such a transaction is likely to be caught by the SDLT anti-avoidance rules in s 75A to s 75C and would thus be ineffective to avoid a deemed market value charge under s 53."

http://www.taxation.co.uk/taxation/Articles/2014/12/02/332394/problematic-connections

let's also say there is a refinancing fee of £10k

and that the interest rate is 0.5% higher on £3.5m, an extra £18,750 per year interest

Add into that insured professional fees (which could, as per the Mark Alexander post above be £50k), early redemption penalties on existing mortgages, new tenancy agreements .... it adds to up a fair few bob

And then what?

If you want to earn from it, you are either on PAYE or dividends (likely a mixture of both). PAYE is taxed normally, dividends are taxed and can only be paid from profit (which is taxed). The company needs to be run with CGT in mind for any sales

Thanks for this BTW.

Some interesting discussion of the tax changes to dividends on the Tax Relief On Buy To Let Mortgage Interest thread that seems relevant to your last point:

They've got a bloody cheek to be moaning about paying 44% tax. With the changes to dividend tax next year ilk end up paying 20% corporation tax followed by 35% dividend tax on most of my income. Income I actually worked for!!

Worth noting that Ian Cowie in The Sunday Times Money section has praised the changes to BTL and says he actually campaigned for something similar

sorry to be picky - surely 32.5% dividend tax for higher rate taxpayer. Still, tax at 46% is high enough

I think they've got an 'entitled' mindset. They've been getting away with it for years - and in some regards will continue to do so. Most people who have an income iro £70k will have a marginal rate of tax of well over 40%, so why is 44% or 53% so onerous. The problem is they think that debt interest should be tax-deductable, whereas for most individuals debt interest is paid after tax. This is an old loophole from the days of Miras which should be plugged. In fact, they shouldn't get any tax relief, just as I don't get tax relief if I take out a personal loan and buy shares. (or they should reintroduce Miras, which IMO may well come in in 2018 or 19 - just in time for the next election).

[the other problem is BTL has created a huge structural problem for the British economy* - it should never have been allowed to get to this state, and they're probably doing too little now - but they do want to get re-elected in 2020 so they can't do too much more]

*BTLs are much more exposed to both interest rates and the state of the economy than OOs.

Dividend tax credits were something else the chancellor abolished in the last budget - keep your eye on the ball. I certainly hope you don't take any income as dividends, since you seem so ignorant of the tax regime.

And dividends are paid out of profits AFTER corporation tax has been taken - this was the case even before the budget, and AFAIK the 10% tax credit had SFA to do with CT and everything to do with the 10% dividend tax rate for basic rate taxpayers due on dividend income pre budget.

[Neverwhere]

It concerns me that you can still believe there's a magic middle ground without government intervention where markets just play out at these levels of leverage. Land and property are probably the most heavily subsidised markets in existence so I'd also give that a 0% probability of happening.

It wouldn't be 'some form of communism, control economy'. It would be closer to the opposite. An economy where people get to not give the output of their own efforts to the State or forcibly to rentseekers at markup, amplified by credit, but social goods like welfare and infrastructure are funded via the stuff that nobody did any work to produce or create (land, natural resources). I don't know at what point in history both the right and left concluded that socialised incomes and privatised rents is more or less the right thing.

In that link I was referring to homeownerism, like landlordism, being socially subsidised. Primarily by those who don't own a house or land.

Ascribing magical thinking to the idea that a house price crash could play out? On what basis? Or are you misunderstanding a call for a correction in the current market without additional government props as a claim that the underlying stucture of the market is entirely free?

As to homeownerism any homeowner or prospective homeowner who is also a productive worker is getting scr*wed by an economy that socialises their income, so many will be net losers under the current system, whereas professional landlords are net winners.

[Guest_northshore_*]

I think you're conflating two different arguments about credit and taxation.

If mortgagors (the mortgagee is the lender) en masse went on payment strike and this was accepted it wouldn't result in a Land Value Tax, it would just allow people who had excluded others from access to land through their own reckless borrowing to shore up that position and keep those people excluded. No debt jubilee could be at all ethical without a commensurate ownership jubilee, forcing everyone to rebuy their assets out of actual earned income (if they were both able and inclined to do so).

I don't think that there would ultimately be a gulf between the haves and the have nots under a resource focused taxation system, and I don't think Venger was implying this as it wasn't something that was noticeably raised up thread (rather I think he was referring to the true inequity of allowing the overindebted to permanently lock the priced out out of land use through a debt jubilee). True wealth is access to resources. If there were a holding cost to hoarding said resources then over time, possible even successive generations, the inequality of a productivity focused taxation system would likely come out in the wash.

In relation to reckless and unsustainable credit, assuming the current focus of taxation and basic system of purchase is unchanged (so dealing with the world as it is, rather than as we would like it to be), buy-to-let lending is the disease as it currently stands. It is the last bastion of interest only lending. The last subprime infection site. And it is rampant.

I probably am, because I think they're intertwined. I didn't say payment strike would result in LVT or a happy ending, it was just an example of how the system could be brought to its knees quite simply. I also didn't say anything about a debt jubilee.

On LVT/resource focused taxation system. you probably know views differ on the likely (in)equality consequences. I doubt it would do a great deal to narrow the greatest spread, but would probably narrow the average spread. I don't really know, but my opinion on it isn't driven by a wish for the State to end inequality, just to move towards a system that better rewards working over free-riding. You're likely right that change would build over time.

On chicken/egg vs irrelevant, that's fair enough - we disagree. I don't believe the two are indistinguishable, discerning the difference is what most trading amounts to, even in bubbles.

[pipllman]

Thanks for this BTW.

Some interesting discussion of the tax changes to dividends on the Tax Relief On Buy To Let Mortgage Interest thread that seems relevant to your last point:

that whole area of SDLT avoidance on incorporation is an example of my reference in another thread to tax lawyers being able to breathe a sigh of relief because of the use of the term reasonable in the GAAR

For a £5m portfolio, where the transactions are considered as linked, the SDLT bill is £513,750 ( http://www.hmrc.gov.uk/tools/sdlt/land-property-results.htm?dates_Transaction=01%2F12%2F2015&moneyResidential=5000000&moneyNonResidential=0 )

That potential bill, when considered alongside the advice offered by a 'professional' that it can be avoided by doing X, Y, Z, is sufficient to encourage many to take the avoidance route.

A case considering the reasonableness of X, Y, Z as anything other than wholly for the purpose of avoiding the tax would cost a good few bob and, until it has been tested in the appropriate tribunals, I don't think the outcome is 100% clear either way.

[Neverwhere]

I probably am, because I think they're intertwined. I didn't say payment strike would result in LVT or a happy ending, it was just an example of how the system could be brought to its knees quite simply. I also didn't say anything about a debt jubilee.

On LVT/resource focused taxation system. you probably know views differ on the likely (in)equality consequences. I doubt it would do a great deal to narrow the greatest spread, but would probably narrow the average spread. I don't really know, but my opinion on it isn't driven by a wish for the State to end inequality, just to move towards a system that better rewards working over free-riding. You're likely right that change would build over time.

On chicken/egg vs irrelevant, that's fair enough - we disagree. I don't believe the two are indistinguishable, discerning the difference is what most trading amounts to, even in bubbles.

Sentiment that is unexpressed is by definition undetectable and untradable.

You were talking about a payment strike (which if allowed to play out without mass repossessions is effectively a debt jubilee) and you wrote "I'm talking about overhauling/killing the whole game, not just getting prices 20% down. I don't care whether that would also stuff every creditor and homeowner (including me), if it forced society to move forward from a culture of socialised wages and privatised rents to socialised land and resource rents and privatised wages" which implied that the two were linked, even if you didn't mean to make that implication.

[Neverwhere]

that whole area of SDLT avoidance on incorporation is an example of my reference in another thread to tax lawyers being able to breathe a sigh of relief because of the use of the term reasonable in the GAAR

For a £5m portfolio, where the transactions are considered as linked, the SDLT bill is £513,750 ( http://www.hmrc.gov.uk/tools/sdlt/land-property-results.htm?dates_Transaction=01%2F12%2F2015&moneyResidential=5000000&moneyNonResidential=0 )

That potential bill, when considered alongside the advice offered by a 'professional' that it can be avoided by doing X, Y, Z, is sufficient to encourage many to take the avoidance route.

A case considering the reasonableness of X, Y, Z as anything other than wholly for the purpose of avoiding the tax would cost a good few bob and, until it has been tested in the appropriate tribunals, I don't think the outcome is 100% clear either way.

It would be a very high risk strategy, especially as HMRC can now seize the SDLT bill until the case is resolved either way.

[Guest_northshore_*]

Ascribing magical thinking to the idea that a house price crash could play out? On what basis? Or are you misunderstanding a call for a correction in the current market without additional government props as a claim that the underlying stucture of the market is entirely free?

As to homeownerism any homeowner or prospective homeowner who is also a productive worker is getting scr*wed by an economy that socialises their income, so many will be net losers under the current system, whereas professional landlords are net winners.

No I didn't say that. I ascribed magical thinking to the idea that 'markets should be allowed to play out (with no more interventions like QE)' as contrasted with the idea that overhauling towards another radically different scenario is concerning. I didn't and haven't said that a house price crash won't play out. They always do.

On homeownerism, I share your outlook, but that doesn't negate their actual and implied subsidisation.

------

I don't know what 'Sentiment that is unexpressed is by definition undetectable and untradable' means.

Payment strike - as said above it was an example of something that would clarify the price-setting and social exploitation mechanism (money, credit, land). I'm not sure a strike that included all land clients including renters would amount to a debt jubillee but it wasn't intended as a call to net constructive action anyway, beyond noting that a lot more power resides with the masses than is assumed and the idea that other social systems are possible.

[Guest_northshore_*]

... Assume we have three material populations: FTBers, BTLers, upsizers and downsizers. (Ignore flippers). [i need to dig up approval data for each population]

Events:

HTB announcement date: March 2013

HTB Implementation date: October 2013

MMR announcement date: ? (Does anyone have the date)

MMR implementation date: April 2014

BTL restrictions: March 2015 ...

Fwiw - charts of my locale (cm23) using rightmove/LR with dashed lines marking HTB announcement in March 2013 budget, bringing forward of stage in October 2013, MMR implemtation and proposed BTL legislation. For sake of info/discussion prompting my questions - but correlation isn't causation, HTB vs BTL not mutually exclusive drivers etc.

Numbers are just listings per price range - manual, sporadic, doesn't account for other sites and completely unscientific.

Green line below is Land Registry index for Hertfordshire (inverted on right hand axis) so more negative means higher price.

[Neverwhere]

No I didn't say that. I ascribed magical thinking to the idea that 'markets should be allowed to play out (with no more interventions like QE)' as contrasted with the idea that overhauling towards another radically different scenario is concerning. I didn't and haven't said that a house price crash won't play out. They always do.

On homeownerism, I share your outlook, but that doesn't negate their actual and implied subsidisation.

------

I don't know what 'Sentiment that is unexpressed is by definition undetectable and untradable' means.

Payment strike - as said above it was an example of something that would clarify the price-setting and social exploitation mechanism (money, credit, land). I'm not sure a strike that included all land clients including renters would amount to a debt jubillee but it wasn't intended as a call to net constructive action anyway, beyond noting that a lot more power resides with the masses than is assumed and the idea that other social systems are possible.

I think you are wildly misinterpreting Venger there. It's very clear from his own post that his statement about market interventions is simply an assertion that people who have monopolised land and resources - and in so doing excluded others from land resources - via the exploitation of cheap credit and loose lending standards should be allowed to eat their losses:

I stumbled on the post which led to that observation. You're very HPC in a way that concerns me.

I don't want to go back to some form of communism, control economy. You've not outlined what occurs after this (below). Do those who own outright (who have £Tn in equity) stay where they are? Or do they get forcibly resettled? People's savings like my own...? (Eg Renter saver). What happens? Those with huge mortgages who outbid my family? What happens after the game is killed in your way? Wipe their mortgage debt away? There's still only a certain number of houses, and then all those wanting a home.

My view is that BTLs and OOs paying £2.85m a few months ago / last year, all got what they wanted via free will. Same for any BTL buyer of OO buyer.

So that markets should be allowed to play out (with no more interventions like QE). Free-will on the way up from buyers/BTLer buyers, to bubble upon bubble prices, stomaching the losses in value if and when they come. And if prices fall 30% it doesn't mean mass repos. It's just life, and a market. Your general public understanding, is for me, other market participants on other side of equation mostly. I won't pay these prices. Their understanding is often hard on the way of forever HPI. I don't want their understanding. Just for markets to prove things; that prices can go down as hard as they can go up.

I don't see that there is any magical thinking in that. I would personally have been very insulted had you levelled the same claim at me. Calling for no more interventions like QE in the market as it stands is not the same as saying that the underlying market structure is ideal or non-interventionist. Nor is there anything wrong with questioning what people mean when they talk about radically different scenarios. There are radical improvements that could be made on the current situation, but there are also radically worse scenarios which would be massively worse.

Allowing those who have behaved recklessly to reap the benefits of that indefinitely whilst forcing the responsible to bear the consequences of their actions - for instance by stopping all land related payments and thereby allowing the liar loan IO crowd to keep their spare rooms and large family homes whilst prudent renter-savers are stuck in the cramped and tiny flats that they've been putting up with whilst trying to save - is a deeply concerning idea, whether it's meant as a real call to action or not.

I'm not sure what's not to understand on the sentiment front. Action or inaction that is driven by sentiment is an expression of said sentiment. Sentiment which is not expressed through any means whatsoever cannot be discerned and therefore cannot be traded upon. Sentiment and the expression of sentiment are indistinguishable from an external standpoint. Policy changes are as much an expression of sentiment as price movements. There is no rational reason why policy can't front run price movements (there may be ideological arguments as to why it shouldn't, but these are just that - ideological - and in practice sentiment is not so easily overridden) or vice versa.

On homeownerism working homeowners are not net subsidised. It's specifically non-working homeowners and non-working landowners that are net subsidised. The net position is important because land rights require money to enforce, and surrounding value-adding infrastructure requires money to build, so where you have uncompensated for land rights you have to look at where the balance of taxation has been shifted instead because that compensation still needs to be paid and so somebody is paying it in lieu of the landowners. Currently workers and businesses are picking up the tab via taxes on labour and productivity. This means that many working homeowners and working prospective homeowners (for home the situation is significantly worse if they are renting) are already effectively compensating for their own land use and then paying additional tax on top of that to compensate for the land use of unproductive others.

Uncompensated land rights are bad for society, and that does cover all land ownership, but to say that even non-working homeownerism is just as bad as landlordism is wholly wrong. If there were no state enforced property laws then people would still have to live somewhere and so they would still have homes - they would just have to defend them rather than relying on the state to defend them. Homeownerism is the natural state, the thing which we evolved to do - shelter ourselves and our families. There is absolutely nothing wrong with that impulses. Landlordism, on the other hand, causes insecurity of shelter and all of the associated social ills that go with that and effectively imposes a greater burden of taxation on renters than on any other sector of society as their taxes effectively compensate for land rights and yet they have no free access to land and must pay for a second time in order to shelter themselves.

Everyone should have the opportunity to have security of shelter and the best way to achieve that would be through compensated property rights, a removal of all taxes on income and productivity, and widespread homeownership. Maybe those first two are pipe dreams but they are worth arguing for, and in the meantime we can at least practically shoot for the last one: housepricecrash!

[Bland Unsight]

Fwiw - charts of my locale (cm23) using rightmove/LR with dashed lines marking HTB announcement in March 2013 budget, bringing forward of stage in October 2013, MMR implemtation and proposed BTL legislation. For sake of info/discussion prompting my questions - but correlation isn't causation, HTB vs BTL not mutually exclusive drivers etc.

Those MMR lines are in the wrong place. Lending practices changed before MMR implementation in April 2014, (quiet word from the FCA one assumes). MMR simply required lenders to do what they were already doing. See this Mortgage Strategy article for details of the withdrawal of lenders in 2012. You can see this explicitly in the data in a graph I've posted more than once from the FCA commissioned Experian report in 2013. Just knock of 25 years for the mortgage tenor.

Source: FCA

With this piece of the puzzle in its correct place your data supports the rather obvious conjecture that the transition from interest-only back to repayment will hit transaction volumes in the absence of a material correction of prices.

[Guest_northshore_*]

Those MMR lines are in the wrong place. Lending practices changed before MMR implementation in April 2014, (quiet word from the FCA one assumes). MMR simply required lenders to do what they were already doing. See this Mortgage Strategy article for details of the withdrawal of lenders in 2012. You can see this explicitly in the data in a graph I've posted more than once from the FCA commissioned Experian report in 2013. Just knock of 25 years for the mortgage tenor.

Source: FCA

With this piece of the puzzle in its correct place your data supports the rather obvious conjecture that the transition from interest-only back to repayment will hit transaction volumes in the absence of a material correction of prices.

Thanks. It could probably support a variety of conjectures. Did those early steps include any measures for owner occupiers that were effectively reversed by HTB?

[Guest_northshore_*]

I think you are wildly misinterpreting Venger there. It's very clear from his own post that his statement about market interventions is simply an assertion that people who have monopolised land and resources - and in so doing excluded others from land resources - via the exploitation of cheap credit and loose lending standards should be allowed to eat their losses:

I don't see that there is any magical thinking in that. I would personally have been very insulted had you levelled the same claim at me. Calling for no more interventions like QE in the market as it stands is not the same as saying that the underlying market structure is ideal or non-interventionist. Nor is there anything wrong with questioning what people mean when they talk about radically different scenarios. There are radical improvements that could be made on the current situation, but there are also radically worse scenarios which would be massively worse.

Allowing those who have behaved recklessly to reap the benefits of that indefinitely whilst forcing the responsible to bear the consequences of their actions - for instance by stopping all land related payments and thereby allowing the liar loan IO crowd to keep their spare rooms and large family homes whilst prudent renter-savers are stuck in the cramped and tiny flats that they've been putting up with whilst trying to save - is a deeply concerning idea, whether it's meant as a real call to action or not.

I'm not sure what's not to understand on the sentiment front. Action or inaction that is driven by sentiment is an expression of said sentiment. Sentiment which is not expressed through any means whatsoever cannot be discerned and therefore cannot be traded upon. Sentiment and the expression of sentiment are indistinguishable from an external standpoint. Policy changes are as much an expression of sentiment as price movements. There is no rational reason why policy can't front run price movements (there may be ideological arguments as to why it shouldn't, but these are just that - ideological - and in practice sentiment is not so easily overridden) or vice versa.

On homeownerism working homeowners are not net subsidised. It's specifically non-working homeowners and non-working landowners that are net subsidised. The net position is important because land rights require money to enforce, and surrounding value-adding infrastructure requires money to build, so where you have uncompensated for land rights you have to look at where the balance of taxation has been shifted instead because that compensation still needs to be paid and so somebody is paying it in lieu of the landowners. Currently workers and businesses are picking up the tab via taxes on labour and productivity. This means that many working homeowners and working prospective homeowners (for home the situation is significantly worse if they are renting) are already effectively compensating for their own land use and then paying additional tax on top of that to compensate for the land use of unproductive others.

Uncompensated land rights are bad for society, and that does cover all land ownership, but to say that even non-working homeownerism is just as bad as landlordism is wholly wrong. If there were no state enforced property laws then people would still have to live somewhere and so they would still have homes - they would just have to defend them rather than relying on the state to defend them. Homeownerism is the natural state, the thing which we evolved to do - shelter ourselves and our families. There is absolutely nothing wrong with that impulses. Landlordism, on the other hand, causes insecurity of shelter and all of the associated social ills that go with that and effectively imposes a greater burden of taxation on renters than on any other sector of society as their taxes effectively compensate for land rights and yet they have no free access to land and must pay for a second time in order to shelter themselves.

Everyone should have the opportunity to have security of shelter and the best way to achieve that would be through compensated property rights, a removal of all taxes on income and productivity, and widespread homeownership. Maybe those first two are pipe dreams but they are worth arguing for, and in the meantime we can at least practically shoot for the last one: housepricecrash!

There are two ways I can reply to that. The first involves a lot of criticism centered around apparently suggesting what I should or should not say to Venger, perhaps because your interpretation might insult you. I'm a little tired of justifying assumed claims that weren't made so I'll skip that part and go with a more polite second.

Sentiment - it's already clear we disagree on lead/lag, whether directionally or relevance of. Therefore your statement, which defers to your position, isn't one that adds up for me. If price is the driver (with which you disagree) then it's sentiment with respect to price that matters. Price can be traded upon.

On homeownerism and subsidies I disagree. Homeowners are receiving subsidies in the form of interest rates, no location rent/tax and untaxed capital gains. Workers and businesses are picking up the tab, but it's private tenants, social tenants, owner occupiers, landlords in that order (inverse order to the extent of subsidisation where landlords are * multiple, owner occupiers are, social tenants aren't and private tenants are being rogered). My issue is with homeownerism not homeowners. If there's evidence concluding I'm wrong then I'll say I'm wrong.

On land rights, compensation, tax burdens and opportunity I entirely agree. But on an evidential basis shooting for change isn't equivalent to shooting for particular hpc catalysts. My questioning or comments are generally because I don't know or unsure about stuff, not as assertions - and when they are it's only until proven wrong. I think we can all already agree that the current situation is sh!t and hope for change, but if discussion must begin with a conclusion and work backwards for explanation that doesn't work for me.

[Bland Unsight]

Thanks. It could probably support a variety of conjectures. Did those early steps include any measures for owner occupiers that were effectively reversed by HTB?

Have you looked at the lending volumes in HTB? Last time I looked they were comedy. It's a gimmick. I'll credit it with keeping volumes from being even lower than they are and feeding BTL sentiment, but compared to the whole banking sector lending like drunks to interest-only financed liars it's barely a gimmick.(Last time I looked they were also focussed at the bottom end of the market.)

Source: NAO

Another re-post I'm afraid.

If you do pull some more recent numbers which contradict my present view, I'd appreciate it if you post them.

[Bland Unsight]

If price is the driver (with which you disagree) then it's sentiment with respect to price that matters. Price can be traded upon.

I realise I'm coming in half-way through a conversation that I haven't had chance to catch up on, but what do you see price driving? Surely price moves around the space of the possible as supply curves and demand curves shift in response to the alteration of the actual.

How can price, which is what is discovered by markets, drive anything?

[Guest_northshore_*]

I realise I'm coming in half-way through a conversation that I haven't had chance to catch up on, but what do you see price driving? Surely price moves around the space of the possible as supply curves and demand curves shift in response to the alteration of the actual.

How can price, which is what is discovered by markets, drive anything?

Is your buying/not decision driven by price? Whether prices in the case of land/housing are discovered by markets in the usual sense is at best debateable anyway.

HTB - maybe, but it's not necessary to disagree on gimmick to perhaps (because I don't know) disagree on other relative factors (e.g interplay with BTL).

[Guest_growlers_*]

Fwiw - charts of my locale (cm23) using rightmove/LR with dashed lines marking HTB announcement in March 2013 budget, bringing forward of stage in October 2013, MMR implemtation and proposed BTL legislation. For sake of info/discussion prompting my questions - but correlation isn't causation, HTB vs BTL not mutually exclusive drivers etc.

Numbers are just listings per price range - manual, sporadic, doesn't account for other sites and completely unscientific.

Green line below is Land Registry index for Hertfordshire (inverted on right hand axis) so more negative means higher price.

Thank you. Very interesting.

I was thinking again about the question (prompted by your post) 'how do you conclusively prove that BTLer are the drivers of house prices' and wondered if the following would be a possible approach:

• Get land registry price data for various regions across the UK that have experienced varying amounts of HPI.
• Demean the data against the national HPI index to get a purely local view.
• Get the mortgage approval data for each geographic region and produce a data series (BTL approvals / total approvals).
• Prepare a dual axis graph for each region, time x axis, and on separate Y axis plot regional demeaned local house price inflation and on the other axis the regional proportion of BTL approvals / total.

You could run a regression of those two time series.

If BTLers are the marginal drivers of house prices, would you not expect these two time series to be highly correlated?

National economic effects: income, inflation, business cycle etc would be constant because you would be looking at data at the same point in time.

I couldn't find regional mortgage approval data (split by approval type) though. Does anyone know if this is available?

[Bland Unsight]

Is your buying/not decision driven by price? Whether prices in the case of land/housing are discovered by markets in the usual sense is at best debateable anyway.

Is your argument is that my choices are not embedded instead somehow the prices determines my choices? If it wasn't my choices and the choices of everyone else that set the price, what did?

[Neverwhere]

There are two ways I can reply to that. The first involves a lot of criticism centered around apparently suggesting what I should or should not say to Venger, perhaps because your interpretation might insult you. I'm a little tired of justifying assumed claims that weren't made so I'll skip that part and go with a more polite second.

Sentiment - it's already clear we disagree on lead/lag, whether directionally or relevance of. Therefore your statement, which defers to your position, isn't one that adds up for me. If price is the driver (with which you disagree) then it's sentiment with respect to price that matters. Price can be traded upon.

On homeownerism and subsidies I disagree. Homeowners are receiving subsidies in the form of interest rates, no location rent/tax and untaxed capital gains. Workers and businesses are picking up the tab, but it's private tenants, social tenants, owner occupiers, landlords in that order (inverse order to the extent of subsidisation where landlords are * multiple, owner occupiers are, social tenants aren't and private tenants are being rogered). My issue is with homeownerism not homeowners. If there's evidence concluding I'm wrong then I'll say I'm wrong.

On land rights, compensation, tax burdens and opportunity I entirely agree. But on an evidential basis shooting for change isn't equivalent to shooting for particular hpc catalysts. My questioning or comments are generally because I don't know or unsure about stuff, not as assertions - and when they are it's only until proven wrong. I think we can all already agree that the current situation is sh!t and hope for change, but if discussion must begin with a conclusion and work backwards for explanation that doesn't work for me.

I criticised the actual claims that you made about Venger's position - "It concerns me that you can still believe there's a magic middle ground", "I ascribed magical thinking" - because they don't make sense from his actual post and so appear to be assumed claims on your part, and rather impolite at that.

It's very hard to unpick exactly how much you misunderstand my position on sentiment. Transactions are an expression of sentiment. Policy is an expression of sentiment. The idea that there is a lead/lag at all between sentiment and its expression is meaningless as sentiment that is unexpressed is undetectable. Different groups can obviously express different sentiment at different times. The idea that prices - independent of access to credit - are exclusively driving prices is rather simplistic and tautological.

Whether you can acknowledge it of not your position on homeownerism is also overly simplistic because workers are not some hypothetical additional category with no housing status. It's a matter of pure logic: some workers are homeowners, renters, rentiers even. Their net position in regards to how much they are subsidised and how much they are subsidising others is far more nuanced than a simple check of their housing status. Private tenants who don't work are clearly not subsiding anyone. Working homeowners who pay out more in income tax than they would for their property under a land value tax clearly are.

Noone has argued that discussion must begin with a conclusion, and I think it's rather strange that you should apparently interpret an attempt to assert that a pragmatic goal is as valid as an idealistic one as an attempt to constrain the debate as to what is actually going on. The evidence is what it is independent of whatever we want.

[Bland Unsight]

Is your buying/not decision driven by price? Whether prices in the case of land/housing are discovered by markets in the usual sense is at best debateable anyway.

HTB - maybe, but it's not necessary to disagree on gimmick to perhaps (because I don't know) disagree on other relative factors (e.g interplay with BTL).

BTW - re gimmick. I know it's difficult to read it on the notes to the figure I posted, but that's 12,785 transactions in 9 months to 31 December 2013. Weighted to the bottom end of the market, and IIRC also weighted towards depressed markets in the North. As I'm sure you're aware transaction volumes currently are in the 700k per annum range. Hence about 2% of transactions. Maybe 1% in the South East? Against maybe 15% for BTL, (with BTL holding up a chains involving existing stock and HTB equity loans being new build stock only).

Gimmick to push mug sentiment. Who are the biggest mugs?

BTL.

Edited September 7, 2015 by Bland Unsight

[Venger]

There are two ways I can reply to that. The first involves a lot of criticism centered around apparently suggesting what I should or should not say to Venger, perhaps because your interpretation might insult you. I'm a little tired of justifying assumed claims that weren't made so I'll skip that part and go with a more polite second.

Let it go. I can't get upset by 'magical thinking' in context of discussion, when I'm questioning other hpc member theories as 'no-stomach hpc'.

It concerns me that you can still believe there's a magic middle ground without government intervention where markets just play out at these levels of leverage. Land and property are probably the most heavily subsidised markets in existence so I'd also give that a 0% probability of happening.

Also I'm not looking for happy middle ground. There's no middle ground from my perspective of the market, just very very high prices.

They have been the most heavily subsidised markets in existence, but markets can change.

Was watching

. The landlord with 75 properties from Telegraph, and plight of taxation relief change. It was a video from 2011. [1 min 55 in]

It is a market-place in the end - it's a volatile moving market place.

Well I'm not there to support those who outbid me, as I fended for my family by refusing to take on dangerous levels of debt in the quest to be a home-owner at ever higher prices. I will blame those who set very high prices via debt/real estate runs on money - paying ever higher prices... and BTLers of course. It's a market. I don't blame them in the sense that I have ill-feelings towards them... I don't know them.. they don't care for my renting family on forums. Neutral. We each make our own market decisions for our families.

On that front then yes it stems entirely from beliefs and values. Just not public interest, your or my beliefs and values; but those of informed homeowners, landowners and power brokers. The psychological element then becomes a function, sadly, of the eternal struggle for somewhere to live and fend for yourself, subject to wider economic cycles.

There's only so much blame I'm willing to assign as free will - when every option involves finding shelter at the whim of some rent-seekers or other with zero core alternative. I don't realistically expect every renter and mortgage payer to go on mass payment strike, even if doing so would resolve much of this pretty quickly.

If you want this via people stopping paying their mortgages, then I think it has to be total jubilee, and you have to hand your house over too. It's just no good to me a 50% - 75% crash, if you're (and so many others) are left with a house at the end of it, and my savings are wiped out, and incomes are much lower.

Getting a bit off-topic, but you suggested once that I'm maybe 'more hpc' than you. I probably am,

, not just getting prices 20% down. I don't care whether that would also stuff every creditor and homeowner (including me), if it forced society to move forward from a culture of socialised wages and privatised rents to socialised land and resource rents and privatised wages. You're right that there would still be a gulf between haves and have-nots, but unlike today the haves would have to compensate the have-nots for mutually assured societal rights rather than the other way round as now. That's not a view I'm apologetic about, although I also give it a 0% probability of happening.

I'm in agreement with all of Neverwhere's well explained market view during last few pages, so I have no more to add.

[Guest_northshore_*]

I criticised the actual claims that you made about Venger's position - "It concerns me that you can still believe there's a magic middle ground", "I ascribed magical thinking" - because they don't make sense from his actual post and so appear to be assumed claims on your part, and rather impolite at that.

It's very hard to unpick exactly how much you misunderstand my position on sentiment. Transactions are an expression of sentiment. Policy is an expression of sentiment. The idea that there is a lead/lag at all between sentiment and its expression is meaningless as sentiment that is unexpressed is undetectable. Different groups can obviously express different sentiment at different times. The idea that prices - independent of access to credit - are exclusively driving prices is rather simplistic and tautological.

Whether you can acknowledge it of not your position on homeownerism is also overly simplistic because workers are not some hypothetical additional category with no housing status. It's a matter of pure logic: some workers are homeowners, renters, rentiers even. Their net position in regards to how much they are subsidised and how much they are subsidising others is far more nuanced than a simple check of their housing status. Private tenants who don't work are clearly not subsiding anyone. Working homeowners who pay out more in income tax than they would for their property under a land value tax clearly are.

Noone has argued that discussion must begin with a conclusion, and I think it's rather strange that you should apparently interpret an attempt to assert that a pragmatic goal is as valid as an idealistic one as an attempt to constrain the debate as to what is actually going on. The evidence is what it is independent of whatever we want.

You criticised your interpretated claims of my post, rather than what I wrote including the qualifier in context. You do it a lot.

Perhaps you're overanalysing price/sentiment and it's simpler than you assume. Claiming tautology is a bit of a kop out. I could have said that but it wouldn't strengthen my perspective.

We've been discussing whether homeowners are subsidised. I'm aware that nuances exist but with economic foundations built on land and money I find it hard to understand how you conclude on a likely net zero or positive impact overall. We weren't previously discussing individual cases, but the entirety. That entirety is still what I'm referring to.

You have a bad habit of asserting claims that haven't been made. I said nothing about the value of pragmatic or idealistic goals, only references to their likelihood. I may be wrong. I'm equally scathing of my own hopes and dreams, as noted earlier - ideologically and practically. I also find your interjections on matters of interpretation strange, but I try to respond to the actual remarks where relevant. We don't have to agree.