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First pass on this is that it is just another demand subsidy, much like Help to Buy equity loans, with some of the crappier aspects of Right to Buy thrown in for good measure.

The government will give money to housing associations. This enables the housing associations to pay current prices for land with planning permission and to build some houses. This enables a small amount of additional supply (new builds) to be called forth at a ridiculously high price where absent the demand subsidy much less supply would be called forth. This makes the statistics on the number of houses being built a bit less grim than they would be otherwise.

The Right to Buy reprise is that to the extent that there is anything good flowing from this (good security of tenure and ending up with a house after a lifetime of paying 'the rent') the benefit flows to a tiny number of households (there are about 20 million households, so 300k is about 1%) with anyone who doesn't get lucky left exactly where they were beforehand.

If this is our first taste of Mayism as it extends to housing then my conclusion is that it's business as usual.

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It's a slightly more inventive and obfuscating way to prop up prices. But what happens if you need to move back into a private rental? Refund? Voucher? This is only going to 'benefit' a small percentage of people willing to prostrate themselves to the government.

 

 

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Quote

 

Families who are “just managing” will have the chance to buy their homes after 25 years of paying rent, under government plans being considered.

 

A new type of tenure, to be called “buy as you go”, is expected to be announced as part of a major revamp of the housing market at the end of this month. Buyers will not need to have paid a deposit or require a mortgage but will build up equity in their homes over time.

...........

The rents paid by people in “buy as you go” homes would be around 90% of the market rate in the local area, with the split between rent and equity payments changing over time until the tenant eventually owns their home outright.

 

So renters will have enough for the equivalent of a deposit (build up equity) after 25 years of renting (by their middle age for most) then they might own outright if they live to something like 140.  

"Buy as you go" - when you're about to go at 140.  "Major revamp" you see.

Bound to be a vote winner.

Edited by billybong

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Great stuff. They really are running out of ideas now.

I would love to be a fly on the wall when they have the meetings to actually come up with these crazy ideas.

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So simply go on housing benefit,pay nothing for 25 years then they give you the house?.Or will you simply own 25% after 25 years?.Another crazy scheme to bung money to HAs to live in clover.

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6 hours ago, Exiled Canadian said:

Isn't that how a mortgage works?  You pay a fixed amount for 25 years which goes to pay interest and capital - the proportion going t capital increases as the deal moves towards a conclusion.

But, I believe, you have no equity until you have done 25 years time in the same place. So this fixes you to not moving.

Also, a mortgage is normally paid with your money, not the taxpayer's.

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Families who are “just managing” will have the chance to buy their homes after 25 years of paying rent, under government plans being considered.

When they say "buy" after 25 years it seems to mean be able to get a mortgage to purchase using some form of built up "equity" as deposit.  

Then of course they'll claim the families will "own" their homes rather than renting from the bank - but having "bought" in their middle age how old will they actually be when they do fully own their home considering how stretched they were in the first place plus increasing job insecurity as they get older.

Edited by billybong

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So having allowed housing affordability to collapse their solution is to try to pass the problem of housing the retired to future generations. This real is desperate and that is exactly how it looks.

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18 hours ago, durhamborn said:

So simply go on housing benefit,pay nothing for 25 years then they give you the house?.Or will you simply own 25% after 25 years?.Another crazy scheme to bung money to HAs to live in clover.

The article talks about wanting people on the living wage to be able to buy their home. What about the people in London and the south east on double the mean wage that can't afford to buy!

What I find a bit odd is how will most of these families be able to afford 90 per cent of market rent - if they need housing benefit to pay this is this deducted from the share they build up. And what happens when they reach the end of the 25 years aged 50 and want to buy the remaining 75 per cent at that age with only 15 years to retirement.

Sounds like another complex gimmick that doesn't add up.

 

 

 

 

 

 

Edited by MARTINX9

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44 minutes ago, MARTINX9 said:

The article talks about wanting people on the living wage to be able to buy their home. What about the people in London and the south east on double the mean wage that can't afford to buy!

What I find a bit odd is how will most of these families be able to afford 90 per cent of market rent - if they need housing benefit to pay this is this deducted from the share they build up. And what happens when they reach the end of the 25 years aged 50 and want to buy the remaining 75 per cent at that age with only 15 years to retirement.

Sounds like another complex gimmick that doesn't add up.

 

 

 

 

 

 

These HAs and ALMOs should be able to rent houses out at £50 a week,most of them were paid for decades ago,the problem is the spending they do.Our local one even gets involved funding events for the community etc.90% of market rent - the equity build up,but how much is that,1% a year?.Is the house then re-valued in 25 years if someone wants to buy the rest?.Can they buy at anytime and use the % built up,1%,2%,12% etc?.

You have to admire them though.Lock people into "market rents",dangle the carrot of "owning your home",then snare them on a big mortgage at 45 that means they will work until their 70th birthday when the state pension probably starts.

The aim of buying a house is buy as young as possible and pay off as soon as possible,this seems to lock in the opposite.

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Essentially leasehold with some kind of option at end of term? Same as it ever was?

Long term policy does not address current housing issues. Bottles up problems for a future government. Typical.

Convenient cowardly politics... if implemented will affect zero politicians currently sitting in Westminster as they will be dead/retired in 25 years.

What about the millions of people with interest only mortgages.. which is essentially the same but with more damning T&C's.

All bluster. In 25 years energy will be the major cost associated with living in the UK, not housing.

 

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4 minutes ago, hotairmail said:

Maybe they've forecast how expensive the housing benefit bill will be if all these pensioners are still paying rent. Wipe it out along with your student loan.

There could be some truth in that,monetize the HB bill.

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2 hours ago, cashinmattress said:

All bluster. In 25 years energy will be the major cost associated with living in the UK, not housing.

Please educate me on that.

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