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Fairyland

How will the Crash stop this time

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To ask, How will the crash stop this time?

1. Sacrifice BTL

2. Tax payers foot the bill via HTB

3. Combination of 1&2 

4. Completely new policy ?

Edited by Fairyland

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Debt jubilee.

Unfair to savers? Of course! But since when has the Bank ever cared about fairness... or savers?

No doubt Mr Carney, or his successor, will offer a few words of encouragement and look reflective. And Mrs May, or her successor, might arrange a small patriotic war to take our minds off things. It's the Tory way.

 

 

 

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46 minutes ago, zugzwang said:

Debt jubilee.

Unfair to savers? Of course! But since when has the Bank ever cared about fairness... or savers?

No doubt Mr Carney, or his successor, will offer a few words of encouragement and look reflective. And Mrs May, or her successor, might arrange a small patriotic war to take our minds off things. It's the Tory way.

 

 

 

That debt jubilee thing is quite likely. At the very least, I expect a HTB equity debt forgiveness.

In fact, that's the biggest reason why I would even start considering using HTB - I'd much rather be on the hook to the govt than to a bank. Any bank just wants its money+interest back in any circumstances and doesn't give two fvcks about what I think of it. The govt, on the other hand, might care about my vote. I don't know what the numbers for HTB Equity Loan will be in 2020, but if it sums up to a significant number of votes, then who knows?

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How will it stop this time?

 

This is exactly the point I am making in my recent "Perfect Storm" thread.

The Government will positively have to stop it, or we really will be in trouble economy wise.   But the thing is, they cannot stop it until it starts, and truly- get a cohesive, incisive & effective battle plan from the Rich Daddy boys and girls at Westminster- without creating more devastating knock on...?

As someone once said- "It is hard to drain the swamp when you are up to your **** in Alligators.."

This is the thrust of my own question.   Last time we had a swelling World economy, "happy times" after yet another war, the world's biggest con man in power, and it could be all brushed under the carpet.  This time we have multi corps with feet pointing towards the exit door, Brexit capping cheap (er) labour, something scary happening in the USA, and potential nuclear grief from Euro law/trade makers, + overheated HPI. 

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45 minutes ago, Wolfie84 said:

I think this is nailed on

Me too. And/or son-of-HTB to help people to afford to buy the HTB houses from the first lot who were HTBd. 

The only consolation with HTB is that it removes rental income from landlords but that doesn't mean it should have been done. 

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24 minutes ago, Patient London FTB said:

Me too. And/or son-of-HTB to help people to afford to buy the HTB houses from the first lot who were HTBd. 

The only consolation with HTB is that it removes rental income from landlords but that doesn't mean it should have been done. 

 

Some of the debt forgiveness is written in to the T&Cs, I suppose.  The stuff below is from the help to buy site.  I guess being on the hook for these losses is another reason the govt won't remove any props :-(

https://www.helptobuylondon.co.uk/docs/default-source/default-document-library/help-to-buy-buyers-guide-oct-16-v1016.pdf?sfvrsn=0

What happens if property values fall?

Will I have to repay the full amount of Help to Buy assistance or just a percentage of the total sale proceeds?
When you sell your home, (unless you have repaid the Help to Buy equity loan document previously) the Help to Buy equity loan document commits you to repay a percentage of the market value equal to the percentage contribution of assistance received.

This means if the market value of your property falls below the level at which it was first purchased, you will repay less than the original amount the Agency contributed to the original purchase.

You must always show that the proposed sale value is at the prevailing market value before going ahead. The Agency’s Mortgage Administrator must approve the sale before allowing the second charge to be released.

As long as you have complied with all your obligations in the Help to Buy mortgage deed, you will not be required to provide for any shortfall in the equity loan repayment if you sell when values have fallen.

If you do not comply with the terms of the Help to Buy mortgage deed, the Agency will seek to recover all the money they are owed. Your solicitor will explain the Help to Buy mortgage deed to you before the property is purchased.

Illustration 2a

Start of year

Estimated annual change in property price %

Total property Value

Help to Buy home owner your entitlement to 80% of property value

Agency Help to Buy entitlement to 20% of property value

1

-5

£200,000

£160,000

£40,000

2

-5

£190,000

£152,000

£38,000

3

-5

£180,500

£144,400

£36,100

4

+5

£171,475

£137,180

£34,295

5

+5

£180,049

£144,039

£36,010

6

+5

£189,051

£151,241

£37,810

In the above example, if no capital repayment has been made on the main mortgage, repayment of the £150,000 mortgage from sales proceeds would leave £39,051 to contribute to the repayment of the £37,810 equity loan. 

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They'll use fiscal policy next (this) time.  Starting with Son-of-MIRAS, perhaps extended to all (including unsecured) debt.  

Also lots of fiscal stuff to support the economy in general.  We'll have a diesel scrappage scheme soon, etc.

The big deals will be in infrastructure -- lots of lovely jobs building fantastical new bridges or whatever.

[I'm of the opinion that they'll just about manage to support property prices in sterling, but there'll be some significant inflation that they'll conveniently ignore for quite some time).

Edited by dgul

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9 minutes ago, Wolfie84 said:

 

Some of the debt forgiveness is written in to the T&Cs, I suppose.  The stuff below is from the help to buy site.  I guess being on the hook for these losses is another reason the govt won't remove any props :-(

https://www.helptobuylondon.co.uk/docs/default-source/default-document-library/help-to-buy-buyers-guide-oct-16-v1016.pdf?sfvrsn=0

They pay for some of it through their taxes like we all do. It's Help to Buy Bail Banks. You know.... that bailing banks with taxpayer's money thing we weren't going to do again after 2008!

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By 'crash' I shall assume 'recession' - longer-term it will of course be a slow burn (multiple decades, perhaps longer)

CBs will use their B/sheets again

Governments will use their b/sheets again

We've not even contemplated fixing long end of the curve yet like Japan, so that's an option

Overall, more of the same - financial repression; re-inflation; taxation of savings; currency wars etc

 

 

 

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1 hour ago, Shea VanHaven said:

How will it stop this time?

This is exactly the point I am making in my recent "Perfect Storm" thread.

The Government will positively have to stop it, or we really will be in trouble economy wise.

That's your market view, and same for those paying very high prices, and those not tempted to sell.

And those who see long-wave smooth-out.  

Makes me laugh... those HPCers who have a breakdown, 'MSM / Don't know what they're doing / Programmed / Controlled' because other people believe firmly in ForeverHPI, bailouts, forever policy intervention.   Market participants to be respected imo. 

My view is they have to let it happen, else we will really be in trouble economy wise - but I am just another market participant, and long on wrong side of things (when looking at my housing costs/position).

Why've they brought in S24 then Shea VanHaven... SDLT surcharge.  Non Dom changes.  PRA.   MMR.

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I suspect in the UK we will see a period of adjustment through a inflation. Prices are going up due to Brexit, and when they go up like this following prior rationalisation in the economy, it can lead to super normal profits. Take a look at the stock market, it is pricing in growth and this will tend to push up wages in due course.

Also Millennials are a bigger cohort than Gen X, and even if they don't feel rich now, over time they will need to be employed as who else will do all the work.

Bigger cohorts tend to spend more in aggregate than smaller ones. So I suspect this may help the UK economy in the end.

The one thing though is taxes need to be cut and spending on boomer pensions, both state and Public Sector final salary needs to be reigned in. But a dose of inflation should take care of this as long as benefits are contained.

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20 minutes ago, Mikhail Liebenstein said:

I suspect in the UK we will see a period of adjustment through a inflation. Prices are going up due to Brexit, and when they go up like this following prior rationalisation in the economy, it can lead to super normal profits. Take a look at the stock market, it is pricing in growth and this will tend to push up wages in due course.

Also Millennials are a bigger cohort than Gen X, and even if they don't feel rich now, over time they will need to be employed as who else will do all the work.

Bigger cohorts tend to spend more in aggregate than smaller ones. So I suspect this may help the UK economy in the end.

The one thing though is taxes need to be cut and spending on boomer pensions, both state and Public Sector final salary needs to be reigned in. But a dose of inflation should take care of this as long as benefits are contained.

Yes, but if lending caps are maintained and possibly increased, then this would mean some prices will rise, and some fall..?  -on the same street even? can't happen.

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4 hours ago, Shea VanHaven said:

Yes, but if lending caps are maintained and possibly increased, then this would mean some prices will rise, and some fall..?  -on the same street even? can't happen.

 

But lending caps are multiples, and I'm suggesting salaries will be heading up.

 

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3 minutes ago, Mikhail Liebenstein said:

 

But lending caps are multiples, and I'm suggesting salaries will be heading up.

 

My partner works for the largest Re-Insurance company in the UK.  Just been told that three years in a row now, she won't get a salary increase.  And she does an important and highly responsible/ accountable job.  As I said, these companies have one foot pointing towards the exit door, and keeping hundreds/thousands of drone city workers in check with the fear of relocation.

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12 hours ago, Fairyland said:

To ask, How will the crash stop this time?

1. Sacrifice BTL

2. Tax payers foot the bill via HTB

3. Combination of 1&2 

4. Completely new policy ?

EVEN MORE money printing (duh!)

 

Continued financial repression, leading to ...

.. Negative interest rates, escalation of the 'war on cash' to get rid of people's 'exit option' from the banking system.

Massive (secret) bailouts ... news blackouts.

Even more backstopping of the markets from Central Banks.

More propaganda on the mainstream media - clampdown on alternative sources (fake news narrative used as excuse).

More restrictions on the internet (usual 'Cheese Pizza' and terrorism narrative used as excuse to clamp down on exchange of information)

A 'minor' war somewhere to distract attention.  Not minor of course if you live in the warzone.

More anti-Russia propaganda to make people believe that aforementioned war could escalate to WW3.

 

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When homes under the hammer stops broadcasting new episodes.

When Kirsty and Phil are mercilessly beaten with a discarded door handle and old brick, by a disgruntled former guest who bought "At The Peak" in Location Location Location

Edited by Tapori

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The mood music has changed. Obvious props will no longer be politically acceptable. 

might get lower rates, I don't think we will see any meaningful negative rates. 

higher inflation against stagnating wages and falling house prices. 

the biggest tools have allready been used up. Now the gov does not want to fight or stop a decline in house prices, they want to appear like its deliberate policy. 

with BTL being pushed out of the market there will be sadly pent up demand so outside of London the slide in prices will be drawn out over 2-3 years. Maybe falling 6% a year.

london flats however will crash , and crash hard. Pure bubble there.

perhaps the gov knows that the builders will try and blackmail gov by stopping all building and just hold while land banking. hence the various policies being talked about to force them to build.

we have a housing crisis, and a crash will cause what little building there is to stop. I think the gov allready has a gun to its head on housing without the builders pulling the triggure on unrest.

i don't see any debt forgiveness. those morons are allready on the hook. I do see demand side policies such as an enhanced HTB ISA and more forced building. 

maybe even boomer bribes to free up some larger housing stock. 

I feel much more positive these days. 

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They will do whatever is necessary to prevent a hpc before a 2020 general election. The DM and DE won't tolerate a hpc, now that they have brexit in the bag woe betide the government if they touch their sacred cows of hpi, btl, and nhs (too many elderly readers).

It could well be some form of debt forgiveness disguised as some sort of misselling compo scheme, IO mortgages for example. 

The reintroduction of MIRAS to help "hardworking home owners".

Then there is the potential for a "novel public private partnership" to provide social houses, in other words a shared ownership scheme where the government jointly owns a 25 or 50% share of the house. One that can be rolled over when going up the "ladder" perhaps. The stake might even be used to pay for care when you're old if you don't buy the government stake. Two birds with one stone? 

Unless something radical has changed in the UK since I left (seen little evidence) it's very much business as usual with non consequential tinkering around the edges. The JAMs (where did they disappear to) being promised jam tomorrow in a victoria sandwich they can have and eat.

Edited by olde guto

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i think they need prices to fall pretty quickly in 2017 and 2018, so that they can pump the market towards mid 2019 for an election winning mini boom.
They would also like that mini boom to be owner occupiers not BTL morons. 

London is already falling pretty hard. 

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16 minutes ago, jiltedjen said:

i think they need prices to fall pretty quickly in 2017 and 2018, so that they can pump the market towards mid 2019 for an election winning mini boom.
They would also like that mini boom to be owner occupiers not BTL morons. 

London is already falling pretty hard. 

I would think that way as well.

Alternatively, if they can rebrand crashing house price as helping young step into housing ladder, and project that as deliberate govt policy outcome. If saying so will win votes, why not.

They will hail the crash(social mobility, cohesion/Society) prevented.

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A houseprice crash is not going to win anywhere near the number of votes it loses. The hate from those that lose money, even paper money, will dwarf the gratitude of those that benefit. I doubt many people who would gain from buying would even consider creditting the government, while existing homeowners would definitely blame them.

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Yeah but no but yeah but no.

Currently, the new incumbents have a mandate to get us out of Europe.  So they are already unpopular with 50% of the voting population.  Voting for anyone else at the next G.E. will not really help the other 50% that I can see.   I mean who else will they vote for exactly?  Or more likely, they just won't vote. Whatever way, we have a chance of stable government for the foreseeable future, even if it is not the choice many want for this very reason.

If somehow housing were able to take a huge knock without impacting take home pay, this gives more money for the economy, and thus more tax for HMRC.  I think what the Government really need right now is discussions with people who have foresight and vision, along with common sense. There must be a "doable" restructure of box building, pricing, lending, taxing, pensions, lock ins and lock outs that will work.   Basically, wipe the slate clean and go for it.   

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