Help to "Buy" (Sell) to be pumped up

[GreenDevil]

Correct me if im wrong. HTB is still active and people can still get support buying at 25% inflated prices. House prices are starting to fall because they are too high, inflation is roaring away and household budgets are squeezed. What difference will HTB extension make to this? Nothing. 

As for next election. The only way to be sure of a monumental crash is to vote corbyn at the next election. He has my vote.

[eric pebble]

1 hour ago, Tempus said:

 

Well, well, well.   

I have often thought that the whole housing crisis thing is not going to be solved at all by either "left" or "right" politicians.

It is a matter of COMPETENCE.  Economic, administrative and shear PRACTICAL competence.  

I totally, totally despair of the Tories.  I reckon the Vested Interests have been at them 100000%  -- persuading them to extend htb.  They have now committed political suicide. They are morons.

And the Adam Smith Institute seem to me to at least grasp it all:  They are absolutely correct in their economic analysis.  

What we need on top of that is --- Practical and administrative competence.  The govt of the day should hire the best brains in the world to sort it out for once and for all time.  

And - of course -- that is like asking for the impossible.  

So sad.

[Sawitcoming]

4 minutes ago, GreenDevil said:

Correct me if im wrong. HTB is still active and people can still get support buying at 25% inflated prices. House prices are starting to fall because they are too high, inflation is roaring away and household budgets are squeezed. What difference will HTB extension make to this? Nothing. 

As for next election. The only way to be sure of a monumental crash is to vote corbyn at the next election. He has my vote.

Indeed. I cant help feeling that this will have little real effect. Just virtue signalling with someone else's money. What I do like about it is that it shows where she feels vulnerable and that is housing for the displaced renters. So they can continue to prop ad infinitum or the market can correct. Which do you think is the most plausible?

Edited October 1, 2017 by Sawitcoming

[Princekie]

Time to emigrate. Give me twelve months and I'm outta here....

[ExiledMatty]

Depressing stuff.

The only way to cope is to assume this kind if support will go on forever and is just a regular part of the housing market.

Alternatively emigrate.

[Bland Unsight]

3 hours ago, spyguy said:

The BoE rules on mortgage lending.

Basically they stress test for 6% and ensure that the mortgage will not take more than ~30% of household income - after reapting expenses have been removed - cars, utils, travel cost etc.

MMR rules are put in place by the Financial Conduct Authority (the so-called 'conduct regulator' which exists in part to protect customer from sharp practice by firms). The FCA is not part of the Bank of England. 

[UnconventionalWisdom]

1 hour ago, DrBuyToLeech said:

It is utterly astounding that the British Conservative party survived the transition to democracy at all, never mind holding actual power.  

That's the Tory genius - getting the masses to vote for the interests of the plutocratic aristocracy that had been keeping them impoverished and oppressed for centuries.

The homeowning democracy was a large part of that survival strategy.

yep, give just enough to just enough people and they gain power. Maybe people believe they have somehow made it to middle class or are about to if they vote tory. Again it's up to the opposition to make people understand that tory policies are not in their best interests

[Sawitcoming]

3 minutes ago, UnconventionalWisdom said:

yep, give just enough to just enough people and they gain power. Maybe people believe they have somehow made it to middle class or are about to if they vote tory. Again it's up to the opposition to make people understand that tory policies are not in their best interests

Much of what I see is as simple as that. 

 

[GreenDevil]

1 hour ago, DrBuyToLeech said:

It is utterly astounding that the British Conservative party survived the transition to democracy at all, never mind holding actual power.  

That's the Tory genius - getting the masses to vote for the interests of the plutocratic aristocracy that had been keeping them impoverished and oppressed for centuries.

The homeowning democracy was a large part of that survival strategy.

But that has changed. 

They have people priced out well into their 40's now.

They have lost their 'aspiring' home owner Tory voter for good. And any props won't bring it back.

[Gigantic Purple Slug]

25 minutes ago, GreenDevil said:

Correct me if im wrong. HTB is still active and people can still get support buying at 25% inflated prices. House prices are starting to fall because they are too high, inflation is roaring away and household budgets are squeezed. What difference will HTB extension make to this? Nothing. 

As for next election. The only way to be sure of a monumental crash is to vote corbyn at the next election. He has my vote.

The devil will be in the detail

If I recall one type of help to buy (the more popular type, mortgage guarantee scheme) finished at the end of last year. The help to buy equity loan scheme is still active.

They may resurrect the mortgage guarantee scheme, or introduce something new.

What's clear to me is they are not going to let the housing market tank for the sake of a few billion quid being thrown at it. And really, from their perspective that makes some sort of sense. Ultimately the market will go down because of something outside of government control. Something so big they can blame it on something external that is not under their control.

[Sawitcoming]

19 minutes ago, Gigantic Purple Slug said:

The devil will be in the detail

If I recall one type of help to buy (the more popular type, mortgage guarantee scheme) finished at the end of last year. The help to buy equity loan scheme is still active.

They may resurrect the mortgage guarantee scheme, or introduce something new.

What's clear to me is they are not going to let the housing market tank for the sake of a few billion quid being thrown at it. And really, from their perspective that makes some sort of sense. Ultimately the market will go down because of something outside of government control. Something so big they can blame it on something external that is not under their control.

We did our best guvnor. HTB an' all that ... it was Brexit you sees.

Maybe what this really shows is that they know it's going down and there is nothing they can do to stop it, but this is a firm message that they tried and that they care. Also may help to shift a few new build for the builders who are genuinely wetting themselves with fear now.

Edited October 1, 2017 by Sawitcoming

[keeprenting]

I think it's just stupidity TBH.

As a Tory, why not let the free market operate and prices fall? You can blame it on Brexit, so no boomer backlash, and the boomers are hardly going to vote Jezza in.

Falling house prices, the young can buy homes and start voting Tory. What's not to like? Maybe the fact that their backhanders from property developers will dry up?

[Simples]

So after months of analysis and crisis sessions on how to reverse their forthcoming fall from power, this is what the Tory HQ geniuses have come up with. Unbelievable.

As someone said further up, they are absolutely cornered, having not taken the opportunity to have a proper recession and HPC years ago. Result is ludicrous contradiction - "we worry about folks getting into too much debt... we are extending HTB to get people, especially the most vunerable, to take on unsustainable debt"  "we're all about market forces... we will intervene in an attempt to force markets".

[Bland Unsight]

1 hour ago, GreenDevil said:

Correct me if im wrong. HTB is still active and people can still get support buying at 25% inflated prices. House prices are starting to fall because they are too high, inflation is roaring away and household budgets are squeezed. What difference will HTB extension make to this? Nothing. 

As for next election. The only way to be sure of a monumental crash is to vote corbyn at the next election. He has my vote.

This. In 2014 the National Audit Office produced a report on Help to Buy. The equity loans had been announced in March 2013 and open to the public on 1 April 2013. (London Help to Buy equity loans at 40% of the sale price were not announced until February 2016.) 

At the time of the NAO report (March 2014) a geographical concentration of Help to Buy loans in the North and the Midlands was already apparent.

Source

Here's what house prices were doing in the North East throughout that time:

I'm not aware of any convincing evidence that Help to Buy has had any effect on house prices. My understanding of the HTB equity loans has always been that they are response to the way in which the big developers cut the roll out of new supply when prices soften. Their profits are driven by the amount they paid for the land. The land is held somewhat tenuously in so-called strategic land banks via contractual arrangements like options. When MMR constrained the ability of households to borrow at 7 or 8 times earnings the plans to build out no longer made money; the land prices the developers had committed to pay were too high for buyers to cover.

Ordinarily the builders would have just waited for the the ability of buyers to grow to the point where the home buyers could pay the prices that were baked-in by the price that was to be paid for the land. This would have resulted in a collapse in the volumes of new houses being built and that would have been bad politics. Help to Buy squared the circle. The developers could now sell at a price which was 20% higher than what borrowers could afford to pay. That was enough to make a profit so the houses got built. (Given the very modest level of real earnings growth absent Help to Buy build out rates would have been much lower. I think that you could make the argument that Help to Buy has a negative impact on house prices because it increases supply without impacting people's ability to pay for second-hand houses.)

Edited October 1, 2017 by Beary McBearface

[Sawitcoming]

6 minutes ago, Beary McBearface said:

I think that you could make the argument that Help to Buy has a negative impact on house prices because it increases supply without impacting people's ability to pay for second-hand houses

The more this sinks in the more it looks like a simple way to appear to care about propping up prices but not actually doing so.

You have to ask why they did not reverse S24. Simply because most people have never heard of it and if they did they would not easily understand what effect it has. HTB is easier to interpret as the government trying to help ordinary folks.

 

[Gigantic Purple Slug]

From what I can tell the number of new builds being sold has dropped off a cliff since the mortgage guarantee scheme ended. It would be nice to see some confirmation of this. The analysis above (Beary McBearface) seems largely right to me. My guess is that the housebuilders have reported to the government that stock isn't selling and therefore there is no reason to build more. A Tory government solution to this is going to be limited by ideology (eg they can't convert unsold stock into council houses). On the face of it there is not much more they can do other than make the unaffordable affordable in some way. What I also see are properties that were built post 2000 (which are pretty much direct competition to HTB) are not selling/devalued. However this may not have an effect on the market in the respect that what it means is that second steppers are simply staying put rather than moving. That's going to have consequences at some point in the future but not for some time yet.

 

[crouch]

29 minutes ago, Gigantic Purple Slug said:

From what I can tell the number of new builds being sold has dropped off a cliff since the mortgage guarantee scheme ended. It would be nice to see some confirmation of this. The analysis above (Beary McBearface) seems largely right to me. My guess is that the housebuilders have reported to the government that stock isn't selling and therefore there is no reason to build more. A Tory government solution to this is going to be limited by ideology (eg they can't convert unsold stock into council houses). On the face of it there is not much more they can do other than make the unaffordable affordable in some way. What I also see are properties that were built post 2000 (which are pretty much direct competition to HTB) are not selling/devalued. However this may not have an effect on the market in the respect that what it means is that second steppers are simply staying put rather than moving. That's going to have consequences at some point in the future but not for some time yet.

 

The second steppers argument may be quite important.

Those who have made that second step know just how much it can cost (I did in the 1980s and backed off) and I wonder whether the euthanasia of the FTB (now forced to rent) together with elevated prices generally  hasn't killed off the possibility of second stepping almost completely. In which case the market, as I see it, has to collapse. Looking at it another way: the more you support prices via schemes like HTB the more you remove the possibilities for second steppers and the more you guarantee a collapse. 

[spyguy]

1 hour ago, Beary McBearface said:

MMR rules are put in place by the Financial Conduct Authority (the so-called 'conduct regulator' which exists in part to protect customer from sharp practice by firms). The FCA is not part of the Bank of England. 

Yep. My mistake.

[spyguy]

37 minutes ago, Gigantic Purple Slug said:

From what I can tell the number of new builds being sold has dropped off a cliff since the mortgage guarantee scheme ended. It would be nice to see some confirmation of this. The analysis above (Beary McBearface) seems largely right to me. My guess is that the housebuilders have reported to the government that stock isn't selling and therefore there is no reason to build more. A Tory government solution to this is going to be limited by ideology (eg they can't convert unsold stock into council houses). On the face of it there is not much more they can do other than make the unaffordable affordable in some way. What I also see are properties that were built post 2000 (which are pretty much direct competition to HTB) are not selling/devalued. However this may not have an effect on the market in the respect that what it means is that second steppers are simply staying put rather than moving. That's going to have consequences at some point in the future but not for some time yet.

 

Or the ukgov csn inttofuce a lose it or loose it law.

Let existing housebuilders go to the wall and open up to Eutopean builders, who cintruct housing of higher quality and cheaper price.

Ik builders have hovered up building land with debt, which uk tax payers had to bail out.

[nothernsoul]

I can see how in theory help to buy might depress prices of the whole market but in certain areas of the north west it has pushed them up. The developers have built in areas next to desirable places, usually areas full of existing terrace stock. They can sell a 4 bed house for around 180 grand which with government deposit would be about 135 grand, very manageable on existing rates. All this building then gentrifies the area and pulls up the price of existing terrace stock in the tier below, something that would once have cost about 90 grand is now 120 or 130. Ironically, before all the new build estates these areas were perfectly decent and liveable, they just weren't as socially desirable. 

[Gigantic Purple Slug]

22 minutes ago, nothernsoul said:

I can see how in theory help to buy might depress prices of the whole market but in certain areas of the north west it has pushed them up. The developers have built in areas next to desirable places, usually areas full of existing terrace stock. They can sell a 4 bed house for around 180 grand which with government deposit would be about 135 grand, very manageable on existing rates. All this building then gentrifies the area and pulls up the price of existing terrace stock in the tier below, something that would once have cost about 90 grand is now 120 or 130. Ironically, before all the new build estates these areas were perfectly decent and liveable, they just weren't as socially desirable. 

Can see that. It's probably more likely though that HTB new build goes up adjacent to the new build of 2000-2010. Stuff that is very depressed (say very old run down terraced) tends to get knocked down and re-generated rather than left on the edge of a new build estate.

[Democorruptcy]

51 minutes ago, spyguy said:

Yep. My mistake.

It's an easy enough mistake to make, given the overlap of staff between the FCA and BoE.

FCA Chief Exec Andrew Bailey https://www.fca.org.uk/about/fca-board/andrew-bailey

Plus others like

https://www.fca.org.uk/about/fca-board/sam-woods

https://www.fca.org.uk/about/fca-board/bradley-fried

[Si1]

1 hour ago, crouch said:

The second steppers argument may be quite important.

Those who have made that second step know just how much it can cost (I did in the 1980s and backed off) and I wonder whether the euthanasia of the FTB (now forced to rent) together with elevated prices generally  hasn't killed off the possibility of second stepping almost completely. In which case the market, as I see it, has to collapse. Looking at it another way: the more you support prices via schemes like HTB the more you remove the possibilities for second steppers and the more you guarantee a collapse. 

Indeed. But for a future govt to take the heat.

[Democorruptcy]

1 hour ago, crouch said:

The second steppers argument may be quite important.

Those who have made that second step know just how much it can cost (I did in the 1980s and backed off) and I wonder whether the euthanasia of the FTB (now forced to rent) together with elevated prices generally  hasn't killed off the possibility of second stepping almost completely. In which case the market, as I see it, has to collapse. Looking at it another way: the more you support prices via schemes like HTB the more you remove the possibilities for second steppers and the more you guarantee a collapse. 

I don't see the houses near me being built using the scheme as for FTBs. Up to £600k is too much there are lots of 4 or 5 bed detached. You could argue it's to eliminate the need for a second step and just go straight to a large house. It could even be used for the second step, you don't have to have never owned to use it. 

In Wales the max is £300k http://helptobuywales.co.uk/are-you-eligible/?lang=en

In Scotland the max was £230k up to March 2017 it then drops to £200,000 for purchases on or before 31 March 2018, and £175,000 for purchases on or before 31 March 2019

http://www.gov.scot/Topics/Built-Environment/Housing/BuyingSelling/help-to-buy

[regprentice]

1 hour ago, crouch said:

The second steppers argument may be quite important.

Those who have made that second step know just how much it can cost (I did in the 1980s and backed off) and I wonder whether the euthanasia of the FTB (now forced to rent) together with elevated prices generally  hasn't killed off the possibility of second stepping almost completely.

Agree 100%. Paid 82k for my 3 bed ex council semi 10 years ago (open market not a rtb). Now a house in my area with one more bedroom and a garage will cost another £250k. And my wages have barely risen in those ten years, highest annual payrise ive had in that time was 2%.