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

[Democorruptcy]

On 01/10/2017 at 4:46 PM, guest_northshore said:

https://www.standard.co.uk/business/building-firms-owned-by-the-chancellor-voice-labour-worries-as-brexit-talks-near-a3484406.html

http://www.channel4.com/info/press/news/secrets-of-britain-s-new-homes-channel-4-dispatches

http://www.politicsforum.co.uk/forum/viewtopic.php?f=93&t=48767

[guest_northshore]

On 10/3/2017 at 3:58 PM, Democorruptcy said:

http://www.politicsforum.co.uk/forum/viewtopic.php?f=93&t=48767

Nice find. In the round corrupt as fck.

[Si1]

3 hours ago, guest_northshore said:

Nice find. In the round corrupt as fck.

+1

[Democorruptcy]

3 hours ago, guest_northshore said:

Nice find. In the round corrupt as fck.

I cannot find the original Private Eye article quoted in that forum post. Has somebody had it wiped?

 

[Si1]

4 minutes ago, Democorruptcy said:

I cannot find the original Private Eye article quoted in that forum post. Has somebody had it wiped?

 

Would not be surprised now.

[Ballyk]

Excellent article on Mail Online, I could have written this myself - 

http://www.dailymail.co.uk/news/article-4957030/Wealthy-families-exploit-7billion-Help-Buy-home-scheme.html

QUOTE - 

Academics said the scheme – given a £10billion further boost by Theresa May this week – was driving up house prices. ‘Help to Buy is like throwing petrol on to a bonfire,’ said Sam Bowman, of the Adam Smith Institute. ‘This scheme is being used by investment bankers and doctors. They are certainly not the sort of people who the taxpayer should be subsidising.

Luke Murphy of the Institute for Public Policy Research, another think-tank, said Help to Buy had made houses less affordable. ‘The two fundamental problems are that it pushes up property prices and that it is primarily helping those who would have been able to buy anyway,’ he added.

It feels like the media are finally getting it.  Plus a lot more people on this forum now seem to realise HTB inflates prices, and only really helps the housebuilders / land owners.

[juvenal]

This Mail article deserves a topic of its own.

A government survey found that 57 per cent of people using Help to Buy said they could have afforded to purchase a home without the scheme. One in five was not a first-time buyer at all.

Read more: http://www.dailymail.co.uk/news/article-4957030/Wealthy-families-exploit-7billion-Help-Buy-home-scheme.html#ixzz4ulplm8l3 
 

Edited October 6, 2017 by juvenal

[nothernsoul]

Without help to buy a single couple in the north west could easily purchase a perfectly good two/three bed terrace, on a nice enough street,  that was built a century ago,  but is of better quailty than your average new build. However, the unwritten rule for houseprice gains is take HTB cash and borrow to the max. 

[guest_northshore]

18 hours ago, Democorruptcy said:

I cannot find the original Private Eye article quoted in that forum post. Has somebody had it wiped?

 

Seems search only brings up the latest Columnists page, but:

https://web.archive.org/web/20160727012356/http://www.private-eye.co.uk/issue-1423/columnists

[Democorruptcy]

6 hours ago, guest_northshore said:

Seems search only brings up the latest Columnists page, but:

https://web.archive.org/web/20160727012356/http://www.private-eye.co.uk/issue-1423/columnists

Thanks for that.

[Sawitcoming]

18 hours ago, Ballyk said:

It feels like the media are finally getting it.  Plus a lot more people on this forum now seem to realise HTB inflates prices, and only really helps the housebuilders / land owners

 

evening standard last week had a half page article mocking this as a desperate move and talking about how it raises prices.

The data posted before by Beary mc bear face showed that overall it did not seem to inflate prices but it did not separate out new build from rest of market iirc. 

Definitely the media have changed their tune. 

[TheCountOfNowhere]

On 03/10/2017 at 9:30 AM, GreenDevil said:

As much chance of that as the current rate of interest rates 0.25%

Mortgage rates already rising...

[Ballyk]

24 minutes ago, Sawitcoming said:

evening standard last week had a half page article mocking this as a desperate move and talking about how it raises prices.

The data posted before by Beary mc bear face showed that overall it did not seem to inflate prices but it did not separate out new build from rest of market iirc. 

Definitely the media have changed their tune. 

I think it would be very difficult to show that HTB didn't inflate prices, or at least prevent prices from levelling out or settling at a lower level.

Government interference in the market can either support prices, as in HTB or purchasing Mortgage Backed Securities (interesting article on that here - http://www.reuters.com/article/us-markets-mortgages-fed/u-s-fed-buys-7-billion-of-mortgage-bonds-sells-none-idUSKBN1CA2CC?il=0 ).

Or it can enact policies to encourage supply and bring down land and house prices.  Previously councils were allowed to compulsorily purchase land at agricultural prices, then develop themselves or sell off parcels to developers, the increase in value largely paying for infrastructure and facilities such as libraries, etc.  Government now prohibits councils from doing this.

Similarly a tax on land with planning permission 'banked' by developers would encourage the building of houses = more supply.

HTB does little to stimulate supply, rather it is allows the same population of house buyers to bid more for each new property.  In the absence of HTB, land prices would fall (perhaps after a disruptive period where housebuilders incur losses writing down the value of their investments) but this would ultimately feed through to cheaper property.

Help to Buy is therefore a very specific policy choice, aimed not at helping home buyers, but at helping sellers of both land and finished houses / apartments, and preventing banks from making losses.  It leaves taxpayers on the hook for any fall in value, as well as  a great deal of administrative costs.  And apparently, even in these 'non-emergency' times, it is a tap which cannot be turned off.

[Sawitcoming]

34 minutes ago, Ballyk said:

I think it would be very difficult to show that HTB didn't inflate prices, or at least prevent prices from levelling out or settling at a lower level.

Government interference in the market can either support prices, as in HTB or purchasing Mortgage Backed Securities (interesting article on that here - http://www.reuters.com/article/us-markets-mortgages-fed/u-s-fed-buys-7-billion-of-mortgage-bonds-sells-none-idUSKBN1CA2CC?il=0 ).

Or it can enact policies to encourage supply and bring down land and house prices.  Previously councils were allowed to compulsorily purchase land at agricultural prices, then develop themselves or sell off parcels to developers, the increase in value largely paying for infrastructure and facilities such as libraries, etc.  Government now prohibits councils from doing this.

Similarly a tax on land with planning permission 'banked' by developers would encourage the building of houses = more supply.

HTB does little to stimulate supply, rather it is allows the same population of house buyers to bid more for each new property.  In the absence of HTB, land prices would fall (perhaps after a disruptive period where housebuilders incur losses writing down the value of their investments) but this would ultimately feed through to cheaper property.

Help to Buy is therefore a very specific policy choice, aimed not at helping home buyers, but at helping sellers of both land and finished houses / apartments, and preventing banks from making losses.  It leaves taxpayers on the hook for any fall in value, as well as  a great deal of administrative costs.  And apparently, even in these 'non-emergency' times, it is a tap which cannot be turned off.

Oh no doubt. I was not saying that the intention is anything but helping the builders and the banks. there have been studies showing that it does inflate new build prices by the amount helped. However I just observed that the data shown earlier in this thread showed no particular inflation to the market overall.  Support highly likely but importantly the data did not separate out new build from the rest of the market. 

Edited October 7, 2017 by Sawitcoming

[Ballyk]

1 minute ago, Sawitcoming said:

Oh no doubt. I was not saying that the intention is to help the builders and the banks. there have been studies showing that it does inflate prices by the amount helped. However I just observed that the data shown earlier in this thread showed no particular inflation. Support highly likely but importantly it did not separate out new build from the rest of the market. 

I guess in theory it would be slightly deflationary on older properties, as some will perceive HTB as actually 'helping', and will have a preference for a newer property.  But certainly inflationary on all the HTB properties.

It is awful that these HTB buyers it seems aren't necessarily thinking through the future consequences, ie having to find funds in the future to purchase the stake of their house owned by the government.  How strange that the Conservative government is effectively 'nationalising' a % of a huge swathe of private newly built British homes!  

It was sickening to hear on the one hand Theresa May decrying the fact that house prices are 8x earnings, while moments later pushing the policy partly responsible for this happening.  [Sorry if I am ranting!]  

Of course it is not just HTB which is sustaining abnormally high house prices, it's also the low interest rates, inertia, easy lending and a collective lack of consciousness that house prices in the South can actually fall (except in the memories of the older buyers who lived through the early 1990s).

[Sawitcoming]

4 minutes ago, Ballyk said:

I guess in theory it would be slightly deflationary on older properties, as some will perceive HTB as actually 'helping', and will have a preference for a newer property.  But certainly inflationary on all the HTB properties.

It is awful that these HTB buyers it seems aren't necessarily thinking through the future consequences, ie having to find funds in the future to purchase the stake of their house owned by the government.  How strange that the Conservative government is effectively 'nationalising' a % of a huge swathe of private newly built British homes!  

It was sickening to hear on the one hand Theresa May decrying the fact that house prices are 8x earnings, while moments later pushing the policy partly responsible for this happening.  [Sorry if I am ranting!]  

Of course it is not just HTB which is sustaining abnormally high house prices, it's also the low interest rates, inertia, easy lending and a collective lack of consciousness that house prices in the South can actually fall (except in the memories of the older buyers who lived through the early 1990s).

On of the best points I saw on this thread was that who would be able to afford to buy the property from them when they come to sell. If those buyers existed surely they would be buying the new houses. The HTB buyers will lose their 5% deposit and the taxpayer will pick up the bill for the rest of it. 

Feel free to rant. This is a very rantable topic.

I didn't for one minute believe that TM is trying to help buyers. She knows the game is up. She is positioning herself to say that she did try to support the housing market and at the same time help her mates to offload some of the new build stock.

Edited October 7, 2017 by Sawitcoming

[Venger]

@TheCountOfNowhere

On some social-media platform away from HPC, I think you posted an article about 3 building bosses at one developer, and what they recently each took out in dividend payments / profits.

Wasn't it in £10M+ each region?

And then there was some sort of calculation about HTB... how much overall that money to 3 individuals stacked up against all of HTB.

At the time I had red-mist so I didn't take it all in.

A developer that also sells some properties through HTB.    To me a developer who sells anything through HTB is definitely part of all of this.  They don't have to be part of it.

[TheCountOfNowhere]

25 minutes ago, Venger said:

@TheCountOfNowhere

On some social-media platform away from HPC, I think you posted an article about 3 building bosses at one developer, and what they recently each took out in dividend payments / profits.

Wasn't it in £10M+ each region?

And then there was some sort of calculation about HTB... how much overall that money to 3 individuals stacked up against all of HTB.

At the time I had red-mist so I didn't take it all in.

A developer that also sells some properties through HTB.    To me a developer who sells anything through HTB is definitely part of all of this.  They don't have to be part of it.

Can't see HTB as anything other than fraud, perpetrated by a Tory government who were funded by the builders who've profited

 

HPC has gone way past house price and its exposed class opression , corruption, fraud, criminality of the British establishment.

 

If people want to support this by buying into their debt ponzi then go for it, I for one will never buy a house in the UK till the fraudsters are strung up,physically or metaphorically.

Edited October 11, 2017 by TheCountOfNowhere

[Guest]

HTB is the taxpayer lending money to people who can't afford to borrow it. Basically printing money with no hope of getting it back. Senseless.

[Si1]

Does anyone know which way the libdems swing on htb?

[Si1]

7 hours ago, Grab_Some_Popcorn said:

HTB is the taxpayer lending money to people who can't afford to borrow it. Basically printing money with no hope of getting it back. Senseless.

I'm not sure it's even that simple. It's the govt lending extra money to people who simply want to max out, including already well off people. At subsidised rates.

[BLOW FLY]

On 07/10/2017 at 6:41 PM, Sawitcoming said:

On of the best points I saw on this thread was that who would be able to afford to buy the property from them when they come to sell. If those buyers existed surely they would be buying the new houses. The HTB buyers will lose their 5% deposit and the taxpayer will pick up the bill for the rest of it. 

 

 

Sitting in my local last night I was earwiging a conversation between some people in the area for a conference all about mortgages and house finance etc.

The guys were not your average EA or broker types talking they appeared to be several levels above that judging by the way they were talking and cars being driven.

Anyway they were having an in-depth discussion specifically about second hand homes on HTB schemes and how they were targeting finance on these type of homes for people wanting to buy them or currently living in them and unable to sell or remortgage when the HTB period ended.

The general idea seemed to revolve around the purchaser having minimum 10% deposit they would ‘settle’ out the HTB part of the loan with the government and the purchaser slowly ‘buys’ via monthly ‘rental scheme’ the remaining % of the property back from them, The rental yield quoted was minimum 4.8% (internally).

The elder gent (who introduced himself to me as the Chairman of the conference before his two colleagues arrived) quickly commented how the ‘rental’ side of the equation would have to be rather high for it to work which was indeed how it was supposed to work with the whole process being rinsed and repeated at the end of every fixed term.

Sorry if it sounds a bit vague but that was the general gist of it and I unfortunately had to leave.

BF

[Venger]

1 hour ago, Si1 said:

I'm not sure it's even that simple. It's the govt lending extra money to people who simply want to max out, including already well off people. At subsidised rates.

If that is so, it's the trap.

What appear to be subsidised rates.

A hunter with a visible snare catches few rabbits.

Boe Term-Funding Scheme (other thread) allowing banks to borrow cheaply for 4 years (£Billions), with the Term-Funding Scheme ending in February 2018 (apparently).

Meanwhile it seems not much of the Term Funding Scheme gets really lent out (some of it probably does), it just drives down lending rates, encouraging the creditworthy are tempted in at ever higher prices/higher risk. 

The Term-Funding scheme driving down the cost of money, making for temporarily very low lending interest rates, encouraging risk takers, and all those who say "They won't let it happen" and big-egos.

This *looks* like the type of behaviour I am trying to describe, assuming it's an investor involved.

12 hours ago, mattyboy1973 said:

Here's one not too far from me which has now been on the market for nearly a year. I can't see the state of the place before it was last bought in 2016, but they paid £525k for it then, revamped it and put it  back on the market for £850 about 6 months later. I'd guess it was a bog standard 60's bungalow when they got it, and they have spent £100k plus on the renovation so they are underwater now and still sinking. Link for the curious.

These are the types of houses that should be bought by local families, but this area in particular (not exactly where I am) is hugely dependent on London money and most of these places are second homes. From what I am seeing locally, the **** has well and truly fallen out of this market.

With giddy borrowers being credit-worthy.

They can repay by selling other assets in event they got into financial problems (inc their own home)

Even HTB has been an incentive for speculators (h/t Neverwhere), in belief 'supply' and Gov stands behind house prices.

Where does HTB lending come in vs BTL lending over same time frame?

Quote

Sir John Cunliffe, Deputy Governor of the Bank of England (Financial Stability) - 2016

Sir Jon Cunliffe: The other thing that has come in increasingly over the last 15 years is not owners occupiers but buy to let. Virtually all the growth in mortgages over the last few years has come from buy to let, not owner occupier.

..Sir Jon Cunliffe: A lot of the growth that we have seen has been because this has looked to be an asset that gives relatively good return at a time when many other assets - pensions or otherwise - are not giving a good return.

- re long passage on BTL / not knowing how BTLers-landlords would react / different opinions OBR vs Council of Mortgage Lenders and others =

..Sir Jon Cunliffe: Of course, you also need to estimate whether, if a number of buy-to-let landlords with mortgages exit the market and the flow of new buy-to-let mortgages goes down because of the extra stamp duty, that means more first-time buyers coming into the market because there is a slowing in house-price growth.

 

They can even offer HTBers some forbearance if necessary, and pay for it out of the big squeeze on BTLers and the Mad Gainzers.

If well off people double down into foreverHPI, they put themselves at risk.

The banks can squeeze them, and when enough of them are squeezed at the margin, asset prices fall.

True story bro

Quote

BTLer 2015 - very happy buying into houses to rent out:  BTLer: Piss weak? With their 25%+ deposits - yeah right.

 

Quote

 

Bland Unsight 2015

[...]You've set down at least £100k invested in a property somewhere in London, which you paid £400k for, and which you think will let at £2,700 pcm. Firstly, I just don't believe your numbers. As there are obviously plenty of BTLers willing to pay prices which correspond to 5% 'gross yields', somebody would have outbid you, unless of course you missed something, e.g. the people who signed up for £2700 pcm propose to pay for a month and then string you along as the arrears mount up for as long as they are able, or possibly you are just exaggerating.

What makes your hand weak is that if buy-to-let mortgage rates move up sharply and a recession hits and you find that you can't secure the rents that you'd anticipated, the net cash flows on your property can turn negative. Now your work as a contractor generates income, but sometimes bad things happen. The HR director, you might find your contracting services are no longer required. The recession makes it difficult for you to get work and your buy-to-let investments, as well as sundry expenses like tissues and hand lotion, are bleeding your savings. A point would come where you might want to sell the BTLs so you could get out ahead. However, you'd find that a house price crash meant that if you sold the BTL you'd make a capital loss, (that is of course what the deposit is really for, to ensure that you and not the bank absorb the capital loss).

Hence you'd be looking at a situation where you thought the market was irrational (your BTL, in your estimation, was worth £400k, although nobody would pay you £400k for it) but the rate at which the negative cash flows and your own living expenses were bleeding out your liquid assets meant that you couldn't hold out forever because eventually you'd run out of savings to pay the mortgages on the BTLs; you would no longer be able to meet your obligations as they fell due, i.e. you would be insolvent, but sometimes the market can stay irrational longer than you can stay solvent. That is the heart of the aphorism; it's about holding on to a leveraged investment position when the market turns against you.

Late entrants are piss weak because in reality the gross yields people are signing up for are too thin to absorb much movement on rents or BTL mortgage rates, much less disadvantageous movements of both at the same time.

You've got it all back to front.

The bank demands the big deposit because they know that you are weak. Arguing that you are not weak because you've handed over a big deposit is an interesting way to look at things, but in my opinion, completely wrong headed.

 

 

 

Quote

Think. What had the Excession done up until now? 
What could it possibly be doing ? 
What was it for? 
Why did it do what it did?

-Excession

 

[zugzwang]

On 07/10/2017 at 5:33 PM, Sawitcoming said:

evening standard last week had a half page article mocking this as a desperate move and talking about how it raises prices.

The data posted before by Beary mc bear face showed that overall it did not seem to inflate prices but it did not separate out new build from rest of market iirc. 

Definitely the media have changed their tune. 

It's the £ per sq metre cost that matters most, since this is the ultimate determinant of occupational density, and hence the key to perpetual hpi.

Every English region has experienced a monotonic rise in sq m house prices since the introduction of HtB in 2013.

https://www.ons.gov.uk/economy/inflationandpriceindices/articles/housepricepersquaremetreandhousepriceperroomenglandandwales/2004to2016

[Kosmin]

4 hours ago, Si1 said:

Does anyone know which way the libdems swing on htb?

Vince Cable's dead against it:

Vince Cable warns Help to Buy could create new 'bubble' - BBC News

www.bbc.co.uk/news/business-23482525

28 Jul 2013 - A flagship government scheme to revive the housing market could inflate it, Business Secretary Vince Cable warns. ... "I am worried of the danger of getting into another housing bubble," Mr Cable told the BBC's Andrew Marr Show. ... "Given the current situation with the economy I think we ...

Vince Cable urges caution over help-to-buy mortgage scheme ...

https://www.theguardian.com › Politics › Vince Cable

1. Cached

11 Sep 2013 - The business secretary, Vince Cable, said the government should not introduce the help-to-buy mortgage scheme in January. Photograph: ...

Vince Cable warns Help to Buy could trigger new house price bubble ...

https://www.theguardian.com › Politics › Vince Cable

1. Cached

28 Jul 2013 - Vince Cable has warned that the Treasury's Help to Buy scheme could trigger a house price bubble. The business secretary said he was ...