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It actually appears this landlord thinks they have a good idea...

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Copy and pasted from property tribes

 

 

A topic discussed on another forum wondering what the tribes make of it

The premise is that currently we (via the student loans company) give out loans of about £60-80k (£9.25k tuition and upto £11k maintenance loans per year) for young adults to buy themselves a university education. The loans are then payed off slowly as 9% on earnings over £21,000 . About 60% of the loans are not fully repaid because someone studying modern dance at Luton who took on £80k in student loans never earns more than £21,000 so does not pay it off and it is written off

The proposal is to replace the student loans company with a young adults education and housing loans company.

The same £60k is offer to all young adults (say between ages 18-35) to be used either on an education or on a FTB house. The loan if used to buy a house is secured on the house and repayment of the loan is on the same terms, 9% above £21k earnings. If the house is sold or the person dies the government gets its money back in the same way a mortgage company would. The loans can be portable.

That means a young person can decide to buy a £60k education or use the £60k on housing deposit
Most people couple up so two young people could couple up and they would have a £120k housing budget via the education and housing loans company. In birmingham they could buy a 3 bedroom terrace with that combined £120,000
No mortgage no rent just 9% of earnings over £21k to pay down the debt. Most people would pay it off in full for everyone else when they sell or die what remains of the loan would be paid off on sale of the property.

Advantages:

Compared to student loans where 60% are not repaid in full, 99.9% of the housing loans would be paid in full

Young people home ownership rate would go towards 95%. Young people would also have a lot more income as they have no expensive rent or mortgage this would be good as most young people do not have a lot

It will be much better for most young people to buy a house rather than a higher education. People studying useful subjects like medicine would still go but the Luton photography students would decide its better to buy a home. That means a £80k lost to putting a kid though unviersity photography lectures which is totally wasted becomes a £60k housing loan which is repaid

We already offer young people upto £32k as a total free gift (via the LISA which is upto £1k per year starting from age 18). These loans would be more effective in increasing home ownership and actually cost a lot less as it is a loan while the LISA bonus is a full gift

We would save a lot in lower benefit payments as home ownership for the young would be 95% so no need to pay 60 years housing benefit for some renters.

It would decrease the gap between the rich and the poor as we are giving access to capital and assets to poor young people

 

Disadvantages:

It will add to housing demand. While a lot more young adults would buy this is canceled out by a lot fewer young adults renting. The net addition to housing demand is going to be about +15,000 to +20,000 a year due to the fact people will move out sooner from their parents homes. This isn't a huge boost to net demand and build rate has been going up for the last 5 years or so.

We would be giving the young a lot of capital and some people just dont like the idea of the government loaning young adults a lot of money. While I understand that view point we are already offering to give them for free £32k via the LISA so why not just loan them £60k and get 99.9% of it back?

 

My views

I think this would be a innovative way to solve the housing problem and a innovative way to solve the education problem. We have too many people doing pointless degrees and the public wont get back 60% of the student loans. Allow the young adults to use the money to buy housing instead and we would get virtually all of it back. It would help the young and help boost ownership. This is something the tories should be looking hard at. It would be a really pro active positive thing to do.

It would also help with social housing too. With the young going towards 95% social housing that means there is less demand for social housing form the young and thus more social hosing for those in middle and older ages.

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I would just make degrees in things like IT maths science medicine  subjects that are of use to the nation free

all the worthless courses  such as social studies media studies film studies etc paid for by the student at a higher figure 

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  • 407 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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