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Six ways the Government could help save the housing market after lockdown


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Six ways the Government could help save the housing market after lockdown

comments please ?

https://www.telegraph.co.uk/property/uk/six-ways-government-could-help-save-housing-market-lockdown/

Quote

There are fears house prices could slump by more than a fifth, and the property industry has demanded that the Government takes action

 

The housing market faces a major challenge to adapt once coronavirus restrictions are eased and property sales are able to resume.

Since the country was placed into lockdown, few transactions have taken place and there have been predictions that house prices could fall by more than 20pc.

The government has stepped in to help other parts of the economy through the crisis. However, property firms have called for urgent support if the housing market is to function properly in the near future.

There are many ideas being proposed, from stamp duty holidays to the government insuring house builders. Here are six ideas to save the housing market – and why they may be unlikely to happen.

Restart the Help to Buy mortgage guarantee scheme

The brainchild of former Chancellor George Osborne, the Help to Buy mortgage guarantee scheme allowed banks to lend to customers with 5pc deposits, with the government taking some of the risk if they defaulted on their loans. 

This was helpful as the economy came out of the credit crunch to encourage banks to lend to first-time buyers. 

Property firm CBRE said that the cost of relaunching the scheme would be low, given the government only pays out when borrowers fail to repay.

However, the Help to Buy mortgage guarantee closed in December 2016. It may be more politically beneficial for Chancellor Rishi Sunak to launch his own mortgage support programme, rather than resurrecting an idea from one of his predecessors.

Slash stamp duty

Stamp duty is Britain’s most confusing tax, with a string of exemptions, charges and thresholds that property buyers must navigate. Scotland and Wales also operate with similar but different taxes compared to England and Northern Ireland.

The tax is seen by many as a barrier to property sales, with buyers less likely to move if they face a five-figure tax bill. The government has recognised the issue created by stamp duty and now exempts most first-time buyers from the tax.

The Royal Institution of Chartered Surveyors (Rics) is among the organisations calling for this to be extended to reinvigorate the market.

However, this will come at a huge cost. In the first three months of 2020, stamp duty raised more than £2.5bn for the government. Mr Sunak needs to raise cash to pay for his coronavirus handouts to workers and is unlikely to sacrifice a major revenue generator.

A more realistic option may be offering a limited stamp duty holiday to some buyers, such as all first-time buyers or downsizers, while excluding landlords or those buying second homes, as the Conservatives have done previously.

Allow property valuations to resume

The housing market was effectively closed when the government banned all non-essential journeys, as valuers and surveyors were not able to do their jobs.

Buyers and sellers now face a nervous wait to see whether the transactions they agreed before lockdown can still take place.

Ben Johnston, of property app Houso, said mortgage lenders would use remote valuations more frequently, but said many properties would still need a physical visit. “When a property doesn't tick a lender’s boxes straight away, a site visit will be required, but under guidance provided by the government,” he said.

Allowing surveyors to visit properties in cases where remote valuations cannot be carried out would be an obvious way for the government to restart the property market gently, with valuers remaining two meters away from homeowners while the evaluation occurs. 

Government helps finance new property developments

Housing developments could slow by 50pc this year, CBRE has warned. One proposal examined by the firm would be that the government steps in and helps finance property developments, perhaps by purchasing stock directly from a builder if it cannot be sold.

However, it warned that the cost of doing so could be excessively high. A more palatable option may be for the government to offer insurance or guarantees to encourage firms to keep building new homes.

Even this step is risky, given demand for properties has fallen substantially. Property technology firm Coadjute estimates that inquiries for properties fell by 62pc between March and April. Interest is expected to rise as lockdown is eased, it said. 

Ease planning permission rules

An easier, and cheaper, way to help builders weather the current crisis would be to ease the current rules regarding planning permission. A one-year extension to current plans would give builders more time to complete projects.

However, this action may simply be delaying the inevitable – cancelled projects and fewer homes being built. It would also require current laws to be changed by MPs, who may prefer to offer more support to workers than developers that have made huge profits in recent years. 

Extend the Help to Buy equity loan scheme 

Another George Osborne creation, the Help to Buy equity loan scheme was launched to bolster the housing market. It offers first-time buyers a loan worth 20pc of their new property’s value, which is supplemented by a 75pc mortgage from a high street bank.

This allows buyers to get onto the ladder with just a 5pc deposit of their own. 

However, the scheme has been repeatedly criticised for only succeeding in boosting housebuilders' profits, rather than helping buyers. New restrictions will apply from April 2021 so that just first-time buyers are eligible, and they will only able to purchase cheaper properties. 

Matthew McDwyer of Bricks & Logic, another property technology firm, said schemes like Help to Buy had provided an immediate boost to activity.

“The critical role that government policy plays in the housing market is clear,” he said. “For instance the flurry of sales completed ahead of changes to second home stamp duty levels or increase in new home purchases using Help to Buy.”

The Government has recently mulled extending the scheme in order to keep the property market going.

In any case, it will have to make a decision whether to extend, rework or drop the programme when it comes to an end. Again, Mr Sunak may prefer to launch his own support package for first-time buyers rather than extend an old scheme.

Axe stamp duty? New taxes on second homes? How should the Government reinvigorate the housing market? Tell us what you think in the comments section below. 

Edit : graph added 

 

 

Forgot to post this graph from the article. Some what desperate title?

Perhaps historic house prices were 'normal' not depressed, just not in a massive great debt fuelled hyper bubble ? 

Annotation 2020-05-08 152256.png

Edited by Saving For a Space Ship
Graph added
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The Telegraph is an allegedly conservative paper that supports the free market yet their journalists appear to think it's the government's duty to intervene in the property market in order to prop up home values through various schemes and deny a functional market.

 

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1 minute ago, Warlord said:

The Telegraph is an allegedly conservative paper that supports the free market yet their journalists appear to think it's the government's duty to intervene in the property market in order to prop up home values through various schemes and deny a functional market.

 

Can only be saved by propping up the banks, anything else is just pi55ing on a bush fire.

If they don't get that LTV back to 95%, we have falls. 

They need to act quick and prevent sentiment change as they've done with furloughing the economy, though that's to big to hold back for much longer.

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7 minutes ago, Warlord said:

The Telegraph is an allegedly conservative paper that supports the free market yet their journalists appear to think it's the government's duty to intervene in the property market in order to prop up home values through various schemes and deny a functional market.

 

"free market"? Haven't heard that one in a while. I believe that was a term used to usher in deregulation, privatisation etc. Noticeably absent in the last few years.

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Just now, MarkD said:

"free market"? Haven't heard that one in a while. I believe that was a term used to usher in deregulation, privatisation etc. Noticeably absent in the last few years.

Been absent for a long time. What we have is the worst kind of government/system. A crony corporatist system more akin to fascism than anything else.

 

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4 minutes ago, MarkD said:

"free market"? Haven't heard that one in a while. I believe that was a term used to usher in deregulation, privatisation etc. Noticeably absent in the last few years.

The only thing free about it is you are free to phuck off if you don`t like it. 

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6 minutes ago, Now or never said:

Can only be saved by propping up the banks, anything else is just pi55ing on a bush fire.

If they don't get that LTV back to 95%, we have falls. 

They need to act quick and prevent sentiment change as they've done with furloughing the economy, though that's to big to hold back for much longer.

Yep.. They still haven't let go of the zombie banks.  Sooner or later they will collapse again.

I suggest to anyone here not to leave too much dough in the bank (Lloyds/NatWest).

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2 minutes ago, Warlord said:

Been absent for a long time. What we have is the worst kind of government/system. A crony corporatist system more akin to fascism than anything else.

 

My thoughts exactly. A kind of subtle corruption. So subtle in fact that nobody spots it. They know something's not quite right, but can't put their finger on it!?

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Already read this first thing thing this morning.

And so it begins, the attempt to keep property prices high and nobody really countering with WHY!!

It's just yet again the arrogant assertion that people with heavily mortgaged homes must be assisted above everybody else, it can actually make you quite angry if you will start thinking about it.

And of course taxpayers money will be needed in this "help the heavily leveraged and in debt" plan, taxpayers money that is now going to show a huge shortage now that no economy is up and running. I can think of a thousand uses for tax spending priorities, and over priced housing and even my own personal difficulties don't even come close to the top.

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2 minutes ago, crumblingcon said:

 

It's just yet again the arrogant assertion that people with heavily mortgaged homes must be assisted above everybody else, it can actually make you quite angry if you will start thinking about it.

And of course taxpayers money will be needed in this "help the heavily leveraged and in debt" plan, taxpayers money that is now going to show a huge shortage now that no economy is up and running. I can think of a thousand uses for tax spending priorities, and over priced housing and even my own personal difficulties don't even come close to the top.

Agreed. It's literally life and death, or instead save house prices.

I won't be a collaborator with this. It's obscene.

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Just now, Warlord said:

Don't fret folks. The day of reckoning is coming. They can no longer kick the can down the road. Things are about to unravel. 

A sizeable number of comments on the article are against it. Reminds me of when the balance of opinion went against New Labour as they ran out of political clients to bribe.

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I knew before I saw the link that this would be in the Telegraph.

Their endless woe is me stories about struggling buy to let landlords, the plight wealthy of pensioners seeing dividend cuts and the desperate nightmare facing one woman and her family already living in a 4 bed detached house not being able to upgrade due to the crisis are laughable.

Crony capitalism - privatise the profits and socialise the losses. Hopefully we will learn from our response to 2008 - but I doubt it.

Edited by MARTINX9
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2 minutes ago, MARTINX9 said:

 the desperate nightmare facing one woman and her family already living in a 4 bed detached house not being able to upgrade due to the crisis 

For real?

Got a link?

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"I have a problem, I will go and get a grant to cope with it! [Help to Buy anyone?]” “I am homeless, the Government must house me!” and so they are casting their problems on society and who is society? There is no such thing! There are individual men and women and there are families and no government can do anything except through people and people look to themselves first.

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29 minutes ago, Si1 said:

For real?

Got a link?

Can't find it at the moment - but here is a classic published today on the Telegraph website.

'My husband led a secret double life and tricked me out of £900,000'. Apparently he had withdrawn £800k in cash from their joint account and spent over £50,000 on hotels via their joint account over the last decade - and she hadn't noticed until she finally checked their statements this year!

Now she only has £300,000 in equity on their £1.2 million home - as her husband has £900k of debts taken out on the house.

https://www.telegraph.co.uk/money/katie-investigates/husband-led-secret-double-life-20-years-tricked-900k/?li_source=LI&li_medium=liftigniter 

Down to her last £300k of equity and didn't notice £850k disappearing from their joint account. Poor thing! Only in the Telegraph.

The article is written by Katie Morley - the Telegraph's 'consumer champion'!

Edited by MARTINX9
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1 hour ago, MARTINX9 said:

Can't find it at the moment - but here is a classic published today on the Telegraph website.

'My husband led a secret double life and tricked me out of £900,000'. Apparently he had withdrawn £800k in cash from their joint account and spent over £50,000 on hotels via their joint account over the last decade - and she hadn't noticed until she finally checked their statements this year!

Now she only has £300,000 in equity on their £1.2 million home - as her husband has £900k of debts taken out on the house.

https://www.telegraph.co.uk/money/katie-investigates/husband-led-secret-double-life-20-years-tricked-900k/?li_source=LI&li_medium=liftigniter 

Down to her last £300k of equity and didn't notice £850k disappearing from their joint account. Poor thing! Only in the Telegraph.

The article is written by Katie Morley - the Telegraph's 'consumer champion'!


"remembered him making himself sandwiches and not offering anyone else one"

She should marry my wife the cow drinks my coke and leaves the empty can on the table and wipes her **** with the last of the loo roll and does not replace it.  

To the oubliette with them both!

 

Edited by Fromage Frais
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46 minutes ago, Fromage Frais said:


"remembered him making himself sandwiches and not offering anyone else one"


 

Presumably she stayed with him out of love.

 

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Just now, spacedin said:

Would you care to enlighten me as to how this is 'more akin to fascism'? It's a fairly bold statement.

Why for example would this be more akin to fascism than socialism? Don't such comparisons become a bit meaningless the more you examine them? I guess it depends who you are and what your ideological biases are.

Fascism is the merging of corporations and government. Socialism is nationalising the means of production.

What we have is more akin to fascism.The banks are a good case where the state has merged with corporations. There are many other examples if not an overt merger then one where privileges are granted to large corporations at the expense of smaller businesses either through excessive regulations where small firms find harder to comply with and are driven out of business or through the tax code where the multi nationals pay little tax.  They own the politicians of both parties.

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  • 417 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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