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munimula

Senior Mp Replies To Letter

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Wrote to a senior MP recently explaining my situation and view on the UK property market, how it is effecting me and my generation. The letter was previously posted on this site.

Just had a reply, very good response to my letter and not a generic reply at all. Answers all my points.

The best bit of all is this paragraph;

'Your fundamental point is right; there is a dangerous bubble in the housing market. But it will in due course collapse as all market bubbles do, hurting a lot of people who are over extended with mortgage debt'

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Do you have a link to your letter?

Here is a copy - it is a bit long

Dear XXXX,

I am writing to you to tell you about something that deeply concerns me. The issue is that of housing and house prices.

I’m 30 years old and live in XXXX with my partner who is 26. My partner and I would like to buy a house and start a family but the cost of housing is prohibitive. After 7 years of saving hard we are still no nearer to buying a first home.

With the costs of buying and selling property now very high, largely due to the cost of stamp duty there is no point buying a 1-bed flat if I want to have a family, we require at least a 2-bed property or preferably a 3-bed property if we are to have 2 children as we would like within the next 5 years. In the current climate of high house prices these properties are simply fantasy.

It appears to me that the yearly increases in house prices over the last 10 years, which should have been unsustainable have opened up a massive divide between the haves and the have-nots. By that I mean those that bought property before the recent, huge price increases and those that didn’t.

My parents generation and older generations (the over 50’s), having paid off their mortgages thanks in part to higher inflation in the past are now reported to own four-fifths of the nations’ wealth of which a large proportion is property. At the same age I am now, my parents bought a 5-bed family home in Devon in 1981 and had four children that grew up in that home. My mother didn’t work and my dad has always earned below average wages. A 1-bed flat in the same town today would be four times my earnings and I earn considerably above average for that area. Things are very different now.

How can we be living in a civilized society where those that don’t have dependent families living at home own all the family housing and those that do have families or would like families can’t afford the family sized houses? In fact, those that would like to have families are having to put the decision of having children off until later in life and will, undoubtedly have fewer children than they might like due to housing restrictions and the problems associated with fertility etc that are a cause of waiting too long. You can’t bring up children in a 1-bed flat.

Even when younger people are buying houses, the repayment costs of the super-sized mortgages that they are taking on will be taking up most of their income. This income could otherwise be spent on bringing up children, saving into a pension and benefiting the economy through spending. If a couple have to work just to pay a mortgage and living costs how are they ever going to afford to have children? Are children not beneficial to our society, will they not be providing the taxes in the future to support the larger proportion of elderly people?

So why do we have this current situation of unaffordable house prices in the UK? To summarise, these are the reasons that I think we have unaffordable housing in the UK at present;

- Low inflation (and hence low interest rates)

- House building/planning restrictions and immigration

- Relaxing of mortgage lending criteria

- Buy-to-let investment

- Growth in 2nd home ownership

- Home owning psychology and the housing ladder

Low inflation (but high house price inflation)

The growth in house prices seems to be largely due to the cheap credit that has been available due to low inflation and hence low interest rates which has been a global trend. However, the official CPI figure has certainly become questionable. A new inflation index by the Independent newspaper produces a figure double the current official CPI figure and most services costs are increasing at far higher rates of inflation.

Low inflation keeps wages down and yet house price inflation has far exceeded the official CPI figures and therefore wages haven’t kept pace with the exorbitant rise in house prices, effectively first time buyers have been left behind.

How have inflation figures been kept so low with such large increases in house prices, energy prices, service costs and money supply. Is the official CPI figure a true reflection of the increased costs of living in the UK? Should more have been done to control the rampant house price inflation over the last 10 years?

House building restrictions and immigration

There seems to be a problem with the planning regulations in this country. The current government recklessly pursues a ‘no limits’ immigration policy and resulting net population increase but they don’t appear to be providing the housing needs to match this population increase. Under a Labour government the number of flats being built is now approaching 50% of all new builds, perhaps a result of the planning restrictions as the proportion of building in the remaining spaces in towns and cities has increased.

People in built up areas are expected to lose all of their open spaces, many of which improve the quality of living in built up areas immeasurably and yet on the edges of towns the building stops. If governments want increasing populations they should meet the housing demands and flats are not the answer for those of us wanting to have children. Over 80% of the UK population live in urban environments, why should the majority be forced to live in smaller and smaller spaces to protect the rights of the minority not to have any new building near them?

Due to the planning restrictions in this country the average size of a new build in the UK is only 76 sq metres, the smallest in Europe, in Germany with a similar population density the average is 109 sq metres.

Migrationwatch have pointed out that UK housing demand projections have been based on net UK immigration at around 65,000 per year. They claim that from 1996 to 2004 the actual level averaged 140,000.

Why is the current government not meeting the housing needs of the growing UK population? Why are so many new build properties now flats?

Relaxing of mortgage lending criteria

Banks have been gradually relaxing their lending rules. Now you can get self-certified mortgages where you can basically make up a figure for your salary and banks are providing mortgage loans on increased multiples of salary. The previous mortgage lending rules like 3 x salary seemed sensible because interest rates are variable and the rules prevent people from borrowing too much.

It seems to me that people generally don’t have much concept of even the basics of economics, interest rates, inflation etc. I know many examples of people really stretching themselves to buy property, taking on mortgages that they won’t be able to afford if interest rates go up.

Why is lending by banks not more closely regulated, perhaps by the FSA?

Buy-to-let investment

One recent trend has been the large growth in the buy-to-let mortgage market. People have moved into this type of ‘investment’, in many cases, to provide some kind of pension. The yields on these ‘investments’ don’t even stack up anymore, many buy-to-let investors reportedly have to subsidise their flats and yet people keep purchasing buy-to-let properties with the hope of future capital gains.

How can my generation, the first time buyer compete with those people that get tax breaks on this kind of investment and can leverage equity from their existing homes to provide the deposits to make the purchase when we have to save to make the deposit?

Growth in 2nd home ownership

I am originally from Devon, my parents family home was bought as a 2nd home, empty for most of the year. My parents current home in Cornwall is about to be bought as a 2nd home. The house opposite my grandmother, again in Devon is a 2nd home and is empty for most of the year. In each case the homes are owned by a generation (over 50) that already have a primary home. The prices of housing in these rural areas is now so prohibitive, especially in relation to the wages in the area that my generation has no choice but to migrate to the towns and cities to find better paid work.

How can we call this a civilized society when those that would like to have a family can’t afford family housing but those that have no dependent family are able to own, in some cases, more than one family-sized home and due to the lack of building reduce the supply of housing and push prices up? Should housing be treated like other assets with so few controls when high house prices can have such a detrimental effect on the lives of so many people?

Home owning psychology

We now live in a low inflation environment – if inflation remains low there isn’t going to be the inflation to erode the mortgage debt and feed into increasing salaries that there was in the past. And yet there still pervades in British society this idea that you have to get on the ‘housing ladder’ at all costs. This is one of the reasons that young people are taking desperate measures to buy their first homes, sharing mortgages with friends, buying houses with very risky, high income multiple loans are two examples. High inflation in the past eroded mortgage debt and helped people move up the ‘housing ladder’ and there weren’t the high costs associated with buying and selling in the past either, now largely due to stamp duty.

Without higher inflation is there such a thing as a housing ladder? How are people going to move up the housing ladder if inflation isn’t eroding their mortgage debt and providing them with decent wage increases? If I buy a 1-bed flat today, how am I ever supposed to be able to afford to move ‘up’ to a small 3-bed family home to bring up children in?

The only thing I hear politicians talking about are “affordable housing” and “shared ownership” but this is not the answer as it can only provide support to very few people. House prices are artificially high. Housing supply is artificially restricted and lending is not regulated. Most of us don’t want to make money out of housing, we just want somewhere to call home, to call our own, somewhere secure that we can bring up a family. Do we no longer have a right to housing at a reasonable cost? Must my generation resign itself to a life in city centre flats?

I would be very interested to hear your views on this subject and what the Conservatives’ policies on housing are and how these problems can be addressed.

The MP agrees that inflation should include asset inflation (point 1)

that there should be further reforms on mortgage lending

campaigned against SIPPS

is arguing for higher capital gains tax on 2nd homes

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Guest mattsta1964

Wrote to a senior MP recently explaining my situation and view on the UK property market, how it is effecting me and my generation. The letter was previously posted on this site.

Just had a reply, very good response to my letter and not a generic reply at all. Answers all my points.

The best bit of all is this paragraph;

'Your fundamental point is right; there is a dangerous bubble in the housing market. But it will in due course collapse as all market bubbles do, hurting a lot of people who are over extended with mortgage debt'

So spill the beans.......Who is your MP?

Excellent letter. Sums up the situation perfectly

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Wrote to a senior MP recently explaining my situation and view on the UK property market, how it is effecting me and my generation. The letter was previously posted on this site.

Just had a reply, very good response to my letter and not a generic reply at all. Answers all my points.

The best bit of all is this paragraph;

'Your fundamental point is right; there is a dangerous bubble in the housing market. But it will in due course collapse as all market bubbles do, hurting a lot of people who are over extended with mortgage debt'

Excellent work, any chance you can post the full reply?

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Excellent work, any chance you can post the full reply?

Full reply;

Dear Mr X,

Thank you for your letter regarding housing and house prices. Your letter is well considered, well thought out and you highlight some very important points.

I encounter numerous housing problems both in my local case work in the constituency and in national debate. There are hundreds of thousands of people living in seriously overcrowded and unsatisfactory accommodation, even if they are not technically homeless.

I have campaigned extensively on the links between the present 'bubble' in the housing market, mortgage borrowing and problems of personal debt (I enclose a report I prepared a couple of weeks ago).

On your specific points;

1) You are right that means of inflation should include asset inflation and currently do not. I have made this point directly to the Chancellor on several occasions. British housing inflation (175% since 1997 is about the highest in the developed world).

2) The Barker report highlights the problems with planning restrictions. At present, because of 'green belt' restrictions there is tremendous pressure on areas like ours to increase density which may be at the expense of green space. Immigration should be managed in ways that reflect both economic demand and the provision of infrastructure including housing (though, frankly, Migration Watch is a campaigning organisation which tends to exaggerate).

3) I agree also on mortgage lending practices as you will see from my debt report. Mortgages are FSA regulated (I was one of the people who campaigned for this) but it is a different kind of regulation which is required to control the volume of leveling as my report tries to spell out

4) Ditto. My colleagues and I campaigned against the extension of SIPPS which would have boosted buy to let.

5) Ditto. I am arguing for higher capital gains tax to tax second home investment effectively.

Your fundamental point is right; there is a dangerous bubble in the housing market. But it will in due course collapse as all market bubbles do, hurting a lot of people who are over extended with mortgage debt.

High house prices are preventing many people, like you, from buying homes, while rented accomodation is often expensive and of poop quality, with more than a million public-sector homes in need of repair. Ther is also a huge imbalance between where housing is and where people want to live, with demand outstripping supply, particularly in South-East England. Over 100.000 families are living in temporary accomodation.

We need new houses - but we must bring the 600,000 empty home in Britain back into use, and make use of the space above the shops and in empty commercial buildings, where there's spance for another two million homes.

I hope this clarifies my position. If you have any further comments or inquiries, please do not hesitate to contact me.

I won't reveal the name of the MP yet. I want to continue the correspondence on this matter as I fundamentally believe that the biggest problem in the UK is housing supply - the Planning laws that restrict building on 'green fields'. I don't believe forcing more people into flats above shops is the answer.

In Devon where I grew up I recently read that the council is passing a ruling that will completely restrict the building of new homes in about 20 small towns including the one I grew up in - to 'preserve' them. This is totally outrageous. When you fly over England you'll see how much land we have that we could build on but we don't to protect the rights of an absolute minority. 80%+ of UK population lives in urban areas.

Edited by munimula

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This would be worth letting the media know about. A great potential news story - if you're up for it that is. I'll assist if you'd like to go down that route. Just let me know.

G

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i) You are right that means of inflation should include asset inflation and currently do not. I have made this point directly to the Chancellor on several occasions. British housing inflation (175% since 1997 is about the highest in the developed world).

It'll get added when prices start coming down!!!

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This would be worth letting the media know about. A great potential news story - if you're up for it that is. I'll assist if you'd like to go down that route. Just let me know.

G

I'm keeping the identity of the MP to myself because I want to continue the correspondence but also I wasn't expecting to get something like that from a senior MP - such a bold statement about being in a property bubble and that market collapsing.

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I'm keeping the identity of the MP to myself because I want to continue the correspondence but also I wasn't expecting to get something like that from a senior MP - such a bold statement about being in a property bubble and that market collapsing.

Muni - can you answer this? Government or opposition?

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I'm keeping the identity of the MP to myself because I want to continue the correspondence but also I wasn't expecting to get something like that from a senior MP - such a bold statement about being in a property bubble and that market collapsing.

Can you give us any clues about which party they belong to?

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Why dont you lot stop moaning on here about which MP it is, and write your own letters to your own MPs.

Excellent letter there munimula, sums up the current situation very well, I personally dont agree with blaming low inflation or low interest rates, as these are good for the economy. If the government included house price inflation in its figures we would have interest rates of over 10% i reckon :)

But your points about the provision of new housing are excellent.

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It's not unknown for MP's to acknowledge the existence of the bubble... even Mr Chancellor fessed up:

"We've had to survive... in the last year a house price bubble"

- Gordon Brown during BBC TV interview , Sept '05

... but to say it will deflate is unusual.

From Priceless Quotes

Lib Dem

Wonder if that why they are massively ahead in our survey... at 64% after we filtered out an attempt at rigging it in favour of Labour (I kid you not).

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I fundamentally believe that the biggest problem in the UK is housing supply - the Planning laws that restrict building on 'green fields'. I don't believe forcing more people into flats above shops is the answer.

In Devon where I grew up I recently read that the council is passing a ruling that will completely restrict the building of new homes in about 20 small towns including the one I grew up in - to 'preserve' them. This is totally outrageous. When you fly over England you'll see how much land we have that we could build on but we don't to protect the rights of an absolute minority. 80%+ of UK population lives in urban areas.

Yeah right, lets concrete over this already overcrowded little island of ours where countryside is at a premium.

With an apparently static population and around a million empty properties do you really think building new houses in rural areas is the only solution.

I live in Cornwall and I live here because it is special and I like it just the way it is. There is so much building going on around here at the moment and it is ruining the place. If I wanted to live in an urban sprawl I would, however, I thought I had chosen not to.

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Why dont you lot stop moaning on here about which MP it is, and write your own letters to your own MPs.

Excellent letter there munimula, sums up the current situation very well, I personally dont agree with blaming low inflation or low interest rates, as these are good for the economy. If the government included house price inflation in its figures we would have interest rates of over 10% i reckon :)

But your points about the provision of new housing are excellent.

The problem with low inflation is that it generally defines salary increases and because the offical inflation measure, CPI has been so much lower than the increases in houses, HPI then we have a generation left behind, left out of the housing market because their salaries haven't kept pace with house price increases. Some measure still allow them to buy, increased lending multiples for example, but in general people have been left behind and stuck out of the market.

Why should house prices not be included in inflation measures? If a car is included and a TV why should a house not be included?

Yeah right, lets concrete over this already overcrowded little island of ours where countryside is at a premium.

With an apparently static population and around a million empty properties do you really think building new houses in rural areas is the only solution.

I live in Cornwall and I live here because it is special and I like it just the way it is. There is so much building going on around here at the moment and it is ruining the place. If I wanted to live in an urban sprawl I would, however, I thought I had chosen not to.

Go away, read the 'Unaffordable Housing, Fables and Myths' report at www.policyexchange.org.uk and the related follow up reports and you'll realise what a load of guff your view is.

If you don't bother to read this report then please don't bother to respond further as your are simply propagating the complete myth that is that we can't afford to build on more green field sites.

But hey, obviously you're OK down in Cornwall living in the home you already have with your sea viea. Sod everyone else right?

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But hey, obviously you're OK down in Cornwall living in the home you already have with your sea viea. Sod everyone else right?

What a pr!ck you are. WTF don't you get a guage of someone by looking around this forum at other posts before you blow assumptions out of your **** and get it soooo wrong. You really think everyone who lives in Cornwall has their own house with sea views??? Sorry to disapoint you asswipe, but Cornwall has higher average house prices and lower average wages than Devon. Why don't you go look that up before bothering to get back to me.

Go away, read the 'Unaffordable Housing, Fables and Myths' report at www.policyexchange.org.uk and the related follow up reports and you'll realise what a load of guff your view is.

What a patronizing c$$t you are. I don't have to read a report to know there are about 3 billion too many people on earth and that countryside isn't just the empty bit between towns.

What's this report going to tell me, I don't know? That the UK has more open space than Mongolia!?

And from your own signature:

the spiralling cost of raising children is causing the British family to shrink.....New figures suggest that the average family now has 1.3 children
Edited by surfgatinho

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What a pr!ck you are. WTF don't you get a guage of someone by looking around this forum at other posts before you blow assumptions out of your **** and get it soooo wrong. You really think everyone who lives in Cornwall has their own house with sea views??? Sorry to disapoint you asswipe, but Cornwall has higher average house prices and lower average wages than Devon. Why don't you go look that up before bothering to get back to me.

What a patronizing c$$t you are. I don't have to read a report to know there are about 3 billion too many people on earth and that countryside isn't just the empty bit between towns.

What's this report going to tell me, I don't know? That the UK has more open space than Mongolia!?

And from your own signature:

You NEED to read the report before making any comments like that. And ALL of the report. Maybe you might have the decency to then come back and apologise because you are totally unaware of the true situation and are making comparisons to mongolia which is probably 90% uninhabitable.

Edited by debtfree

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It's not unknown for MP's to acknowledge the existence of the bubble... even Mr Chancellor fessed up:

... but to say it will deflate is unusual.

From Priceless Quotes

Wonder if that why they are massively ahead in our survey... at 64% after we filtered out an attempt at rigging it in favour of Labour (I kid you not).

Fiddling the figures to suit labour? I'm really surprised at that! :lol:

Was it an individual or did you trace the IP to a company?

Sorry for being nosey but I'm interested.

Cheers :)

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What a pr!ck you are. WTF don't you get a guage of someone by looking around this forum at other posts before you blow assumptions out of your **** and get it soooo wrong. You really think everyone who lives in Cornwall has their own house with sea views??? Sorry to disapoint you asswipe, but Cornwall has higher average house prices and lower average wages than Devon. Why don't you go look that up before bothering to get back to me.

What a patronizing c$$t you are. I don't have to read a report to know there are about 3 billion too many people on earth and that countryside isn't just the empty bit between towns.

What's this report going to tell me, I don't know? That the UK has more open space than Mongolia!?

And from your own signature:

It's sad that you can't read the report and then engage in some useful debate rather than resort to a slur of nasty words.

I know Cornwall very well, in fact I'll be in Padstow on friday, my parents live and have just sold there. I was born and bought up in Devon and am working in Exeter at the moment so I'm very well aware of the problems faced by people in Cornwall/Devon and such areas.

However your posts are completely contradictory. In one sentence you say that you wouldn't want to see Cornwall 'concreted over' and in the next you are complaining that Cornwall has some of the highest average house prices.

Can you not see the link?

(note how I don't have to resort to using foul language to make my point)

You NEED to read the report before making any comments like that. And ALL of the report. Maybe you might have the decency to then come back and apologise because you are totally unaware of the true situation and are making comparisons to mongolia which is probably 90% uninhabitable.

I think you're wasting your time on this one.

He doesn't want Cornwall 'concreted over' but he's complaining about high house prices there :lol:

And he doesn't 'need' to read a report that outlines the real problems and situation in the UK because there are too many people in the world :lol:

overcrowded little island of ours where countryside is at a premium.

That's the best line - 'countryside is at a premium' :lol:

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Don't give me that 'I don't have to resort to insults blah, blah'. If you don't think stating someone's point of view is rubbish and being patronising won't bring that kind of response then you are either naive or just doing so to provoke a response where you can smugly point out your superior intellect/debating style where you have the support of logic and reason and don't have to resort to offensive language etc.

So yes I have noted you don't have to resort to 'foul' language. Anyhows, for patronising me as far as I'm concerned you are still a pr!ck

However your posts are completely contradictory. In one sentence you say that you wouldn't want to see Cornwall 'concreted over' and in the next you are complaining that Cornwall has some of the highest average house prices.

Regarding the actual discussion I think you will find there is more than one camp regarding what drives house prices. In my opinion this house price bubble is solely driven by cheap credit and the media pushing home ownership. I completely refute the idea it is caused by a shortage of affordable housing. Obviously if there were 10 million more homes than people it would effect the price but I don't think it is the major factor in the current bubble.

As far as building anything goes I am utterly opposed to development, green field and even many brownfield sites. This is just an environmental stance. At the end of the day I'd rather not have a house myself than see much more building, urbanisation and encroachment into the countryside

And yes I have glanced over your report and I think it is fundamentally flawed for the reasons I have stated above. I don't see the point of comparing the UK with other overcrowded countries.

Edited by surfgatinho

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Regarding the actual discussion I think you will find there is more than one camp regarding what drives house prices. In my opinion this house price bubble is solely driven by cheap credit and the media pushing home ownership. I completely refute the idea it is caused by a shortage of affordable housing.

Read the report. It's a full scale investigation into the UK housing market and gos on to compare it with the housing markets in outher countries. Germany for example - almost the same population density but average new house there is 121sq metres compared to 76sq metres in the UK. The report is excellent and is full of stats debunking the myths propagated about the UK housing market, myths about countryside being at a premium etc.

The well off and the propertied are basically forcing the generations behind them to live in smaller and smaller houses that cost more and more. Personally I'm not up for that. I'm not up for covering the countryside in housing either but there is nothing wrong with local councils releasing more green field land in appropriate places around towns and cities so that more houses can be built (not the current 50% of new builds that are flats), houses so that real people can live real lives and bring up familes etc and not be forced into smaller spaces in the urban environments where playing fields are being destroyed and people are only given the option of living in tiny flats.

As far as building anything goes I am utterly opposed to development, green field and even many brownfield sites. This is just an environmental stance. At the end of the day I'd rather not have a house myself than see much more building, urbanisation and encroachment into the countryside

Very useful stance indeed, growing population buy hey - let's not build any more houses.

It is you sir that are the *****

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  • 301 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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