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loderingo

The Utility Of Housing

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Hi All,

I've been watching this site for a long time but this is my first proper post. I was doing some thinking today about the reasons behind the major housing boom we've seen and I know that one reason often given is that we have shortage of housing in this country. I think this is incorrect and that we have enough housing but we don't use it properly i.e I think we use the housing we have badly. It's interesting that this boom is happening around the time that the baby boomers are in their late 50s as by now all their children have left home putting up the demand for housing but very few of them have sold their own houses or downsized. I think this is the cause of the boom as in other countries (such as Italy) where many more people rent, people of that age are going to be much more willing to 'downsize' than people in the UK.

As an example of the situation in this country, I'll give you my parents. They moved up to a three bed house from a two bed house in 1985 when I was 7 (I'm an only child but the old house was very small). I'm now 27 and moved out years ago but they are still living there. They are now coming up to retirement and are worrying if their pensions will be enough to maintain a decent standard of living. They do have some other assets but their main asset is the house which is worth in the region of 150-200K (in Avon). I pointed out to them that in strictly logical and economic terms - their best plan would be to sell the house as it is giving them no return and tying up most of their capital. They could buy somewhere smaller and maybe get 40-50k in capital after moving costs. Well invested this could supplement their income when they retire. They could also STR if they wanted. Selling up would be the logical thing to do but like many other couples in their 50s they won't do this due to:

1) Emotional attachment to house

2) Hassle

3) Large amounts of furniture / nicknacks which wouldn't fit in a smaller house

4) Status - all my mum's friends have good-sized houses

5) Just bought a new kitchen

Multiply my parents by many thousands of others and we can see part of the problem. If they lived in Italy for example and were still paying out rent payments every month then I think they would be much more likely to get somewhere smaller.

I think that my theory then is that the problem of high prices is at least partly down to the poor utility (or efficiency) of the housing in this country. I currently rent in a shared house and for £360 per month get 1 bedroom + a share of a kitchen, lounge & bathroom. If I bought a 1 bed flat, I would get a kitchen, bathroom and lounge all to myself but would have to pay extra for the privilege and I have no problem with sharing. So for me my housing meets my needs and I don't pay more than I need to. But a great number of people in this country are (one way or another) paying for many extra rooms that they don't need and so the country as a whole has a poor utility of housing.

The Government seem to be building more houses but this won't solve the problem. Ultimately, I think the solution would be to increase property taxes / council tax at the expense of income tax as this will encourage people to downsize. Unfortunately, no Government will do this as it would lead to a mini-riot from the grey vote who are already rebelling against council tax as it is. Any thoughts?

Loderingo.

PS: I am not seriously saying that my parents should sell their house but am merely pointing out that from an economic point of view ONLY it would be their best option. I think that ultimately like many other baby boomers, that they will choose to have a lower income and live in a nice house than to have a higher income and live in a smaller house.

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A valid point. I know plenty of older couples in that situation.

Add to that the numerous empty properties. In my block, 18 flats, there are 7 unoccupied for various reasons. Next door to me, the flat has been empty 12 years!!! The little old guy who owns it pops in once a year to run the vac round and clean the windows. The flat below me, empty, as the couple live abroad. Been that way three years.

Opposite me, 23 new builds 2 bed 2 baths. £250k Finished 18 months ago, still only 11 sold.

This is highly populated North London.

There is a shortage of properties. Yeah right! And of course inflation is running at 2.5%, oh excuse me, down to 2.4%

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Good post.

There is a lot of irrational thinking with regard to houses at the moment. I feel the tide is turning a little, but the market is still being propped up by huge foreign investment and foolish sheeple. The basic facts are that current price levels are unsustainable, but only change in sentiment, driven by enforced selling (most probably thru high interest rates or unemplyment) will jolt the market back down.

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Good post.

There is a lot of irrational thinking with regard to houses at the moment. I feel the tide is turning a little, but the market is still being propped up by huge foreign investment and foolish sheeple. The basic facts are that current price levels are unsustainable, but only change in sentiment, driven by enforced selling (most probably thru high interest rates or unemplyment) will jolt the market back down.

Talking of irrational thinking... how do you square 'current price levels are unsustainable' with 'only change in sentiment [...] will jolt the market back down'? :blink:

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Talking of irrational thinking... how do you square 'current price levels are unsustainable' with 'only change in sentiment [...] will jolt the market back down'? :blink:

Sorry pissed - what I am trying to say is that prices have to fall cos they are way too high on every possible measure- but that they won't fall until sentiment changes.

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Sorry pissed - what I am trying to say is that prices have to fall cos they are way too high on every possible measure- but that they won't fall until sentiment changes.

Drinking and posting? Tut, tut... :lol:

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Look at for example Kenya, property prices are rising in Keyna:

http://allafrica.com/stories/200608100251.html

This flies in the face of all reason.

Life expecancy has dropped from 65 to 43, it might bounce back (in 40 years), but it could drop to Malawi's 37.

20% of the population (6 million people) are predicted to die of aids in the next few years, 1 million have already died and it might be getting worse. Civilization is also pretty much collapsing in some areas of Africa for this and other reasons, as an example in Zimbabwe the goverment has in the last few weeks stolen 1/4 of all the money in the country in house to house raids and cross country road blocks.

There is absolutely no reason that the price of property should go up in those conditions but still it has. Aparently some Kenyans have been getting mortgages in Britain or Italy.

It's a kind of global property mainia. I have heard people all over the world give reasons based on the local economy why property prices should go up in their area, but their reasons can't possibly be true. The real issue is very lax control of the supply of money that has created asset bubbles everywhere. It's all going to blow up in someones face, and I just hope that someone ain't me.

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1) Emotional attachment to house

2) Hassle

3) Large amounts of furniture / nicknacks which wouldn't fit in a smaller house

4) Status - all my mum's friends have good-sized houses

5) Just bought a new kitchen

I expect 1) is the killer reason and this is something often forgotton on this board. Houses *are* extremely emotional things .

I think the 'love affair' with home ownership may be like the 'love affair' with the motor car. Many people can logically see the folly but nevertheless are reluctant to give up this cherished notion. Like car ownership, maybe making the alternative more attractive is the answer. Renting is so depressing in this country because we generally have no security of tenure, something compounded by BTL who will have no compunctions in kicking you out once the 'sell' signal is given. Letting agents also treat you like scum and then charge YOU the privilage of giving them an income.

In your parents case, selling up and investing the proceeds is all very well but the income generated will be taxed by the government. So will buying back in after STR. Some tax reform is needed here too if renting is going to be a better option. How about rental bonds, where tax free investment income can underwrite long term rental agreements? These can be similar to IO mortgages, except without the capital risk and with the money is being used usefully and not just lining the pockets of the banks.

Just some thoughts.

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Wouldn't it be good if the government could apply a 'unused bedroom tax'

Not sure how it'd be enforced though! :blink:

Wouldn't make much in our house - if you know what I mean ;)

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My parents are in exactly the same position as yours with the same dilemma and reasons to stay/move. However, I think they will sell. I'm beginning to think that the whole baby boomer generation who have built a healthy nest egg based on property price inflation will be faced with this scenario over the next decade or two. It seems that many will choose to downsize, especially if they start to fret about future prices and they will choose to rely on their property investment to maintain living standards. This can only contribute to a steady supply of properties at all levels which may suppress prices over the longer term.

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Loderingo - I agree totally with what you say. It's an argument I've been making for a long while. My parents actually moved up to a bigger property after my sister and I had left home. :rolleyes:

Also, I've met a lot of single guys in their 40s occupying 3-bed Victorian houses and not renting out any rooms who are equally to blame for the housing shortage. Some of them have the gall to claim they are Green because they walk to work or recycle. :lol:

Tax on bedrooms not permanently occupied is a great idea IMO.

I agree that the housing shortage does not apply to every corner of the UK - it would be very strange if it did - but round where I live there's no doubt that there's a chronic shortage of housing. Houses in my area are selling within an average of 3 weeks, and there's fierce competition for rented accommodation (especially at this time of year, when you're competing with students).

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I did a poll on the forum some time ago which confirmed that indeed much of Britain's bedroom capacity is tied up, unused, in the houses of baby boomers.

http://www.housepricecrash.co.uk/forum/ind...c=22061&hl=

I think the important thing about this is that it is a *new trend*. I believe that in previous generations, people in their 50s and 60s would downsize and live in a bungalow. But today's retirees-to-be are keener to hang on to the large family house.

frugalista

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A couple of years ago I asked the pro immigration pro asylum Green Party what their solution is to the housing shortage and skyrocketing house prices. Their reply was room to let. They stated that up and down the country there are at least a million - possibly two or three million but nobody knows for sure - empty bedrooms in houses and it is a scandalous waste of a resource. At the same time the majority of people who require accomodation are single and young rather than families. Rather than rent complete houses and flats or overstretch themselves with mortgages, they would be better off financially renting a spare bedroom. The trouble is that room to let isn't very common at the moment and most people with spare bedrooms are reluctant to rent them out. In some ways it is financial in that the homeowners don't need the cash, but the biggest reason is changes in social attitudes over the past 25 or so years where people have got more individualistic and don't like the idea of sharing their house with a stranger. The Green Party is considering making changes to taxation to provide rebates for homeowners who rent out rooms and a higher council tax for unused spare bedrooms.

The Green Party denied that immigration has driven up house prices and cited that there was mass immigration during the 1960s and 70s and that didn't cause HPI because back then there were more bedrooms available for rent cheaply.

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I read that something like 90% of the people in the UK live on 8% of the land.

Wouldn't it be simpler just to compulsarily purchase land and build on it - it's not as if we're short of land.

Is it just a lack of political will that prevents that?

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The Green Party denied that immigration has driven up house prices and cited that there was mass immigration during the 1960s and 70s and that didn't cause HPI because back then there were more bedrooms available for rent cheaply.

Are they crazy or what ? Do they think that all immigrants should rent a bedroom including families ? Do they really think that a million extra people coming into the UK does not affect housing ?

At the moment bedrooms for rent are cheap relative to 10 years ago partly because people have to rent a room out to pay their mortgage.

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Hi All,

I've been watching this site for a long time but this is my first proper post. I was doing some thinking today about the reasons behind the major housing boom we've seen and I know that one reason often given is that we have shortage of housing in this country. I think this is incorrect and that we have enough housing but we don't use it properly

You need to distinguish between houses and flats

There is a massive shortage of houses - not flats.

In 1997 17% of new builds were flats. Today the figure is nearer 50%

Why?

Because of restrictions on green belt land and the current planning policy of making urban areas more densely populated.

More than 80% of UK population live in urban areas so why should the majority experience a deterioration in the quality of their environment. loss of playing fields etc to preserve the environment for the NIMBY minority.

There is no shortgage of land in this country. It is our land that needs to be used properly and that means more of it for housing so future generations are not holed up in 1 and 2-bed flats.

I think the important thing about this is that it is a *new trend*. I believe that in previous generations, people in their 50s and 60s would downsize and live in a bungalow. But today's retirees-to-be are keener to hang on to the large family house.

Yeah, because all the offspring are either living in shared houses or squashed into studios and 1-bed flats.

They have to hand onto the large family home so that the family still has somewhere to get together. This is the case for my parents who have 4 kids.

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Are they crazy or what ?

Of course the Green Party are crazy!!

My view of the Green Party is that it is more of a humanitarian party than a party of the environment. I find it impossible to believe that any sane environmentalist would ever dream of an open immigration policy and the dismantling of border controls which is what the Greens want. The Greens nowadays are more concerned about gay rights in Papua New Guinea than environmental issues in Britain.

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My parents' neighbour downsized from their three-bed semi to a two-bed flat at considerable expense. The three-bed semi was bought by a btler who rented it out to a family with four children who'd lived for years on social security. The family weren't even British the mother and father are eu citizens. The eldest son is a knife-welding teenager who attracts frequent visits from the police. Where did the neighbour downsize to: the type of flat usually bought by a first-time professional couple so that made one less property available for first-time buyers.

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My parents' neighbour downsized from their three-bed semi to a two-bed flat at considerable expense. The three-bed semi was bought by a btler who rented it out to a family with four children who'd lived for years on social security. The family weren't even British the mother and father are eu citizens. The eldest son is a knife-welding teenager who attracts frequent visits from the police. Where did the neighbour downsize to: the type of flat usually bought by a first-time professional couple so that made one less property available for first-time buyers.

Surely the solution to families like that is at Heathrow ?

On the original question with the cost of moving eg stamp duty, estate agent fees etc. Downsizing is often not such a great idea financially especially if you end in leasehold flat with maintenance charges etc.

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In some ways it is financial in that the homeowners don't need the cash, but the biggest reason is changes in social attitudes over the past 25 or so years where people have got more individualistic and don't like the idea of sharing their house with a

stranger.

They may need the cash if rates soar.

You don't need to rent to a complete stranger but I also expect that people move in much smaller and narrower social circles as well.

The Green Party is considering making changes to taxation to provide rebates for homeowners who rent out rooms and a higher council tax for unused spare bedrooms.

This is already built into the Council tax system so minimal changes are required. In fact this was underway with a revaluation/banding exercise. Trouble is VIs have squashed it.

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Surely the solution to families like that is at Heathrow ?

Did you read that the family were from the EU? Under EU law every EU citizen is free to move to every other EU country in the same way a Hampshire resident can move to Surrey. The only way for Britain to impose immigration controls on EU citizens is to leave the EU.

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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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