Saturday, Jul 29, 2006

First time buyers wanted for tv show

Firstrung: Trapped first time buyers on

The producers of Tonight with Trevor Mcdonald have contaced Firstrung to ask for our input and that of our readership on a programme to be aired in September. They're developing content for the show looking at the phenomena of generations living under the same roof for ITV1's leading current affairs programme.

Posted by converted lurker @ 11:28 AM (677 views)
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1. bidin'matime said...

This could be good news. As they say, it is good that a mainstream TV programme is picking up on the downsides of HPI. Sir Trevs programme tends to be a bit lightweight, but anything that gets people thinking about how this might all end, must be good.

Hopefully it is just a matter of time before we see some serious debate about the housing market on TV, followed by the return of programmes about how to sell a house in a difficult market - all this will help to focus the attention of the potential BTL investor or FTB who will think twice about diving into an overpriced market.

Saturday, July 29, 2006 04:52PM Report Comment

2. sirgoogle said...

Why make a programme about this? Apparently there will be no HPC as the housing market continues to boom and debt never needs to be repaid. This is what I keep being told by everyone with whom I get into a conversation with on this subject. Obviously the FTB-living-with-parents issue is only affecting a minority whose votes don't count.

I really hate this "I am all-right Jack" attitude in British culture. I will not be unhappy to see this end in tears as it will bring these self-satisfied people down a peg or two and perhaps begin to undo the damage begun by Mrs Thatcher with her me-me-me culture and "death-of-society" policies - that the Major and Blair Govts have so happily continued to implement.

NB.I am not a socialist - just someone who believes in fair-play. I gave up labling myself 20 years ago when I could not see any difference between the parties anymore.

To solve this properly - when the HPC has run its course and house prices bottom in 2016ish - a new Govt (and I do not care who) should put some policies together that make all property come under capital gains legislation to reduce speculative short term investment.

Saturday, July 29, 2006 07:20PM Report Comment

3. bidin'matime said...

Glad youve got that off your chest, SirG, but youre way off the mark. Its not the owners/sellers who push prices up, its the buyers. And if people who sell their own home make a profit, they have to spend that on their next home, so it would not be fair to take a bite out of it as tax. People would have to keep moving to a smaller house (or borrow more just to move to the same size house).

People who buy a second house (whether to let out or as a holiday home) already pay tax on any profit they make.

It is the market (the same one that Mrs T championed) that will punish everyone who has borrowed as much as they can possibly afford, to bid as high a price as they can, for a house that they think will sell for a big profit and make them their fortune. It is their greed that has made them borrow so much and the market will punish their greed, by reducing the value of the property back to its correct level and leaving them very much out of pocket. The government may tinker with the process in the short term, but ultimately it is helpless to stop prices moving either up or down.

Sunday, July 30, 2006 05:17PM Report Comment

4. sirgoogle said...

Bidin. I am not saying tax for tax sake. I observe in The Netherlands where the cost of transferring a house is around 12% (legal fees, agent fees and tax) that their housing market (although very expensive - due to limited supply) does not suffer the wild fluctuations or short term speculative investment that the British market does. It is still a free market. In addition due to the high house prices and because there is more institutional investment in housing - many people rent - and are quite comfortable with it. Annual increases in rent are tightly controlled (capped) by law - as are manyother issues regarding the duty of landlords to tennants. Obviously this would be a big vote loser now and is not probably applicable to the UK market (at the moment).

However, another method for the UK could be to control houseprice inflation through capital gains tax on every transaction - with an allowance provided for each year. If the start of this was applied at the bottom of a cycle then this would allow house prices to rise again in a controlled manner, calm house price inflation and scare off speculators.

I believe that Capital Gains is applicable to nearly all other investments but not to property. Please correct me if I am wrong.

Sunday, July 30, 2006 06:51PM Report Comment

5. sirgoogle said...

When I say "Property" I mean primary residence as well as other properties.

Sunday, July 30, 2006 06:52PM Report Comment

6. sirgoogle said...

And in the Netherlands it is the buyer who pays the entire 12%. This is quite a disincentive to speculate. Even when prices were rising fairly steeply (for The Netherlands) in 2001-2003 it was estimated that it was a minimum of 3 years that the property had to be hung onto before someone could clear their costs. Consequently due to the high transaction costs the market here will stagnate rather than crash.

Sunday, July 30, 2006 07:06PM Report Comment

7. Bryan said...

Look on the BBC web site, they are looking for stories from people who cannot raise enough money to buy a house

Sunday, July 30, 2006 07:44PM Report Comment

8. indiablue19 said...

Sir G,

Maybe speculation relies more on the mentality of the culture rather than simple mathematics. For instance, a taxation system such a you are describing already exists in the States. The estate agent's fee alone will be around 7% of the sale price. Other costs for recording, deed and title search, banking points to acquire a mortgage [another 1 to 4%], or similar assumption fees for an existing mortgage, add up to a package often exceeding your 12% estimate of a psychological or practical deterrent in the Netherlands.

And then, of course, there's capital gains tax. In the US, you may have an exemption once in your taxable lifetime -- but of the capital gains on a primary residence only. You must have owned the home more than three years, and it must be primary. Capital gains otherwise may figure in the 30 to 50 percent bracket depending on length of ownership, your ordinary taxable income, and whether the property was a first residence or for investment. The prudent own a first residence, get it paid for at some stage, and claim their onetime exemption for what they believe will be the highest sales profit they are likely to realize in their lifetime when they downsize for retirement. Everybody else does exactly what you've been witnessing here in Britain with no or low equity, and property speculations that would curl the hair.

This legal structure doesn't seem to have discouraged boom and bust, as we are noticing in the headlines today. Those who perceive themselves to have vast paper wealth at their disposal seem to consider these liabilities a mere cost of doing business. They pay the penalties, collect the profits and move on. They also don't seem shy of leveraging one acquisition from the speculative proceeds of another either, with all ending in a shambles when cheap mortgages evaporate.

Monday, July 31, 2006 03:54PM Report Comment

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