Saturday, September 24, 2011

Oh dear a call for more of the same old lending preactices

How I would sort out the UK's housing market if I was the chancellor for the day

I (Nigel Stockton) was recently asked what I would do to help the property market if I was chancellor. I hadn’t thought about it before as it’s not something I am usually asked, but I guess I should not have been surprised as I am known for my political correctness. But as the Treasury has asked lenders and commentators for input on how to kick-start the first-time buyer sector, I thought about what I’d do if I were housing minister...........I’d probably kick off with three telephone calls to our nationalised and part-nationalised lenders. I would insist that they lend £500m each at 95% LTV to first-time buyers.

Posted by jack c @ 02:28 PM (1783 views)
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10 thoughts on “Oh dear a call for more of the same old lending preactices

  • I (Nigel Stockton) was recently asked if I could find my own ar**h*le using both hands, if given directions. I hadn’t thought about it before but I guess I shouldn’t have been surprised as I am not known for my anatomical correctness. What I am about to say may therefore not come from the usual organ of speech, but an altogether more useful (in my case) orifice somewhere inside my boxer shorts. But as the treasury has even less idea than I do, they have asked people like me how to do everything possible to repeat the mistakes that got us here in the first place.

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  • sibley's b'stard child says:

    Then all we would need to worry about was 2013 as I’ll have probably been accused of creating a small housing bubble.

    Yes quite.

    In fact, why stop at those recommendations; devise a law whereby FTBs are penalised (say, a fixed levy of 1k) for not purchasing a house. After all, it’s no good forcing lenders to lend if you can’t force the buyers to buy.

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  • “I did consider mortgage interest relief at source but realised that it would take about four years to implement” (why so long?)

    “I’d increase tax breaks for those who buy new properties for buy-to-let purposes.”

    “For others in the private sector, I’d allow the first year’s rent for all new rental property to be added to the interest paid and allow this to be offset against tax.”

    Stockton shows a good understanding of how to boost UK property market. His proposal to change the tax system in favour of property buyers would probably be an effective way to start another bubble. Whatever we might think of his ideas, he demonstrates a good understanding of the importance of the tax system to the property market.

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  • I’ll give you a better tax idea to solve the housing problem; tax land in land banks, hard.

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  • How about: big tax on people with second homes so that having a portfolio of homes becomes less attractive; and closing loopholes for side-stepping this (you know how a lot of laws get side-stepped by presenting oneself as a corporation).

    Or: Like minimum wage, having a maximum rent for types of property in London. Again,this would reduce landlords hogging property and I think other effects too in making life in London affordable for ordinary people.

    In general, make it uncomfortable for people to profit from making life unaffordable for ordinary people. So the land bank tax idea also sounds good.

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  • If the horse looks dead – Just flog it a bit more. Bound to work.

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  • Clock, there’s no need for an extra tax on land in land banks, we could just apply Business Rates to them until the houses are completed and actually sold (or rented out). Or cut out the middleman and slap LVT on the lot.

    MDM, there’s no need for an extra tax on second homes (very difficult to police), or a maximum rent (which causes more distortions than it solves), slap them all with LVT and there’ll be more houses available for people to rent or buy to actually live in, so prices would come down.

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  • Mark W, you get a lot of flack sometimes for your magic wand approach to LVT.
    However, I think your trump card is that you might stop people from wriggling out of their tax obligations through loopholes.
    I read an article some months back about how football players present themselves as corporations and avoid huge amounts of tax in that way. I would like to see a tax system which says, “Listen mate! You can call yourself a corporation if you like but you have to pay your dues!”
    I don’t know if you’d term it ‘rule of law’ or what but I don’t like people getting a free ride.

    Mike

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  • “everyone knows it is deposit not affordability that’s the main issue”
    I didn’t I thought affordability was quite an issue

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  • MDM, all LVT proponents get a lot of flack, after a century or two we’re used to it. For sure, one of the thousands of selling points is that it is easy to assess and collect, no loopholes etc. If yer footballer wants to live in a £1m mansion, he hands over his £80,000 a year (or whatever) and that is the end of the matter.

    Rooney did something quite cunning with loans from offshore companies or something, maybe he cut his tax bill in half (we in the tax profession are not sure quite what he did), if in future he wants to halve his tax bill by moving into a £500,000 house, then good luck to him.

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