From This Is Bristol:
SOME may say that local councils should not get involved in helping people to buy homes. But Bristol City Council's initiative for those trying to get onto the property ladder should be welcomed.
Because in days when house prices continue to remain unreasonably high, increasing numbers of young couples are finding themselves priced out of the market. And if they cannot buy at the bottom of the housing ladder it has a knock-on effect as people cannot sell and then move up to bigger homes. As a consequence the market stagnates.
The loans being offered by the city council will help bridge the gap for people looking to find the deposits for their first home. This is an example of the council acting in an enlightened way over housing.
It is also nearing the end of its first year of buying empty homes in Bristol and refurbishing them to let.
In both of these cases the city council has identified a need, put together a plan and then acted. These are both practical responses that will make a difference. Of course neither will entirely solve the problems faced by people looking for homes. But they are both positive steps in the right direction and the city council should take credit for them.
So they are dishing it out with both hands, aren't they? First they buy up empty homes to set a floor under prices, and then they lend people money to enable them to pay the inflated prices of what's left.
They could achieve a far more favourable result by slapping a big fat precept on empty properties. That raises money rather than costing money; getting empty houses back into use tends to benefit an area; and by getting more supply onto the market (whether rented or for sale) helps push rents and prices down for young people/first time buyers.
And this is a real gem of Home-Owner-Ist non-logic: "if they cannot buy at the bottom of the housing ladder it has a knock-on effect as people cannot sell and then move up to bigger homes". That's patent bollocks, firstly because there's got to be some sort of equilibrium between prices at the bottom and the top and secondly because not everybody can trade up simultaneously.
Inconvenient people
1 hour ago
15 comments:
I particularly like the second paragraph where they say “house prices continue to remain unreasonably high” and end by saying “as a consequence the market stagnates”. So a “stagnant” market is one where prices are too high - that’s a new one on me.
Definition of a bureaucrat: one who is paid to ameliorate the harmful effects of another bureaucrat.
Agreed. Thanks for this. Its changed my mind whats being going on in Wokingham.
My local council is doing this with the speculative vacancies in the best value retail locations in Wokingham High St.
Been empty for 10 years. Council buys up on compulsory terms for 15 million to set the price floor and compensate the speculator with a nice capital gain.
Then they rent them out at 50% below current 'market' rental value.
Beautiful. Robin Smith
"Because in days when house prices continue to remain unreasonably high, increasing numbers of young couples are finding themselves priced out of the market. And if they cannot buy at the bottom of the housing ladder it has a knock-on effect as people cannot sell and then move up to bigger homes. As a consequence the market stagnates."
Why is not all of the above considered a good thing? It could be worded thus "Because in days when house prices continue to remain unreasonably high, increasing numbers of young couples are delivered from the temptation to buy an over-priced, diminishing asset. And if they cannot pay over the odds at the bottom of the housing ladder it has a knock-on effect as people cannot sell at currently inflated prices and have to reduce their asking price to something more reasonable. As a consequence the market starts to deflate." Hurrah!
I don't understand the obsession with trading up. I live in a studio flat right now with my wife (renting - all bills included). We could afford to buy it now but why bother? In a few years time we will just buy a medium-sized house with space for 2 potential children, and not feel any desire to move into a bigger house every 5 years.
RM, RS, B, trying to make sense of the tipsy-topsy world of Home-Owner-Ist logic is futile.
Anon 20.01, all this 'trading up' is a Home-Owner-Ist myth. As a simple matter of fact, most people live in fairly average houses for most of their lives, a few strike it rich and trade up, some hit hard times and trade down, but by and large, people live most of their married lives in a semi-detached or a terraced house. It's the kitchen, the furniture, a happy family life, quiet neighbours etc. that matter, not the value of the house.
But the Ponzi scheme works best if everybody is simultaneously trying to 'get a foot on the property ladder' or 'trade up to a dream home', because that helps keep prices inflated etc.
Mark, sorry to be off topic but can you just pop over here
and show John Henson how to do his numbers.
Eleven comments down.
Thanks.
JJ, done, I've covered all this on this here blog.
Anon 20.01 I think it is something to do with the meme that your home should reflect your status and wealth. Hasn't anyone said to you "Surely you can afford a bigger flat than that"?
B, sure, a lass at work asked me whether I'd bought a house again yet and I told her frankly no, I'm happy to rent for the rest of my life.
She was horrified and said "But don't you want to have something to leave to your children?" to which I replied, "I'm with the Jews on this one. I spend a lot on their education, that's the most important thing, and they'll inherit whatever's left over, whether that's cash or a house makes no difference."
That said, as outrageous snobs, the wife and I rent somewhere nice. Our kids aren't embarrassed when their friends from school come round and so on.
Slightly OT, but how would it work if you could purchase a lease with a high ground rent? The purchase price would represent the price of the brixnmortar and the rent would represent the rental value of the land. This way you would be "owning" the brixnmortar and could make alterations, redecorate etc without reference to your landlord, your rent would be lower, but your purchase price would be considerably lower than buying outright. For most people they would simply be renting land, not money.
B, that's where local councils have missed a right old trick with their shared ownership/part rent part buy nonsense.
Instead of splitting the ownership vertically (so that you buy 25% of the brixnmortar and 25% of the land, and pay rent on 75%) they should split it horizontally so that you buy the brixnmortar outright and pay rent on the land element. It's LVT by the back door.
B, from the occupier's perspective, they would be then living under an LVT regime. The only difference would be that the land rent would be going into private hands.
F, which reminds me that one of the many "Killer Arguments, Not" is that some blocks of flats have a freehold and a head lease and sub leases and sub sub leases etc, and they say that these things would be impossible to value for LVT purposes.
Nonsense. If the tax is purely on the rental value, then the amount of rent which the ultimate freeholder collects from the head lessee is a known figure, so we just charge a high rate of income tax on that; the head lessee pays rent and collects rent, if that's a net positive, we collect tax on that positive figure.
The rental value of the individual flats is not difficult to establish, and then seeing as the required total amount to be collected from that whole site is a known figure, we reduce the taxable amount of the flats by the amount each one has to pay to head lessee, and Bob's your uncle.
Alternatively, if LVT is based on the plot value, then the freeholder can be responsible for paying it and it's up to him how he claws it back from the leaseholders. No need for any special income tax. In the short term, there would need to be some legal right for the freeholder to override the terms of the existing lease(s) so as to be able to up the ground rent to cover the LVT.
B, or we could do that.
My original idea was to work out the total LVT for any such plot and then split it up pro rata by relative values (i.e. selling prices).
If the freeholder doesn't want to pay anything, he values his freehold interest at £1, and as a quid pro quo, the head lessee would have the right to buy it for £1. He can now depress his LVT share by valuing his enlarged interest at £1 as well, but then the leaseholders would make use of their pre-existing right to enfranchise under Leasehold Reform Act 1993, as amended.
So market forces mean that the freeholder and head lessee would put a reasonably fair value on their interests and pay their fair share of the LVT.
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