From The Daily Mail:
Liberal Democrat leader reveals parents and grandparents can use pension funds to guarantee mortgage deposits for first time buyers...
In an attempt to move on from grumblings about his leadershop, Mr Clegg's hailed a plan to help young people to buy their first home. Mr Clegg said: ‘We have thousands of young people who are desperate to get their feet on the first rung of the property ladder but deposits have doubled and the number of young people asking help from family members has doubled.'
He unveiled a plan being worked on by the Treasury and the Department for Work and Pensions which would allow parents and grandparents to use the lump sum of their pension as a deposit for their children or grandchildren to buy a home.
Liberal Democrat sources said around 250,000 people had a pension pot of £40,000, with a lump sum element of around a quarter - £10,000 - which could be used as a guarantee. They estimate that five per cent of those with a suitable lump sum would take advantage of the scheme, meaning 12,500 people could potentially benefit.
Words fail. All this means is that yet more savings and real wealth will be tied up in leveraged land speculation, so even if it works on an administrative level (which it won't), it will be a disaster economically.
Sunday 23 September 2012
Crackpot idea of the day
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13 comments:
"Words fail."
I'm not surprised. This one puzzles me, because it's so ineffably stupid, practically and politically.
I think somebody wants to be rid of him before the next election and he's too dim to see it. I just can't think of anything better.
a pension pot of £40k! Doea he mean that? Ie that you will sacrifice apart of a pension of about £1500 per annum to help your kids buy a house?
AKH, do you think he was deliberately set up to fall on his arse, like in "The Thick of It". It's quite possible I suppose.
G, it would appear he does mean it.
No he means that you put it up as collaterol. In other words the bank have a charge on your pension.
This allows your kids to take on a 100%ltv mortgage, and pump up the money supply / credit and land price bubble some.
Then, if it all goes wrong the banksters (after being bailed out) can repossess your equities and your kids house.
"We have thousands of young people who are desperate to get their feet on the first rung of the property ladder"
Either this is a political myth (idea for Mark: run a series on Great Political Myths of Today) or these unfortunate youngsters have been deluded by one or all of the prevalent memes like "renting is for losers" or "a rented house is not a home" or "property is always a sound investment" etc etc.
There's only two arguments against renting that stack up, that I can see, first security of tenure and secondly not being able to alter things the way you'd like. I've often thought that a short lease, say 20 years, with a ground rent at close tomarket rent levels should be an attractive option, but there must be some problem with it, 'cos they ain't out there.
'not being able to alter things the way you'd like'
To be fair, I think that's what most folks really mean when they say 'a rented house is not a home'.
Imagine the Daily Mail in a few years time...
"Mr and Mrs Bloggs took advantage of a government scheme that allowed them to pledge their pension lump sum to guarantee their children's mortgage. But their children didn't pay, the house was repossessed and sold, and now the Bloggses face passing their retirement in poverty, with their pension going to the bank.
Legal experts believe that people like the Bloggses may have a case against the government for miss-selling.
Mrs Bloggs said, "We never realised we could lose our pension. We just wanted to help our kids. It's all so unfair."
Britain's EU Commissioner, Nick Clegg, claimed today that the fiasco was the British government's fault and showed the need for increased regulation at EU level."
B, F, yes, 'ownership' means being able to decorate as you like with no risk of a landlord or bank chucking you out. Whether you're paying tax on your land rent or tax on your income does not affect that.
AC, that's the general idea, isn't it?
I've even heard some real H-O-ists berate thius as daft. So it must be.
AC There is the undoubted fact that a person in debt is a person in fear of losing their job and a person in fear of losing their job is a lot easier to control than someone who isn't. So, from the government's, banks' and employers' point of view, personal debt is good. I once had my boss tell me he hated me, because I wasn't in debt. Partly it was envy, but partly it was because he knew that he needed me more than I needed him.
It's just puff. Everyone knows that the economic correction is going to take years and this sort of junk just makes people hope that things can get "back to normal" if the government presses the right buttons.
BE
"things can get "back to normal" if the government presses the right buttons."
That's what politicians want us to believe. Another Great Political Myth of Today.
and if many people have a pension asset of £40k...that leaves a big hole for future governments to fill somehow.
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