Wednesday, 20 March 2013

"Budget 2013: £100,000 off right-to-lend on London homes"

From The Evening Standard:

Thousands of London mortgage salesmen will get a chance to lend money to London's higher earning social tenants to buy their homes under a major extension of the Right-to-Lend in tomorrow’s Budget, the Evening Standard reveals today.

George Osborne will raise to £100,000 the maximum incentive to persuade tenants in London to swap a secure tenancy at a low rent for five years of debt slavery during the lock-in period, after which they will be able to sub-let the home for a huge guaranteed profit or to sell it to an aspiring homeowner or BTL landlord who will have to take out an even larger mortgage.

One Council of Mortgage Lenders spokesman said it could "unleash a new generation of land-price speculation and mortgage lending in the capital". The rise, from £75,000, reflects the higher land rents of London property compared with other regions...

Mr Osborne has hailed Right-to-Sublet, which was introduced by Margaret Thatcher in 1980, as "one of the greatest trickle-up policies of all time. As The Daily Mirror pointed out recently, forty per cent of homes bought by tenants are now in the hands of landlords; and with prices as high as they are, it's difficult for banks to lend even more money on the existing housing stock."

It gives long-standing tenants a discount of up to 50 per cent if they buy their taxpayer-owned home from the taxpayer. Sources say David Cameron personally backed the move and pushed it through against feeble resistance from the Liberal Democrats who just don't get it.

Andrew Johnson, the business development spokesman for the British Bankers Association said: "A £100,000 discount could make the difference to thousands of hard-working London bankers who could not otherwise dream of lending social tenants hundreds of thousands of pounds. It’s the time for the Chancellor to grab the Right-to-Rent bull by the horns and unleash a new generation of Home-Owner-Ism in the capital."

Six Right-to-Speculate sales have been completed in Hammersmith & Fulham since the discount nationwide was raised to £75,000 last year, with a further 37 awaiting completion. But a study last year found that discount was not enough for most financial service industry insiders and future BTL landlords.

Average house prices in London have reached £403,000 for the first time. It is 15 per cent above the £350,000 peak in January 2008 before the short-lived house price dip, which triggered a decade long financial recession.


Bayard said...

I used to think that Right To Buy was a political thing (breaking Labour fiefdoms, bribing voters with their own money), but of course, there's also the "selling off the family silver" aspect as well. Which sort of makes sense: when you're broke, you sell what you can for whatever prices you can get for it. Ideally, they would kick out the tenants and sell the social housing for full market value, but since this is politically impossible even for this rotten crew (although the bedroom tax should free up a good many of the largest and therefore most valuable houses), they have to sell them at a greater and greater discount as there is less and less money available from the remaining tenants.

Mark Wadsworth said...

B, a state (with an unlimited life span) does not need to differentiate much between "capital receipts" and "revenue receipts", so it makes no sense to sell off council housing at undervalue.

If they want to maximise receipts from council housing, then just crank up the rents, or worst case, sell tenants "lifetime tenancies" with a loan from the government or something.

Lola said...

Excellent parody. I will bottle it for future reference.

Bob E said...

That "lock in period" may not necessarily be as long as 5 years :-

Social tenants will be able to buy their home after living in it for three years – previously they’ve needed to live in a property for five years before being able to take part in the scheme.

Mark Wadsworth said...

L, it wasn't a parody, it was a rant :-(

BE, no, that's the qualifying period. I mean the period between buying it and being allowed to sell it (or legally sublet it). Which I guess is 5 years, it might be 3 or 4.

Bayard said...

"If they want to maximise receipts from council housing, "

They don't, they want as much money as they can get their hands on, up front, right now.

Mark Wadsworth said...

B, if they want as much money as poss, why are they selling them at a discount?

Bayard said...

I refer you to my first comment: they have to sell them at a discount because they can't afford, politically, to throw the tenants out onto the street and the tenant's can't afford, otherwise, to buy them.