Recently there was a piece on Radio 4 about "shared ownership", which is buying a house on the never never, but with the added joy of paying a mortgage on the part that you "own".
As far as I can see this is yet another "initiative" to try to blow some air into the housing bubble and get round the rules on lenders designed to stop borrowers reducing themselves to penury whist they desperately try to get access to the magic money tree that is housing in the UK. It combines the worst aspects of renting - it's not your house to do what you want with - with the worst aspects of buying - the properties are leasehold and, so long as you only own a small percentage, your share is almost unsaleable, so you are stuck with it.
It has all the makings of a mis-selling scandal of the future, I expect the ambulance chasers are already gearing up.
Sunday, 22 November 2020
Another Official Property Scam
My latest blogpost: Another Official Property ScamTweet this! Posted by Bayard at 19:05
Labels: House price bubble
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16 comments:
Sure, but this nonsense has been around for ten or fifteen years.
but not the latest effort to push it, though.
Your are wrong. It's not the 'Never. Never'. It's the 'Always. Always'.
It's my contention that what this is all about is a new Feudalism not based on some spurious duty owed to the Lord of the Manor but a real debt from which you can never escape owed to whomever can make himself/herself an overlord. Currently Doris and his cultural Marxist global 'elite'.
Nice spot of the worst of both worlds for labour mobility. Very hard and expensive to sell your slice, good luck if you want to deploy your skills elsewhere in the economy once you've got on this Frankenstein step of the 'ladder'
I first heard of this 2001 so at least 19 years.
It is crazy.
Another issue is that if you want to buy another tranche of equity (eg move from owning 30% to 50%)you have to pay based on the current market price. It can become very expensive to escape this financial trap. However it is just about the only way that the average punter can get onto the ladder.
This scheme and all the others like it are primarily, designed to keep house (land) prices high and so, in fact, make it harder for the average punter to get on the ladder. It's financial Stakhanovism.
I'm not sure I understand your objections to shared ownership. I started off in 1992 with a 30% share of a flat, later increasing it to 80%, so when I eventually could afford to move into my own house I had some equity to sell. I suppose I could have just rented for all those years but it didn't seem very sensible when I could be using some of the money to pay off my own mortgage instead.
VS, sure, but back in 1992, your initial 30% probably only cost ten or twenty grand.
"I'm not sure I understand your objections to shared ownership. I started off in 1992 with a 30% share of a flat, later increasing it to 80%,"
Given that you had the resources to increase your equity by that much, how come you didn't take out a bigger mortgage in the first place?
"Your are wrong. It's not the 'Never. Never'. It's the 'Always. Always'."
I've always supposed that HP is called the "never never", because you never never actually get to pay off the debt and own the item outright, in which case, it's very appropriate for the majority of people who use shared ownership schemes.
It always ends up in location value
I don't have the official numbers. But roughly...
UK revenue 750e9
UK stimulus 750e9
UK real estate value 8e12
UK house price inflation Oct 21 8%
UK RPI flat
So
8% * 8e12 = 640e9
Order of magnitude thereabouts?
It always ends up in location value
Neil, I have a question about Georgism - wouldn't it result in government surpluses? Government spending and tax cuts on earnings and output increase rental value of the land, so are self financing. It could well be the case that the initial revenues from 100% LVT are NEVER spent. The question I have is - would this result in deflation or a depression. I see this as a downside to Land Value Tax.
Neil, that would be a nice problem to have!
If we were to reach that stage and most other taxes had been phased out, the government can pay off the national debt; distribute the surplus as UBI; reduce the % collected or exempt farmland and lower value areas; build up a Sovereign Wealth Fund; simply spend more, etc etc.
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