What will they do next to prop up house prices?

A couple of posts ago, I ran through the list of the gummint's first six reckless attempts to prop up house prices. As we can see, as each attempt fails, they try something bigger and stupider, culminating in the taxpayer funded £50 billion (or £500 billion, depending how you interpret it) bank bail out and 0.5% base rate cut yesterday.

JackC over at HPC asked:

@mark wadsworth "each new throw of the dice is more reckless than the previous one" - is the latest measure introduced yesterday the last thow of the dice (in your opinion?).

I for one doubt very much that it is, so here's my list of things that the major parties have seriously considered (and might yet implement), all with an eye to propping up house prices, which is of course impossible:

- giving FTB's grants towards their first home;
- buying up empty properties;
- giving more money to Housing Associations;
- paying the mortgages of people who lose their jobs;
- reintroducing MIRAS;
- putting a cap on Council Tax;
- increasing SDLT nil rate from £175,000, scrapping it altogether or exempting FTB's;
- exempting main residence from Inheritance Tax;
- replacing Council Tax with Local Income Tax;

I am sure that there are dozens of others that I may have missed, if you think of any more, please leave a comment.

Another day, another desperate throw of the dice (18)

Up to now, the UK and the US have been taking the long way round:, first encourage/allow the banks to make reckless loans, which the banks then slice and dice and sell on to investment firms, and then when it all goes wrong, bail out or nationalise the banks with billions of taxpayers' finest.

But why bother waiting for the banks to fail first? Why not short-circuit the whole thing and just have the government make the reckless loans in the first place? That's the approach now being taken in the UK:

"The Chancellor's plan involves effectively underwriting the majority of new mortgages in the UK to encourage big investors to give badly needed money to lending banks.

The proposed scheme means the UK Government would guarantee mortgage bonds, where banks parcel up individual home loans and sell them to investment firms. When the system works properly, banks have a source of money to loan to customers and investors get a return.

The total value of new mortgages involved has been estimated as up to £100bn... "

Via LP

Another day, another desperate throw of the dice ...

In my view, the whole Nulab 'economic miracle' was based on the fallacy that house prices can, in the long run, rise faster than incomes.

The Goblin King actually gave this as a reason why Middle England should vote Labour just six months ago: "I think the important thing is that over the last 10 years people in the South have seen their living standard rise substantially. They've seen their net wealth [i.e. house prices] rise even faster than their incomes."*

This whole "bank bail out" is partly just Scorched Earth Strategy, but, AFAICS, they are working on the basis that the last six desperate throws of the dice (throws 1 to 4 documented here a year ago, FFS!, throws 5 and 6 here) failed miserably to stem the house price crash.

When I first heard about this £50 billion bank bail out crap yesterday, my first thought was "I don't know what will happen next, all I know is that whatever comes next will be worse". And cutting interest rates - aka "pushing a piece of string" - was worse.

But if you read enough newspapers, in among all the drivel (spouted mainly by people who don't understand double-entry bookkeeping i.e. don't understand banking) the basic thread shines through:

From today's FT: "The implicit expectation is that banks will have to maintain mortgage lending to customers and loans to small businesses."

From The Evening Standard: "The Bank of England move will bring immediate relief for hundreds of thousands of homeowners on tracker mortgages. The monthly repayments for a borrower on a typical £200,000 London mortgage will fall by around £60."

... or even better, their Q&A:

Q: Will it stop property prices falling?
A: Not for a while...

Q: Where does this money come from?
A: You. £500 billion is equal to £20,000 for every taxpayer. The £50 billion immediately going into the banks is like a cheque for £2,000 from every taxpayer. The Chancellor will not be asking you to write a cheque for this amount but he will get it back in other ways: namely taxes. There is no guidance yet on where the Government's financial commitments to the banks will sit in the nation's books.

But as I said, this is just my view. There may be an altogether more innocent explanation for these seemingly unconnected events.

* As further evidence, there's the admission of Eddie George, the former Governor of The Bank of England, that they deliberately fuelled a consumer boom and the FSA turning a blind eye to the reckless lending practices of Northern Rock. These are my favourite examples, if you have any more, please leave a comment!

"Gangs of con artists prey on London"

From The Evening Standard:

Greedy and corrupt MPs today called for action to tackle a rise in the number of gangs staging illegal gambling games on Westminster Bridge. They said con artists operating in the shadow of Parliament were threatening to blight London's image in the run up to the Olympics, the cost of which over ran by about 400% once all the insiders had lined their own pockets.

As many as nine gangs playing fraudulent dice or 'three card trick' games have been seen operating on the bridge in recent weeks fleecing tourists and visitors to the capital. The call came as police took time off from boozy meetings with journalists to launch a series of raids across the capital to target gangs engaged in pick-pocketing, fake designer bag thefts and illegal gaming.

Mark Field, the Cities of London and Westminster MP, said several constituents had alerted him to the growing problem of gamers on Westminster Bridge. He said : "It is a clear problem that we get in this part of town. We Tories are underfunding the police so there is a limited amount of police resources they have to move people on. It is a blight, it happens every year. It runs the risk of undermining a very important time when we want to showcase London to the world."

Falkirk MP Eric Joyce, whose constituency's unemployment rate has remained consistently higher than Scotland's average over the past three years, took time off from his stressful MPs job with gold-plated pension to tweet: "Seven dice games blocking whole pavement on north half of Westminster Bridge. Why do cops allow?"

Gangs typically operate with a dealer, a banker and two 'players' who pretend to be members of the public while two 'heavies' look out for police and step in when people complain. Tourists see people 'win' £100 and join the game but then lose £20.

Colin Wiles, 55, a housing consultant from Cambridge, said he saw "eight or nine" of the gangs on Westminster Bridge last month when he came to London to visit his daughter. He said: "There were six or seven in each gang, a few of them were stood around while one of them did it. I didn't see a single policeman anywhere. I woudn't mind if they were just robbing poor people in Brick Lane or somewhere on the margins, I mean who cares about them, but to see them robbing relatively wealthy tourists under the nose of the Houses of Parliament is a slap in the face for aspiration. It gives a really bad impression of London, especially in Olympics year."

Duwayne Brooks, a Lewisham Liberal Democrat councillor, whose parents used a highly unusual spelling of a Gaelic name meaning "dark" or "black" and who was once best friend of murdered teenager Stephen Lawrence - presumably before rather than after he was murdered - also tweeted about the Turkish and eastern European gangs.

He said: "Bloody foreigners. They're always there. Sometimes I've seen as many as nine gangs. They should be dealt with. Send them back home, I ask you, this country is going to the dogs. But it's difficult, if you arrest them, they will be given bail. They're just going to go out and do it again. Enoch was right."

Taxi driver Stuart Wild, 66, said he often drove past the gangs. He said : "I cannot believe the extent to which this is happening - it's totally out of control.... yeah, Euston to St Pancras, that'll be £25, sir... hanging's too good for them... I haven't got change for a £50 note, no, but it's another £20 for luggage... and the bloody minicab drivers, stealing my customers, all darkies they are... is a fiver all right for a tip... call it quits shall we?"

Scotland Yard said police were carrying out operations in 10 boroughs today to disrupt the gangs. Which was a bit of a waste of time seeing as they knew perfectly well that the con artists are working on Westminster Bridge.

Another day, another desperate throw of the dice (12)

Hot on the heels of the state-controlled Royal Bank of Scotland's decision to allow mortgage borrowers to rack up six months' of mortgage arrears before commencing foreclosure, thus exacerbating the deficit faced by the borrower on the inevitable repossession and a corresponding bad debt in its own books (enhancing the loss to the taxpayer from the part-nationalisation), the state-owned, taxpayer-funded Northern Rock follows suit.

That's the fifth throw of the dice this week alone, BTW.

Another day, another reckless throw of the dice (20)

From The Metro:

Thousands of families facing the threat of repossession are being offered Government help to stay in their homes as a mortgage rescue scheme was rolled out across the whole of England.

The £200 million scheme allows vulnerable households to reduce their monthly mortgage payments by selling a share in their home to a housing association*, or to sell the property to the association outright and remain in it as tenants on subsidised rents...

Housing minister Margaret Beckett said: "For the most vulnerable households, the mortgage rescue scheme will be available across England to help ensure they can remain in their homes. This is part of a range of measures the Government is putting in place to help households at risk of repossession in the current climate. As well as expanding free debt and legal advice, we have increased the support available for people who lose their jobs, and are introducing the option for homeowners to defer part of the loan to give them the time they need to get back on their feet."

*sigh*

1. £200 million sounds like a lot, but that's enough to bail out 2,000 families, assuming they have a mortgage/house of £100,000. There are over 20 million households in the UK, so the scheme will 'help' (a modern euphemism for 'give money to') fewer than one in ten thousand families.

2. UK residential properties are falling in value by over £1 billion per day, so this money is enough to delay the house price crash by about five or six hours.

3. If this were a good time to buy housing, then investors would be snapping them up. It's not and they aren't. If I don't want to buy properties as a private individual, I'll be damned if the government uses my tax money to do so and then let them out at subsidised rents. OK, I'm damned.

*/sigh*

* Please note that housing associations are creatures of legislation, funded/backed by the government, with a lot of tax exemptions who can thus compete unfairly with private developers, as well as having more flexibility than local authorities but without even a shred of democratic accountability. They are the ultimate quangoes.

Ouch that hurt, but let's try again...

Torygraph hack Matthew Lynn has found some interesting stats on housing in Europe:

* The UK is now fourth from bottom of all 28 member states for homeownership
* 96% of Romanians live in owner occupied housing
* The average British home is now 96 square metres, the smallest in Europe

He suggests we might like to worry that the disenfranchised might turn to "populist, brain-dead redistributionist politics of the sort pushed by Jeremy Corbyn". But fear not, for Mr Lynn has a populist, brain-dead redistributionist solution of his own:

  ... why not re-introduce mortgage interest tax relief, abolished in the 1980s? That was the one policy that kick-started home ownership and it makes getting on the property ladder dramatically more affordable.

One last roll of the dice?  They wouldn't, would they?

Another day, another desperate throw of the dice (13)

As I suspected earlier today, it's A Big One:

Homeowners granted mortgage holiday

Gordon Brown is to grant homeowners in financial difficulty the right to demand a two-year mortgage holiday, guaranteed by taxpayers, in a dramatic bid to underpin the housing market. The move will put about £1bn* of taxpayers’ money at risk in an attempt to stem the rising flood of repossessions as Britain enters recession and unemployment soars...

H/t Mountain Goat at HPC.

* "about £1bn"? Have they never heard of unintended consequences? Moral hazard? Thin ends of wedges? Slippery slopes? That'll soon turn into £10 bn and hence £100 bn. See also "London Olympics 2013".

£1bn to kick-start Silly Week

From The Metro:

Hundreds of building projects that have stalled in the recession are to be kick-started with almost £1 billion of public money, the Government is set to announce.

The cash is being targeted at developers and housing associations who can get developments back under way by the end of the year but cannot get funding from elsewhere.

Some 20,000 jobs are expected to be created in the process. Up to 22,400 new homes, more than a third of which will be "affordable", could be built(1). Almost half of the money will be in the form of loans, to be repaid within five years(2)...

Housing minister John Healey will announce 270 development projects in line for the cash, although they will still have to undergo due diligence. But he will stress that the Government is not awarding developers a "handout"(3).

"There are tough terms to this deal including repayment of loans within five years," he will say. "And only builders who accept a realistic current market price(4) for their homes are eligible..."

(1) If the government allowed more homes to be built, or even better stopped wasting £4 billion a year on Housing Benefit for private tenants and used the money to build 80,000 council houses a year, then houses would become more affordable. Sure, councils aren't brilliant at managing their properties, so why not auction off the right to collect the rent to managing companies (or indeed tenants' associations), and allow them to keep whatever surplus they generate, and repeat the process every three years or so? Then instead of housing being an expense, it would be a nifty source of income, seeing as councils can obtain the most valuable/expensive component - i.e. planning permission - for free.

(2) So if 'almost half' is loans, that means over half is a straight hand out, yes? Why 'within five years'? If sensibly priced, it shouldn't take the builders more than a year to finish off the houses and sell them.

(3) See (2).

(4) Does anybody think that they'll manage to strike a good deal for the taxpayer? Why not wait until the builders go bankrupt and then buy them for fire-sale prices? Why not give the builders a kick up the arse by imposing Business Rates on half-finished developments? If there's only one potential buyer, then whatever he offers is the market price, surely? So maybe this qualifies as "another reckless throw of the dice" to prop up house prices.

Another day, another desperate throw of the dice (9)

From The FT:

RBS promises mortgage respite

The political and public campaign to force Britain’s banks to do more to help customers weather the economic downturn will gain impetus on Monday with a promise from Royal Bank of Scotland to give at least six months’ breathing space to homeowners who fall behind with mortgage payments.

The promise, which will put pressure on other banks to make similar commitments, comes as ministers prepare to outline plans that could see voluntary codes of practice for the banking industry placed on a statutory footing.

*sigh*

1. Don't we taxpayers now own the bulk of RBS? Weren't we promised that the government would make an overall profit on the bail outs? As an involuntary shareholder, I'd like the RBS to minimise mortgage arrears; if the price of that is more repossessions, then so be it. I'm not aware of any "public campaign" to the contrary.

2. Is the government also prepared to subsidise all tenants who are up to six months in arrears? Probably not, and if so, they shouldn't be.

3. One thing they haven't announced yet is Council Tax exemptions for people with mortgage arrears, but I suppose that's only a matter of time...

4. Is this all maybe just another feeble, ultimately ill-fated and hugely expensive attempt to prop up house prices by keeping properties off the market?

Bastards.

*/sigh*

Another day, another desperate throw of the dice (6)

I'd better add the lunatic BoE base rate cut, and subsequent arm-twisting of the banks to the list of things that the government has done over the past two or three years to try and prop up property prices.

This might help the half of existing borrowers with a reasonable amount of equity, income and good repayment history who are on tracker rates or standard variable rate (but not those on a fixed rate, obviously), but not anybody else and certainly not first-time buyers. As Jack C explained over at HPC (comment 29) on Friday:

The lenders are starting to reduce the rates in response to Government demands however how much of this will filter through to customers is debatable because the lenders need to make as much margin as possible to help their re-capitalisation programme.

They will thus use a whole host of other tactics to avoid passing on the rate cut including the following: Lower loan to values (LTV's); Lower Salary multiples; Stricter valuation criteria ie if the valuer reports items that require remedial work the lender is now insisting it be remedied before they will advance any monies (retentions); Down valuations are much more likely; Income that was previously acceptable is now excluded eg Working/Child Tax credits, overtime/bonus.

I could produce a list which would ultimately run off the page. One of my close friends has 40 (Forty) re-mortgages (typically 2 year deal coming to an end) on his desk as I type and he can't place even one of the 40 because none of the fit the new lending criteria - so the drop in rates is IMO at this juncture irrelevant and backs other contributors suggestions that the tail wags the dog

(perhaps Lola can confirm or deny the accuracy of this as an overall picture?)

Another day, another reckless throw of the dice (25)

From The Times:

HBOS, which is part of Lloyds Banking Group, will consider offering a new mortgage to customers in negative equity whose existing deal, such as a fixed rate, is about to expire.

Normally such borrowers would see the rate they pay revert to the lender's standard variable rate (SVR) and would be unable to remortgage if the new loan were greater than the current value of the property as a result of the decline in house prices.

But Halifax and Bank of Scotland, which are both part of HBOS*, are offering the rates on 95% loans to some remortgage customers needing to borrow more than the property value – up to 120% of the value in some cases.

* Allow me to insert the missing words: "Halifax and Bank of Scotland, which are both part of HBOS, which itself is part of Lloyds Banking Group which is 65% owned by the taxpayer..."

Hmm. I'm not convinced that this is the best use of taxpayers' money, but hey...

H/t QG at HPC.

Another day, another desperate throw of the dice (34)

The government's attempts to force banks to continue lending into a falling housing market to keep the bubble inflated, by nationalising and bullying RBS and Lloyds, doesn't really seem to have worked, so they're now going to try an even more direct approach.

From The Daily Mail:

Post Offices will start offering controversial 'super-size' mortgages to help young people with little savings buy their first home, the Government will reveal today.

Under the radical plan, Britain's struggling network will hand out mortgages to people who can only afford a 10 per cent deposit. It raises fears that they will be left exposed to a negative equity nightmare if house prices fall sharply over the next few years, as some economists predict...

... under the new plans, millions of people who have not visited, or rarely visit, their Post Office will be encouraged to return by a new range of products. The radical shake-up will include a proposal to force Britain's banks to pay a new 'community levy'... The money will be used to help the Post Office and credit unions to hand out cheaper loans to people, who would typically be targeted by loan sharks...

The decision to offer 'super-size' mortgages comes just days after the Chancellor scrapped stamp duty on homes bought for up to £250,000 for first-time buyers until March 2012. For many young people, they feared they could not take advantage of the tax break because few banks would give them a mortgage.

The number of 'super-size' loans has collapsed since the credit crunch. In August 2007, there were 829 loans for those with a deposit of only 10 per cent. Today there are just 154.

Another day, another reckless throw of the dice (30)

This is The Big One, e.g. from The Daily Hatemail, RBS and Lloyds cancel bonuses for bankers - in return for £40bn MORE of taxpayers' cash.

The politicians will waffle on about "stabilising the banking system" (1) and "encouraging banks to lend to businesses" (2) and "getting value for the taxpayer" (3), of course. To their credit, they appear to have steered the debate in a completely different direction, i.e. breaking up the large taxpayer-owned banks (as instructed by the EU) to "encourage competition" - despite the fact that a few months ago the government was boasting about having arranged Lloyds TSB's "rescue" of HBOS when all that happened was that HBOS dragged Lloyds TSB down all the quicker, so double points there.

(1) Missing the point. The government allowed them to get themselves into this mess, and once they were in it, debt-for-equity swaps could have sorted this all out a year or two ago. Note that it says that Lloyds' rights issue "will be accompanied by a debt conversion offer expected to generate £7.5 billion."

(2) If the government really wanted to help businesses, it could just cut taxes by £40 billion. It wouldn't even need to do this all in one go, it would be sufficient to offer a £10 billion cut this year and make it clear that this would be permanent; this would simultaneously reduce businesses' need for credit and make them a better credit risk. So that can't be the reason.

(3) What does that have to do with anything? Maybe they'll make a profit on this, maybe they won't, but if taxpayers wanted to invest in banks, then they are free to do it on their own account.

So the real reason for all this is to encourage banks to lend to mortgage borrowers to keep the house price bubble inflated, and as long as the government controls over half the banking system, they have the whip hand. When I first started this series on their efforts to keep the bubble going - which commenced nearly three years ago - I didn't think it would work. To my horror, it does appear to be working and the house price crash has been flattened off, or even reversed, over the past six months. I think we've gone a bit beyond "Spring Bounce" by now. The question is, how long can they keep it up?

Another day, another reckless throw of the dice (44)

From the BBC:

"A London council is to help families get on the housing ladder by offering tenants and first-time buyers £50,000 deposits. Wandsworth councillors will discuss plans to set up a special "deposit fund" to help low-income families...

The council is to lobby Government for the financial freedom to create a "deposit pool" funded from the sale of council housing and future development. Initially, interest-free deposits of up to £50,000 would be repaid back into the fund once the property was eventually sold."

I refuse to believe that a council could, collectively, be so stupid as to imagine that this will help those whom it is supposed to help and assume that this is downright corruption, i.e. maybe a lot of the councillors own buy-to-let flats in the area and they want to be able to sell them at a high a price as possible.

What this council cheerfully overlooks is that it is a f-ing council!

If the council gives somebody an interest-free loan, repayable when the home is sold, then it is effectively part-owner of that home but is not charging rent for it and is bearing a lot of the risk of the value falling. That's about the worst position you could be in.

Alternatively, for £50,000 they can build a whole flat or maybe a small house and own it outright. Sure, land is expensive round there, but it's actually only land with planning permission which is expensive. Land without planning permission is pretty cheap wherever it is. And the council is in charge of granting planning permission, so it can give itself planning permission for free. Problem solved.

Another day, another reckless throw of the dice (2)

As John Pickworth pointed out, in reply to my question "What will they do next to prop up house prices?", our benighted gummint has thought up another wheeze to prop up house prices at taxpayer's expense:

Mr Purnell pledged that ... Those who are made redundant will get help to pay their mortgage after 13 weeks on the dole up to the value of the average house - £175,000.

The underlying message is: "If you are worried about losing your job, rush out and buy a property for £175,000 or less and you can live there rent- and mortgage-free"

FFS! Subsidies for land and property ownership are the very worst kind of subsidies* as these are in fixed supply, so subsidies just feed through into artificially high prices. Being repossessed is stressful, I agree, but that house doesn;t get demolished - the new owner either lives in it or rents it out - ultimately to the very people who were repossessed in the first place.

* The equal and opposite argument is that taxes on land values are the least bad taxes! This sort of scheme is yet another transfer of wealth from workers/businesses/tenants to the unemployed/homeowners. How about having a tax system that does the reverse?

Another day, another reckless throw of the dice (40)

When Labour were in charge, at least they had a wide, sweeping vision of how to suck money out of the productive economy and from the young, and to parcel it out to quangocrats and the already-wealthy. The Lib-Cons share these broad ideals, but instead of having the vision and courage to throw hundreds of billions at propping up banks and house prices, the Lib-Cons think they can do it for pennies:

Mr Osborne will also announce £250m to help 10,000 first-time home buyers purchase newly built flats and houses...

According to Radio 4, the scheme is a modification of schemes which local council dreamed up last week and which home builders invented years ago (see e.g. Barratts, but they were all at it), i.e. the government and homebuilder get together to lend the gullible FTB a low interest or interest free deposit of twenty per cent of the purchase price, thus taking most of the risk away from the oh-so-fragile banking sector.

Wot? Apart from being a shit idea in principle, what on earth difference is ten thousand more first time buyers (not all of whom want to buy a new build, of course) going to make? To keep the Ponzi Scheme going, the market needs at least three-quarters-of-a-million first time buyers every year, a figure which had fallen by half by 2010 and is set to fall further.

What's in it for the home builders, you may ask. Why don't they cut the price by ten per cent rather than upping it by ten per cent but then lending the buyer ten per cent of the price?

As Adam Collyer points out, there is something called a new build premium - the resale price of a new build house falls by five per cent in the first year or two, so what this does is more or less guarantee negative equity for the first time buyer.

The whole thing is so mad that sometimes you struggle to understand how thought processes are distorted in Home-Owner-Ist economics, completely different rules of logic seem to apply.

£250m divided by 10,000 = £25,000, so assuming that's the government's half-share of a twenty per cent deposit, they would cover houses up to £300,000 or more (a lot of houses are less than £250,000, of course).

Another day, another desperate throw of the dice (33)

From the BBC's Budget write-up:

Chancellor Alistair Darling has axed stamp duty on house sales under £250,000 for first-time buyers paid for by a rise in duty on homes over £1m... the planned cut in stamp duty would stay in place whoever wins the election, as it is similar to existing Tory policy.

So this all to help the 'first-time buyer', is it? Doesn't that pre-suppose that sellers won't just hike their prices by one per cent to match? (And it's a nice bit of Indian Bicycle Marketing).

Even The Daily Mail sees it that way:

Labour will be desperate to avoid signs of another collapse in house prices in the run up to the general election, expected in May, and a stamp duty cut - reported last night by the BBC - would be an ideal way of propping up the market.

I don't like Stamp Duty Land Tax, like most land or property taxes, it is almost deliberately badly designed, it's as if they were trying to bring such taxes into disrepute (a weird mixture of Poll Taxes, transaction taxes and jealousy surcharges), but the only people who'll benefit from this are people who sell up in the near future. If I were in the market for a house - oh, I am - then I'd rather wait another year or two, as prices are set to fall by considerably more than one per cent.

Glorious bit of landlord squealing

From the BBC, a few highlights:

Six thousand jobs are at risk in a drastic attempt to save [House of Fraser] from collapse. If the rescue plan fails, administration is likely. But High Street landlords are furious about the way they're being treated. They are the creditors who have to shoulder the burden of financial losses.

Many properties are owned by institutional investors who rely on store leases to provide a steady income stream for pension funds and insurers. Take the House of Fraser store in Milton Keynes. It's part of a shopping centre co-owned by Hermes Investment Management. Its rent generates long-term funding for two big pension schemes.

"Landlords are in an invidious position. We enter into these long-term contracts in good faith, with pensioners' income and security often at stake," says Chris Taylor, head of private markets at Hermes Investment Management.

House of Fraser is using what's called a company voluntary arrangement (CVA), a form of insolvency proceedings, to overhaul its business...

The plan requires approval from 75% of its unsecured creditors. All creditors get a vote, but the value of the vote depends on how much they are owed.

Under insolvency rules, landlords' claims are already heavily discounted because of how accountants judge their losses. The issue for landlords is that their "say" or voting rights in the CVA process is discounted by a further 75%, which they believe is grossly unfair.

The BBC understands that even if most landlords vote against the plan, they won't have enough clout to win the day.

"With landlords' voting power reduced by 75% of the value of their claims, the dice are clearly loaded against them in the CVA process," says Mark Fry, from the restructuring firm Begbies Traynor... "Even if the majority of landlords were to vote against the CVA, that would not be enough to stop it being approved in its current form, leaving landlords taking all the pain of the CVA process whilst House of Fraser's shareholder takes out £70m."

I'd never heard of that reduced-votes-for-landlords rule, but it sounds eminently sensible to me.

Another day, another reckless throw of the dice (27)

From The Metro:

The Government is doubling the funding available to give people who face losing their home free legal advice in court. Housing Minister John Healey said the Government was increasing the extra money for the service from £750,000 to £1.5 million. The service offers free on-the-spot legal help to people in England who are in court facing having their home repossessed or being evicted from rented accommodation...

However, the CML has recently indicated that it is considering revising down its forecast for repossessions for this year from its near-record level of 75,000.

Assuming that £1.5 million is an annual budget, that works out as £20 of 'free legal advice' per case, which is enough to pay for about ten minutes of solicitor's time. And if the scheme actually 'worked', does this not set the 'moral hazard' alarm bell ringing?

We have clearly sleepwalked into a post-modern tax/economic system, whereby savers are not only subsidising (reckless) borrowers (via artificially depressed interest rates), but then Timmy Taxpayer is being asked to foot the bill to help the self-same borrowers wriggle out of the responsibility of even paying the subsidised interest.

I accept that rising house prices are a symptom of a growing economy, but over the years, this logic has been turned on its head, and the generally accepted view is now that rising house prices are what drives the economy. Which is, presumably, why money is now being sucked out of the real economy in order to try and reflate the bubble...

Also chucklesome is this:

The Government has introduced a range of initiatives to help people avoid losing their homes, including the Homeowner Mortgage Support scheme, under which people can defer up to 70% of interest on their mortgage for up to two years.

It has also increased support for mortgage interest and introduced the Pre-Action Protocol under which courts can only grant repossession orders as a last resort. But recent figures showed that only two families have so far benefited from its mortgage rescue scheme.

NB, the original article appears to have disappeared.