Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 7, 2022 11:11:30 GMT
Kicking off a new Issue Specific thread with a YG article: yougov.co.uk/topics/politics/articles-reports/2022/02/07/what-housing-policies-would-britons-support-tackleHopefully a place for constructive discussion as there is minimal partisan bias. As the article states: There is support among both Labour and Conservative voters for almost all the policies we asked aboutBack on the UKPR we had several posters with a lot of experience and views on housing, some are now on UKPR2 and some (eg GARJ) maybe lurking? I will again suggest a good book that covers many of the issues, for which a quick summary can be found at: www.shoutoutuk.org/2021/07/27/home-truths-by-liam-halligan-how-money-rules-the-uks-housing-shortage/I fully acknowledge that CON HMGs (and Blair-Brown before them), along with BoE policy has made the situation in UK worse. I'd also note it is a 'global' problem with many countries facing similar issues, often for similar reasons to UK. In GE'17, Matt Singh had the view that the 'youthquake' was more or a 'rentquake' and I'll again restate my view that it is very low hanging fruit for LAB policy that would help them greatly with the GOTV into GE'24. Due to 'demographic drift'[1] then CON need to start turning voters at a younger age and ensuring more young people can get onto the housing ladder (which would also be helped by 'disincentives' (via higher taxes?) to BTL landlords and 2nd home owners). Housing might not be a high ranking 'most important issue' in YG/Opinium/etc trackers but for many people it could well encourage them to GOTV in a GE (or in LEs where 'NIMBY' is often an issue). [1] Younger people and new voters lean heavily towards LAB (or at least ABCON) and older voters lead towards CON. So as time moves forward more ABCON voters become eligible to vote and more CON voters die. Hence the 'drift' whereby demographic issues favour LAB/ABCON. |
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 7, 2022 11:46:00 GMT
|
|
|
|
Post by mandolinist on Feb 7, 2022 12:55:55 GMT
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 7, 2022 13:47:15 GMT
Thank you. I hadn't read that specific piece but as someone who lives in 'commuter belt' then I'm certainly aware of the problem of '“( Big[1]) Developers are building in the wrong place, with the wrong design and the wrong layout" and I'd certainly support: new housing is “recast around sustainable travel”, with compact, mixed-use developments such as European-style apartments above business premises(and restate a disclaimer that I have a business interest in exactly that kind of thing) [1] In my experience (and there is some data to support but not 'prove' it) then 'planners' like the 'big' (and hence often 'Greenfield') projects as they can sign off 1 x 1,000 rather than 100 x 10 to hit a 'quota'. I suspect there is a large amount of at best 'cronyism' (and quite likely 'corruption' as we've seen in places like Liverpool) as well. |
|
|
|
Post by mandolinist on Feb 7, 2022 14:01:27 GMT
Thank you. I hadn't read that specific piece but as someone who lives in 'commuter belt' then I'm certainly aware of the problem of '“( Big[1]) Developers are building in the wrong place, with the wrong design and the wrong layout" and I'd certainly support: new housing is “recast around sustainable travel”, with compact, mixed-use developments such as European-style apartments above business premises(and restate a disclaimer that I have a business interest in exactly that kind of thing) [1] In my experience (and there is some data to support but not 'prove' it) then 'planners' like the 'big' (and hence often 'Greenfield') projects as they can sign off 1 x 1,000 rather than 100 x 10 to hit a 'quota'. I suspect there is a large amount of at best 'cronyism' (and quite likely 'corruption' as we've seen in places like Liverpool) as well. I agree that "planners" can often have a preference for the big greenfield projects, but the reasons can be quite complex. For instance, the local plans which so many authorities have implemented, have little space for negotiation and require huge step changes in numbers of new homes being built. It is often more politically straightforward to approve one large developement in a ward which has representation on the council which is other than the ruling party, than lots of smaller developments which spread the difficulties (and the unsung benefits) across an authority. There is also a real tendency to put the cart before the horse and build lots of houses quickly with little infrastructure planning, from healthcare through education to shops and transport. The old SRB funding streams from Europe used tohelp with more rounded and joined up developement, but all gone now of course. The continued asymmetry in power between large developers and smaller organisations, including self builders and co-operatives also tends to favour the large out of town developements.
|
|
|
|
Post by birdseye on Feb 7, 2022 14:58:48 GMT
The surprising thing about the yougov list is that there is no suggestion of sharply increased house building. If prices are too high in any market then part of the answer is to increase supply to drive prices down. And they are too high for UK housing - you only need to look at the profitability of the likes of Persimmon to see that. And that of course is after Persimmon have bought building land at a high premium over previous use.
So let me propose one step which would alter the situation for the better. Local authorities to purchase land for house building at current use prices which is then sold to both big builders , self builders and small builders at cost plus a margin to directly related infrastructure costs like roads, sewers etc. To this I would add a compulsion on local authorities to have a bank of such land available at all times to ensure that nimbyism couldnt affect supply.
The issue of course is that taking any approach to free up supply would reduce the value of existing housing. Hardly a vote winner because like all such moves, people have lots of solutions to problems - solutions which dont affect their own pocket.
P.S. The ageing population reducing Tory voters and making us all socialists doesnt work TW. The reason is my last sentence above. Youth is idealist and socialist not least because they dont have much. Old age is conservative and right leaning because they have made something and want to protect it. Self interest trumps principle.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 7, 2022 15:32:57 GMT
1. So let me propose one step which would alter the situation for the better. Local authorities to purchase land for house building at current use prices which is then sold to both big builders , self builders and small builders at cost plus a margin to directly related infrastructure costs like roads, sewers etc. To this I would add a compulsion on local authorities to have a bank of such land available at all times to ensure that nimbyism couldnt affect supply. 2. P.S. The ageing population reducing Tory voters and making us all socialists doesnt work TW. The reason is my last sentence above. Youth is idealist and socialist not least because they dont have much. Old age is conservative and right leaning because they have made something and want to protect it. Self interest trumps principle. 1. That was discussed at length back on the UKPR and something most folks (LoC or RoC) would like to see IIRC (it's discussed at length in the book 'Home Truths'). Thumbs up. 2. It is more about the 'have houses' v the 'have nots'. Part of the 'turn' to RoC (on the economics axis) as young people age is partly seeing your pay slip and noting taxes* but also being 'invested' in capital (eg getting onto the property ladder). One BTL landlord with a portfolio of say 10 HMOs is 1 vote to 50 votes and a large reason that LAB are so dominant in Uni areas (where a lot of students continue to live after graduation). Unless they have the 'bank of mum+dad' then those 50:1 votes are seeing inflation busting rent increases** and few will be able to save for a deposit (or achieve the earnings to get a mortgage) as they have very little net disposable income after paying rent+essentials. * This incarnation of CON HMG v 'New Lab v2' are seen as much closer when it comes to the party of lower taxes. www.politicshome.com/thehouse/article/third-of-public-think-tories-are-a-low-tax-party-redfield-and-wilton-poll-reveals**https://finance.yahoo.com/news/uk-property-rents-rise-at-fastest-ever-rate-000130024.html? |
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 7, 2022 17:05:06 GMT
|
|
|
|
Post by birdseye on Feb 8, 2022 17:24:02 GMT
1. So let me propose one step which would alter the situation for the better. Local authorities to purchase land for house building at current use prices which is then sold to both big builders , self builders and small builders at cost plus a margin to directly related infrastructure costs like roads, sewers etc. To this I would add a compulsion on local authorities to have a bank of such land available at all times to ensure that nimbyism couldnt affect supply. 2. P.S. The ageing population reducing Tory voters and making us all socialists doesnt work TW. The reason is my last sentence above. Youth is idealist and socialist not least because they dont have much. Old age is conservative and right leaning because they have made something and want to protect it. Self interest trumps principle. 1. That was discussed at length back on the UKPR and something most folks (LoC or RoC) would like to see IIRC (it's discussed at length in the book 'Home Truths'). Thumbs up. 2. It is more about the 'have houses' v the 'have nots'. Part of the 'turn' to RoC (on the economics axis) as young people age is partly seeing your pay slip and noting taxes* but also being 'invested' in capital (eg getting onto the property ladder). One BTL landlord with a portfolio of say 10 HMOs is 1 vote to 50 votes and a large reason that LAB are so dominant in Uni areas (where a lot of students continue to live after graduation). Unless they have the 'bank of mum+dad' then those 50:1 votes are seeing inflation busting rent increases** and few will be able to save for a deposit (or achieve the earnings to get a mortgage) as they have very little net disposable income after paying rent+essentials. * This incarnation of CON HMG v 'New Lab v2' are seen as much closer when it comes to the party of lower taxes. www.politicshome.com/thehouse/article/third-of-public-think-tories-are-a-low-tax-party-redfield-and-wilton-poll-reveals**https://finance.yahoo.com/news/uk-property-rents-rise-at-fastest-ever-rate-000130024.html? As a newcomer I struggle with some of your abbreviations - RoC and LoC for example. Humour me and explain please.
The sad result of Blair's everyone to university is that we are producing graduates with worthless degrees that they have paid a lot for. So whilst your plumber or leccy is doing very well thank you, your Geography or media studies grad is stacking shelves. The plumber now tends to Tory and the graduate goes to the left. The redeeming feature for both of them is that they are the first generation that will inherit parental homes en masse.
As for taxes - low is a relative term. The public dont know whether the Tories are low tax or not since they dont know what the Labour party really would do.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 8, 2022 17:48:47 GMT
1. As a newcomer I struggle with some of your abbreviations - RoC and LoC for example. Humour me and explain please.
2. The sad result of Blair's everyone to university is that we are producing graduates with worthless degrees that they have paid a lot for. So whilst your plumber or leccy is doing very well thank you, your Geography or media studies grad is stacking shelves. The plumber now tends to Tory and the graduate goes to the left.
3.The redeeming feature for both of them is that they are the first generation that will inherit parental homes en masse.
4. As for taxes - low is a relative term. The public dont know whether the Tories are low tax or not since they dont know what the Labour party really would do.
1. RoC = Right of Centre LoC = Left of Centre Whilst highly flawed over-simplistic terms and highly context dependent then often used to show a difference of approach/opinion on an area where it is unlikely people from opposite sides would agree (but will hopefully respect the other side is entitled to an opinion). However, as the polling shows, then on 'housing' (and quite a few other issues) then there is less difference than folks might assume there to be. 2. Fully agree. I know a lot of 'trades' folks making a lot of money (and/or turning down work due to VAT threshold or 'lifestyle' choice), able to save to put down deposit on house, etc and a lot of graduates who are £50k in debt working in a hospitality job (eg my local pub) and either 'boomerangs' (back with mum+dad) or paying £400+/mth to live in a HMO (House in Multiple Occupation). Certainly a lot of graduates are likely to vote LAB but in my experience a lot of the 'trades' folk don't vote. It would be nice to see polling to see if that 'suspicion' is genuine. 3. To an extent, yes. However that inheritance will obviously vary considerably depending on where ones parents live(d) as house prices vary significantly across the country and as time goes on we will see a lot of older people die with no inheritance to pass on (either as they never bought their own home or used it for their own 'retirement' using 'equity release' or to pay for care in old age). Even at my 'middle age' I know a lot of folks whose parents are dying and they intend to use the money they inherit to retire early and enjoy their retirement rather than pass much/anything to their own kids (some ONS 'Labour market' data shows that).'Trickle down' to younger generations is likely to occur when the younger generation are in their late 40s-early 50s (please check) which is pretty late to 'turn' an LOC to ROC and the 'upper reservoir' of wealth from which it flows will be in a shrinking pool of the population. 4. Agreed. I would however agree with the polling info I posted and point out that Rishi has raised taxes (NIC) and Starmer is 'not Corbyn'. So 'relatively' the two parties are closer than they've probably been since Blair (and Blair was the last LAB leader to win GEs). I await Starmer-Reeves fully costed manifesto in GE'24 as quite a few 'pledges' are either going to be 'forgotten' or we're going to have to see some significant tax rises (and I doubt the 'wealth' type ones will bring in the kind of ££ that some of their spending 'pledges' are 'promising' (unless Reeves tweaks the fiscal rules or BoE's mandate WRT to QE) |
|
|
|
Post by leftieliberal on Feb 8, 2022 17:52:12 GMT
The sad result of Blair's everyone to university is that we are producing graduates with worthless degrees that they have paid a lot for. So whilst your plumber or leccy is doing very well thank you, your Geography or media studies grad is stacking shelves. The plumber now tends to Tory and the graduate goes to the left. The redeeming feature for both of them is that they are the first generation that will inherit parental homes en masse.
As for taxes - low is a relative term. The public dont know whether the Tories are low tax or not since they dont know what the Labour party really would do.
And worse still, your plumber or electrician is not having to repay his/her/their graduate loan, which means that even those graduates who manage to avoid shelf-stacking are paying marginal rates of over 40% on everything they earn above £25k (which is incidentally less than the median salary). |
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 8, 2022 18:09:39 GMT
And worse still, your plumber or electrician is not having to repay his/her/their graduate loan, which means that even those graduates who manage to avoid shelf-stacking are paying marginal rates of over 40% on everything they earn above £25k (which is incidentally less than the median salary). No one is forced to go to University. At 18 you are an adult and should be able to make responsible decisions for yourself (eg whether you 'borrow to invest' in a (potentially not very useful) degree and which degree or adult job/career to pursue) We could venture into 'means testing' (which on UKPR was loathed by some LOCs), greater assistance for STEM subjects and/or 'caps' on courses unlikely to end up with a decent job, etc but that might be better for a separate Issue Specific thread on 'Education'? I personally don't think taxpayers generally should fund the 'bad decisions' of an adult. I do respect that higher fees failed to be the 'market based' solution that Blair then CON-LDEM coalition hoped it would be and that there are issues WRT to 'graduate farms' (Unis becoming businesses) but I was glad to see Ministers to ditch target of 50% of young people in England going to universityEducation secretary sets out plans to abandon target introduced by Tony Blair in 1999www.theguardian.com/politics/2020/jul/09/ministers-to-ditch-target-of-50-of-young-people-in-england-going-to-universityPerhaps in an 'Education' specific thread we could discuss that further as IMO 'Education' functions very poorly as an 'efficient' market (some of this was discussed back on UKPR but the Issue Specific function does mean we can put all that discussion in one place) |
|
|
|
Post by birdseye on Feb 9, 2022 8:15:33 GMT
Whilst no one is forced to go to university, it is for a lot of families a very attractive proposition in the same way that Thatchers home ownership was. A chance to move up the social spectrum, or at least it is seen as that. Initially the idea was that fees would be related to the quality of the university and the value that students saw in the degree. That hasnt worked. As an ex Uni board member, there was free money available for the heirarchy in charging the full amount ( vide the woman at Bath)and for the students the lazy assumption that an easy arts type subject would be worth the same as a degree in engineering or law or even medicine.
Your graduate farms description is entirely justified - the uni I was part of reduced entry standards to ensure that they filled their maximum allowed numbers irrespective of the end result. There is, in the minds of many educators, no link between education and economic worth and indeed not that many degree courses include any real element of training for future life in a job market.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 9, 2022 8:45:45 GMT
Whilst no one is forced to go to university...
Time for an Issue Specific thread IMO as it is an important but different topic to housing, beyond the implications WRT to financial situation that has been covered. I'll let you/other pick the title and start it off. |
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 14, 2022 18:43:49 GMT
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 16, 2022 15:23:47 GMT
shevii Posting on the Issue Specific thread but Allsopp did make one valid point. A young person/couple can still buy a starter home in many parts of the country. Sadly you see properties like the one attached marketed as: This is an ideal apartment for the Buy To Let market or as a Holiday Let.www.zoopla.co.uk/for-sale/details/59252240/?I appreciate the 'draw' of places like London, Bristol, etc but there are some great jobs in some of the places being cherry picked for 'Level Up' and with cheaper housing then less need to rent and folks living+working in these kind of areas will have much higher net disposable income than in 'trendy' places doon South. IMO we need to stop these kinds of places being snaffled up by BTL landlords and instead find ways to make them more/only available to young/essential workers. ROC approach might be to tax BTLers until the pips squeak but a lot of that would be passed on to tenants. So I'd support a more interventionist approach, especially on new builds, that 'bans' BTL or even goes further and says the owner of the property has to be an 'essential' and local worker (eg nurse, teacher, etc at local hospital/school) These kinds of policies are IMO 'low hanging fruit' for LAB. I certainly accept CON HMG have followed on from Blair and made many of problems WRT to affordability, etc worse. It is to some extent a 'global' problem, related to QE, etc. but that makes the importance of 'counter acting' intervention even more important IMO.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 16, 2022 17:47:34 GMT
From the Times...
“The average UK house price rose by £27,000 last year, ending 2021 on a record high of £275,000, according to official figures.
The Office for National Statistics (ONS) said that the average price across the UK, as well as specifically in England and Wales, reached record levels in December.
Across the UK, house prices increased by 10.8 per cent over the year to December, nudging up from 10.7 per cent in November.
...
Mike Hardie, head of inflation at the ONS, said: “UK rental prices accelerated at their fastest pace since 2017, with increases across every region in England, including London.””Moved to the Issue Specific thread and adding the ONS link (direct to regional prices as that relates to a discussion with shevii ). See also Fig5 and I'll show the numbers of average house price per region: NE: £147,214(NI: £159,000)
(Scotland: £180,000)Y&H: £196,877
NW: £200,172(Wales: £205,000)E.Mids: £235,004
W.Mids: £238,238
SW: £314,037
E: £339,502
SE: £380,237
London: £521,146www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/december2021#house-prices-by-regionObviously a lot of difference within a region and also around the 'average' (eg studio apartment to 5bed house with nice garden) but a 'home' in NE is 28% the price of one in London. You might get paid more in London for some jobs but you'll need a bl00dy well paid job anywhere 'doon South' to afford anything if your hoping to make a start of the first rungs of the housing ladder (and obviously need a decent deposit as well - rent prices are highly correlated to house prices so you can save more if your renting 'oop North') NB You can get very high multiple mortgages from some places these days but roughly then divide above prices by 5 to get to the 'wage' required to buy an 'average' home and then reduce that by say 1/2 to get to 'entry level' home (eg NE. £147,215 /5 = £29k pa or £14.7k pa for 'entry level' home v about 4x that for London) |
|
|
|
Post by shevii on Feb 16, 2022 19:27:27 GMT
@tw Article in the MEN that you may find interesting: www.manchestereveningnews.co.uk/news/greater-manchester-news/manchester-rebuilt-londons-housing-crisis-23083647This is spreading outwards (and downwards) just as it did in London and then impacting house prices in poorer areas for those people, especially those who are not part of the Manchester commute and not gaining from Manchester wages and/or job opportunities. Rather than being levelled up by Manchester success they end up being levelled down with higher cost of living. I think we've already rehearsed the arguments quite a lot. For me population control is the only option that works as it's simple supply and demand which then gets compounded by housing being a very lucrative business encouraging BTL. Net immigration of zero basically dependent on birth/death trends. Short term we can do whatever "good ideas" we have that don't involve building on Green land and we can make BTL very unpleasant for investors. This would mean that house prices are governed by what someone who wants to live in a house can afford rather than what someone who has spare cash can afford in order to beat the interest rate of alternative investments. I suppose the political question now is whether political parties are getting a bit scared of losing the BTL voters votes. Things like housing associations, part buy and so on are good short term sticking plasters but they only treat the symptoms and don't solve the fundamental issue. |
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 16, 2022 20:27:16 GMT
@tw Article in the MEN that you may find interesting: www.manchestereveningnews.co.uk/news/greater-manchester-news/manchester-rebuilt-londons-housing-crisis-23083647This is spreading outwards (and downwards) just as it did in London and then impacting house prices in poorer areas for those people, especially those who are not part of the Manchester commute and not gaining from Manchester wages and/or job opportunities. Rather than being levelled up by Manchester success they end up being levelled down with higher cost of living. I think we've already rehearsed the arguments quite a lot. For me population control is the only option that works as it's simple supply and demand which then gets compounded by housing being a very lucrative business encouraging BTL. Net immigration of zero basically dependent on birth/death trends. Short term we can do whatever "good ideas" we have that don't involve building on Green land and we can make BTL very unpleasant for investors. This would mean that house prices are governed by what someone who wants to live in a house can afford rather than what someone who has spare cash can afford in order to beat the interest rate of alternative investments. I suppose the political question now is whether political parties are getting a bit scared of losing the BTL voters votes. Things like housing associations, part buy and so on are good short term sticking plasters but they only treat the symptoms and don't solve the fundamental issue. Thank you for that article and your comments. I think we agree on the 'problem' but some subtle difference on the solution. I don't disagree that 'population control' would help (and has broader benefits) but for the 'priced out locally' issue then I'd define 'population' in a far more localised and limited way. Local and especially 'essential' population should be able to afford to live in their local area (and ideally be able to buy a house if they wish to[1]). Hence IMO the 'controls' come in via increasing supply of property to that specific population and removing the BTL demand (and you mention that). I can see that CON might be ' a bit scared of losing the BTL voters votes' but for every BTL landlord there is a large multiple of 'tenants' who vote (eg 1 landlord with 10 houses let to 3 voters (+kids) is a 1:30 ratio on votes). LAB need to go after those 'many' votes IMO as IMO it's a 'no brainer'. IMO it would 'unite' LAB's broad church (in PLP and VI) as it gives folks a reason to vote FOR LAB and put clear 'red' water between CON and LAB. I agree the fundamental issue needs to be fixed and IMO the 'sticking plasters' would then be more effective as longer-term solutions if the 'bad' demand is constrained and more supply is then available to a 'controlled' population. PS Disclaimer alert. I'm selling off my BTLs for several reasons beyond 'hypocrisy' if I keep them, but I know a lot of people hoovering up BTLs 'oop North' (East of the Pennines around Humber and Teesside mostly as 'Uni towns' are 'last years trade'). It's a very good investment IMO and the tw from 10+ years ago would be all over that like a rash. I'm more interested in investing in the local business opportunities but those are a bit riskier, even with a little help from my friend (Rishi). [1] Long reply another time with more sources for examples but some countries have specific laws (often very local) on who can own property in specific areas. IIRC Switzerland has these kinds of laws but Banff, Canada also restricts who can buy in their area (to stop 2nd home/BTL owners jacking up prices and pricing out locals). banffnationalpark.com/realestate/eligible-resident-requirements/ |
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 16, 2022 22:13:25 GMT
shevii Posting on the Issue Specific thread but Allsopp did make one valid point. A young person/couple can still buy a starter home in many parts of the country. Sadly you see properties like the one attached marketed as: This is an ideal apartment for the Buy To Let market or as a Holiday Let.www.zoopla.co.uk/for-sale/details/59252240/?I appreciate the 'draw' of places like London, Bristol, etc but there are some great jobs in some of the places being cherry picked for 'Level Up' and with cheaper housing then less need to rent and folks living+working in these kind of areas will have much higher net disposable income than in 'trendy' places doon South. IMO we need to stop these kinds of places being snaffled up by BTL landlords and instead find ways to make them more/only available to young/essential workers. ROC approach might be to tax BTLers until the pips squeak but a lot of that would be passed on to tenants. So I'd support a more interventionist approach, especially on new builds, that 'bans' BTL or even goes further and says the owner of the property has to be an 'essential' and local worker (eg nurse, teacher, etc at local hospital/school) These kinds of policies are IMO 'low hanging fruit' for LAB. I certainly accept CON HMG have followed on from Blair and made many of problems WRT to affordability, etc worse. It is to some extent a 'global' problem, related to QE, etc. but that makes the importance of 'counter acting' intervention even more important IMO. I'm afraid if you ban BTL then you'll just reduce the incentive to do those kind of developments and perpetuate the housing shortage. Surely we need to be doing everything we can to reward the creation of new housing stock? I don't see anything wrong with BTL, it's the norm in many countries i understand. |
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 17, 2022 8:54:42 GMT
I'm afraid if you ban BTL then you'll just reduce the incentive to do those kind of developments and perpetuate the housing shortage. Surely we need to be doing everything we can to reward the creation of new housing stock? I don't see anything wrong with BTL, it's the norm in many countries i understand. ?!?! Lots of countries have the same problem with local workers being priced out of their area by BTL/2nd home if that is what you mean (eg Berlin, Germany has been mentioned in the past) Anyway, I do slightly get your point about not discouraging new housing so for that we need to look at why houses/apartment blocks are built = for profit and mostly by 'big' builders Where is the profit made? 1/ On the price of the land 2/ By the 'big' builder #2 is excessive and 'gamed' by the big builders (read: Home Truths (Liam Halligan) or similar) so that cartel should be broken up IMO as they never end up building much of the social housing they 'promise' to build (long discussion discussed a few times on UKPR). #1 requires something like ' Land Uplift Tax' and even some CON folks support that*. There would be a split of the uplift value, shared between local authorities and landowners (could be 50/50 or another ratio). The LA could have some 'zoned' areas that pass their share onto specific home buyers to reduce the purchase price (ie make the home affordable to targeted groups) and in return have a covenant that the home can only be resold to a 'similar' (ie local/essential) person. There could also be a ' use it or lose it' clause on land banks, etc. where the land owner is holding back their land stocks to ensure prices keep being squeezed up. There is also 'existing' housing (trickier) but above hopefully shows that any changes would need to be far reaching to tackle the problem of local/essential workers being unable to live close to where they work. * nacsba.org.uk/news/sajid-javid-supports-morally-justifiable-land-uplift-tax/ |
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 17, 2022 9:27:53 GMT
I think a regular tax on the value possessions is absolutely necessary, but as the law is made by "haves" it won't ever happen. So the issue is land and property which is owned but not used or is underused. I would agree with you that it should be taxed, though I've no idea how much it could raise. Moved to Issue Specific thread as those are valid questions. Unused or underused: 1/ Land. a/ See ' use it or lose it' for those with 'land banks' b/ Land Value Tax (LVT): neweconomics.org/2019/11/funding-local-government-with-a-land-value-tax(some issues with that one as a lot of that might well be past on to the tenants (people living in the property or businesses) so you're just rearranging the deck chairs - could have some specific uses though) 2/ Property a/ Some places already apply a higher Council Tax to 2nd home owners to " ensure second home owners make a fair and effective contribution to the communities in which they buy" (eg www.walesonline.co.uk/news/politics/holiday-cottages-second-homes-wales-20975946 ) b/ Changes to compulsory purchase and more powers given to Local Authorities (longer discussion on 'managing the change' to the High St.). Not specifically a tax but the result would be the LA owns the property if the current owner no longer intends to use it (so you could call it a 100% tax) In terms of £££ tax raised then a few numbers get bounced around but it's about a lot more than just the £££s. It is also about ensuring 'societal' goals and for politicians about ensuring you get the votes of the 'many' rather than the 'few' (see previous posts WRT to GE'17 'Rentquake'; land owner/landlord : tenant ration; and why CON need to start turning voters at a younger age as the demographics drift against them) |
|
|
|
Post by shevii on Feb 17, 2022 10:10:00 GMT
I'm afraid if you ban BTL then you'll just reduce the incentive to do those kind of developments and perpetuate the housing shortage. Surely we need to be doing everything we can to reward the creation of new housing stock? I don't see anything wrong with BTL, it's the norm in many countries i understand. I don't see the reasoning behind your comment at all to be honest. Simple supply shortages suggest there will be money in building homes whether there is buy to let or not and I believe there is quite a lot that councils can do in their development plans to favour specific types of developments anyway. Builders will work off set profit margins and land values will take this into account- if land values go down as a result that is no bad thing. The housing issue is not just about housing shortages but about economic competitiveness with rest of the world. If land and buildings are cheaper then companies can be more competitive and if housing is cheaper then they don't need to pay their staff so much. Start ups might have more chance of success if their starting overheads are lower. One big irony of where I work is that the company has made more money from the property they owned than they have made in profits over 50 years. Lower overheads by owning your own buildings and then the ability to sell off one of them meant we could keep manufacturing longer than we could have done helping with jobs, skills and exports etc. I mean it's not a good business model but business doesn't just have to be about return on investment. You also notice that any local shops that have survived the online challenge or out of town shopping centres do so because they owned their building anyway- so you get the "old boy" cycle repair shop or Ironmonger or restaurant who don't have the same sort of overheads. Eventually they disappear because someone in the family decides to sell up and doesn't particularly want the hassle of running a shop when they can cash in and do what they want- but those old style shops, usually not that busy, can be handy even in the days where you can get something delivered from Argos often in a few hours. |
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 17, 2022 12:28:20 GMT
Who pays the tax?1/ Council Tax. Some comments on the main thread about trying to shift tax from tenant to landlord but hopefully it is obvious that the landlord will simply pass those through (ie back to the tenant) so it achieves nothing (and in many cases, notably 'slum' landlords then the landlord might pay the council tax as they don't want the tenants registered and if they're being very naughty will claim it is an 'allowable expense' in their tax return (assuming they do bother to pay tax, or at least the full amount of tax they should pay!) 2/ Income Tax. In recent years then HMRC have increased the tax from BTL landlords (by reducing the tax deduction and other 'allowable expenses' or the removing stuff like the 10% 'wear and tear' allowance, etc). Good in theory but a lot of the reduced profit after tax is perhaps part of the reason for rents being pushed up so much (ie landlords seeking the same 'net' profit push up rent prices) 3/ Stamp Tax. BTL have to pay a higher rate (good). That should be a deterrent to new BTL purchases but with lack of alternative investments (eg very low annuity rates) then it doesn't seem to be much of a deterrent. Maybe if it was increased further it would? Tough to say if that is 'passed through' to tenants but if tenants were then more able to become 'owner occupiers' themselves then the 'demand' would shift from BTL buyers to 'real' buyers. 4/ Capital Gains Tax (CGT). Absolute F-ing no brainer to jack that up to at least the marginal tax rate or even higher (we apply higher tax to oil+gas companies). Since it is only a tax on 'Capital Gain' then it wouldn't be passed through to tenants and the Brucie Foresight Bonus is that if you announce you're going to steadily increase CGT on BTL/2nd homes then those who bought them a long time ago would have an incentive to sell sooner rather than later (ie you'd front-load some tax receipts). It should also act as a deterrent for new BTL purchases. 5/ Inheritance Tax *(mainly, touches on some other ways to reduce ones tax bill as well). More of a complex one but the best way to legally avoid various taxes (notably CGT as part of Inheritance Tax) or be able to charge more 'expenses' or claim allowance against your tax bill is to buy BTLs via a company (and a lot of the 'dirty' money does that so could reduce that as well). Overhaul of the Land Registry would take a long time but at least start by ensuring any new purchases have to be made in an individual/couple/group of humans name and not a company. NB It would need to be a broad package of measures, ideally all used at the same time but above covers a lot of the issues. Sources: the rules keep changing but some info: uklandlordtax.co.uk/allowable-expenses-against-rental-income/ * Inheritance Tax is often called a voluntary tax as it's very easy to avoid paying it. You can either do nothing and volunteer (for your beneficiaries) to pay it, or you can take steps to avoid it. Tax avoidance is not illegal but let's not go into that tangent. An overhaul of Inheritance Tax could be something to consider at same time and I quite like the (LDEM?) idea of a lifelong gift allowance (although it would be tricky to administer it should catch the 'big' transfers such as property or shares in a company that owns a load of property)
|
|
|
|
Post by shevii on Feb 17, 2022 14:32:35 GMT
@tw
I think you have to judge what the rental market can afford to pay. If they can't afford to pay any more then it doesn't allow landlords to push up the rent (although they might try to skimp on decent accommodation in some way) to compensate- surely mostly private landlords are grabbing what they can? I agree with the lifetime allowance to catch IHT avoidance and should look at "trusts" as well. I know eventually a trust will have to pay some sort of tax when the money is realised but in the meantime they've had an awful lot of tax free perks and I'm sure there are a lot of ways that you can still keep the money in a trust indefinitely but benefit anyway.
Contract clause and a perhaps boring story of my last few years... like someone else on the forum we've become "accidental landlords" and the story involves everything we've been talking about. My mum died and left the 4 siblings around £900k in inheritance. The estate paid the smallest amount of IHT because it was just only a small way over the limit (2 people's allowances and 2 x family home allowance) and the only reason she had this type of money was because the majority was in a modest semi detached (£700k) in Greater London that had benefited hugely from price rises. I can only regard this as fair (the house inflation & the IHT) had we still been living in London and needing it for our own housing when all 4 were not living in London. In any event three of us were already retired and me not that long off considering it- so the passing down had no benefit to living a London life while we were working and needed accommodation that on today's prices none of us could afford. The economic and tax system has benefited us significantly but was in no way deserved (for simply being born to someone who had a house in London) or in no way fair given the problems for younger people especially, some of which could be fixed with a higher tax take.
The "accidental landlord" bit comes in because my close to minimum wage stepson with mild learning difficulties was very unlikely to be in a position to buy his own place and not good with money so would have found it quite hard dealing with all the stuff that comes with a mortgage- interest rate rises etc. I used a fair bit of the inheritance to buy him a place that he was not ready to move into on his own and we await the day he either finds a solid girlfriend or when the time comes when he really needs to learn how to deal with all the things connected to owning a home while we are still around to help him. We wanted to buy then because of house price inflation as it would have cost more to do it at a later date and we'd be paying more money that was set aside for our retirement and have an unknown expense coming to us (it's still a bit unknown as there will be CGT to pay while he's not living there but at least it's a 20% unknown rather than a 100% unknown). So we've set it up as a loan to him (which will be gifted at the right time), simply to protect from anyone who might take advantage of him and knowing we can't afford to buy him another house if that happened. I think obviously it's not fair on us for him to pocket the rent so he's repaying off the loan what rent comes in less tax. So in a rather direct way we are benefiting from BTL, even if that's not the aim of what we are doing, and certainly are part of the system which means prices go up because of demand and locking younger people out of the housing market.
All of these outcomes which I consider "bad" are down to house price inflation. All I can do to mitigate the guilt is to have no rent increases while our current tenants live there but if they do move out then you're back in the mix because you're almost obligated to charge the new going rate. We did say to the rental company that if there was a deserving and reliable tenant who needed a bit of help then the rental was up for negotiation but given it was rented in the first afternoon not even the opportunity for that and the rental company is not going to take kindly to losing their percentage monthly commission on a lower rent so can probably manipulate this without us taking an active part in finding a tenant.
The other "horror" we discovered is that for 10% commission you don't have to do anything and the rental company does it all if the tenant needs repairs or if they don't pay the rent or whatever. We've not had any contact at all with the tenant and if something needs fixing the rental company deals with this and gives us a bill at the end of it. It really is money for old rope but it has damaging consequences for people who want to put a roof over their head.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 17, 2022 15:41:17 GMT
@tw I think you have to judge what the rental market can afford to pay. Valid point and we could discuss price elasticity of demand, etc but the general point still stands WRT to something like who effectively pays the Council Tax. I'm a 'deliberate landlord' from the mid-late 1990s when the opportunity was very obvious but as mentioned before then I'm scaling out of that (using up CGT allowances and exiting why the 'going is good' and I'm not taxed at my marginal rate). This is not the place to discuss using an agent or how to be a 'nice' landlord offering below market rent but just FWIW then the one place I have left in Guildford is rented to nurses as a House in Multiple Occupation (HMO) at a bit below market rates (£400pm+bills per room). I say 'below market' rate but that is due mainly to loyalty, very low maintenance and that they replace any exiting tenant with one they find themselves (ie my 'costs' and hassle factor are basically zero and no agent fee). Depending on who buys the place they'll need to find somewhere new soon or will probably see their rent go up to 'market rates' (more like £450pm+bills per room) Rent looks a bit cheaper near you but then houses prices are a lot cheaper so when you look at yields (as most BTL types do) then you can see why a lot of folks are hoovering up property North of the Watford Gap. The yield (to value) on my last place in Guildford is roughly 1/2 what I could get buying 3 places in say Hartlepool (not that I'm buying any new places, just saying) PS Several internet sites where folks can check house prices or rent prices. Below is one for rent prices, 'filtered' to HMOs in Guildford. Change the location to wherever you like. For gross yields then formula: 12 x #rooms x monthly rent / house price (for net yield or profit after tax then add in the extra bits to the formula) www.spareroom.co.uk/flatshare/guildford?location_type=area&flatshare_type=offered&showme_rooms=Y&offset=0 |
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 18, 2022 12:05:22 GMT
Why is BTL so popular? Inflation Linked Guilt (BTL) v Index Linked Gilts.Fairly simple illustrative example which also shows the 'problem' that QE created. Illustrative scenario just to able to put some numbers on the choice. Say someone is looking at retirement income (or just a 'safe as houses' investment) and has £250k (or £50k deposit and wants to leverage it via a mortgage) A/ Inflation Linked Guilt (BTL)Income: Net Yield after tax on a well chosen, well run BTL property should generate about 4% 'running yield' = £10k pa That income is likely to be 'inflation linked' (ie you can put the rent up every year so your 'real income' stays roughly inline with inflation) Capital Gain: I wouldn't like to predict that but if you put the BTL into a company and gift the shares to your kids then no Inheritance Tax to pay and most people think property is a 'one-way' bet so 'perception' is that you'll make a capital gain and historically it has been way more than inflation. You might feel a bit guilty about pricing out locals but your more worried about your own retirement, handing something over to the kids, etc. Summary: - 4% income that probably rises roughly in line with inflation - Probably a capital gain (historically in 'real' terms as well as absolute terms) - Can shield it from Inheritance Tax B/ Index Linked Gilts (which are safer than houses) Let's take the IL Gilt that matures in 2044: TREASURY 0.125% INDEX-LINKED 2044 www.hl.co.uk/shares/shares-search-results/t/treasury-0.125-il-2044Current price = £168.89 (so for 250k you'd get 1,480) Running yield = 0.075% = £187.50 pa (basically f-all) but it will rise with RPI as it's 'index linked' Capital LOSS (in real terms) = harder to show but the bonds mature at 'par' + inflation and given the price is so high (due to QE and forced pension fund demand) then your going to lose money in real terms. (tangent: this also shows how 'cheap' it still is for HMG to borrow) Summary: - Virtually no income - A Capital loss (in real terms) - Bit trickier to shield from Inheritance Tax (if you're over that threshold) Conclusion:Above has left out lots of costs and the issue of liquidity, etc but if the intention is a 20yr+ investment and you don't like the risk of investing in equities then BTL looks like a very attractive investment and whilst ' Past performance is no guarantee of future results' then most folks like to back winners and consider property as being ' as safe as houses'
So far, we've mainly been looking at 'sticks' to reduce BTL demand (or at least ways of extracting more tax from landlords without that simply being passed on to tenants) but IMO we also need to look at finding other 'carrots' for investors to feast on. The end of QE has seen the IL Gilt mentioned drop a bit in price but not a lot. It's fairly complex to show the comparison to annuity rates but they've gone up a tiny bit in the recent past (and you could get more than £10k pa with £250k (various caveats) but with an annuity you have nothing to pass onto your kids. NB If IL and conventional Gilt yields rise further then that will also help with the pension 'black holes' issue (discussed in the past on UKPR). That should then help some companies 'invest' in real things rather than spend profits filling in their pension black hole.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 19, 2022 19:30:40 GMT
@tw Another sensible option would be to put the 250K into stocks and shares e.g. a small number of index-based funds including FTSE100, FTSE250, All-World (and some UK Gilts). And move them into an ISA as quickly as possible.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 20, 2022 15:04:49 GMT
@tw Another sensible option would be to put the 250K into stocks and shares e.g. a small number of index-based funds including FTSE100, FTSE250, All-World (and some UK Gilts). And move them into an ISA as quickly as possible. You're preaching to the converted but worth going through the facts and the perception issues. Quick summary (using same metrics as previous post) for investing in shares for comparison to IL Gilts or BTL property: C/ EquitiesIncome: FTSE100 dividend yield is currently 3.37%[1] (much better than IL Gilts but a bit less than a well chosen, well run BTL[2]) Capital: Far more volatile and considered 'riskier' (see 2nd column in link in [1] or the longer-term charts in [3]) Tax avoidance. Pensions best as govt/employer tops those contributions up, ISA decent. Bit harder to avoid Inheritance Tax unless you gift early (eg get your kids started by investing in their pensions at age 0) However, you can't so easily 'leverage' a share portfolio but you can easily leverage a property investment (via a mortgage) and a lot of folks have the 'perception' that property investments are 'as safe as houses' and a one-way bet - which of course they are not (unlike Gilts or even a bank account [4] where you do get capital protection) The normal way to fix a false 'perception' about an investment is via price (ie a crash)! Calling the peak of a bubble is very tricky but the higher it goes, the further it might fall and I'm very aware of the risk of bursting rather than deflating a property bubble - hence the urgency of a/ not making the bubble risk worse, b/ starting to fix the causes of the bubble asap. [1] Bit lower for other indices as FTSE100 has more 'high dividend' shares siblisresearch.com/data/ftse-all-total-return-dividend/[2] Ignoring costs and issues of liquidity. If you factor in the higher stamp tax for BTLs, various fees on entry/exit and much worse liquidity then you could certainly make the case that the income and flexibility of shares is better than BTLs. For a long-term investment those factors become less important. [3] A lot depends on timing but see below for FTSE All Share compared to House Price Index, RPI and CPI. henwoodcourt.co.uk/the-last-decade-how-did-uk-shares-and-residential-property-compare-in-the-2010s/[4] Limitations on that of course and as with IL or conventional Gilts then it's a capital loss in 'real' terms. |
|
|
|
Post by birdseye on Feb 20, 2022 16:20:08 GMT
@tw Article in the MEN that you may find interesting: www.manchestereveningnews.co.uk/news/greater-manchester-news/manchester-rebuilt-londons-housing-crisis-23083647This is spreading outwards (and downwards) just as it did in London and then impacting house prices in poorer areas for those people, especially those who are not part of the Manchester commute and not gaining from Manchester wages and/or job opportunities. Rather than being levelled up by Manchester success they end up being levelled down with higher cost of living. I think we've already rehearsed the arguments quite a lot. For me population control is the only option that works as it's simple supply and demand which then gets compounded by housing being a very lucrative business encouraging BTL. Net immigration of zero basically dependent on birth/death trends. Short term we can do whatever "good ideas" we have that don't involve building on Green land and we can make BTL very unpleasant for investors. This would mean that house prices are governed by what someone who wants to live in a house can afford rather than what someone who has spare cash can afford in order to beat the interest rate of alternative investments. I suppose the political question now is whether political parties are getting a bit scared of losing the BTL voters votes. Things like housing associations, part buy and so on are good short term sticking plasters but they only treat the symptoms and don't solve the fundamental issue. For heavens sake, why would anyone want to adopt Chairman Mao's approach to population control when 91.5% of UK land is undeveloped? Its simple. In a free country if supply shortage causes unacceptable price levels then increase supply. |
|
