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  • Property-a-holics

    Jacob Rees-Mogg - solving the housing crisis



    Large sections of the green belt would be declassified and VAT on property restorations slashed as part of a radical package of free-market reforms set out by Jacob Rees-Mogg to urgently tackle the housing crisis.

    Writing in The Telegraph, the senior Tory, who is tipped to become Boris Johnson's Chief Secretary to the Treasury, puts Britain's homes shortage down to "distortive taxation" and the "most centralised planning system" in the world.

    "We must urgently renew a property-owning democracy in Britain once more," he says.

    Full/source story

    Meanwhile, from the latest ONS survey:

    Owner occupation is the most prevalent tenure in England and more own their home outright rather than having a mortgage, the latest snapshot of the housing market shows.

    In 2017/2018, there were an estimated 14.8 million households who either owned their home outright or were buying with a mortgage, amounting to some 64% of all households. More than half, 53%, of owner occupiers and 34% of all households own their home outright.

    Full/source article

    So Boris as PM and JRM taking over from Spreadsheet Phil?

    SEE ALSO  -         Boris - raising higher rate tax threshold

    UP NEXT -             My chat with Boris - Stamp duty on his mind

    DON'T MISS -        Housing endangering Conservatives - the Times

    NOW WATCH:

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    Watched the video and I have my own rant on one specific set of responses from Graham:

    Baby boomer generation worked hard and this generation want everything handed to them? Another entitled baby boomer thinking he had it tough and that everyone young is a snowflake. It's infuriating and insulting. Baby boomers saw incredible wealth generation through no particular effort. House prices since 1975 have gone up by 300%, they had glorious pensions, 100% mortgage options, people on low or zero income had decent benefits and largely good quality council accommodation which was later offered to them at a discount price to buy. ONS calculates that people are working as many hours per week now as they were in 1975 so in what way are the young generation not working as hard Graham?

    Now I don't hold any of this against baby boomers, times were good and it was just a fortunate time for many of them. What I do absolutely get pissed off by, is being told by people who had it so good that we just need to pull up our bootstraps and man up. Wage to house value ratios have widened by 200-300% since 1975. Many baby boomers were financially stable on one income whilst now most families have to have both parents working in order to support a family (meaning this generation are in many cases working harder) even though a large portion of that income needs to go towards exorbitant childcare costs. State pensions are a joke, private pensions even raise some serious concerns with pensions ages constantly being increased and market instability. Affordable housing, what affordable housing (unless you're fortunate like most of us on these forums are). 

    Baby boomers had it great, it's nothing to be ashamed of but your anecdotal and entirely unfounded, unverifiable and inaccurate assessment of "this generation" is pure prejudice and ageism. Times are tough, the political world is a shambles, there is little hope that the future will be better than the present, wealth gaps are widening, education is worsening, NHS is struggling with staff shortages and lower budgets per capita than it has seen for decades and on top of all this there is the climate crisis which this generation will need to fix.

    Just wanted to get that out of my system!

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    Well said Richard, wholeheartedly agree with what you say.

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    All very well but inflation from 1975 to today means a pound then would be over 8 today, so you could say houses are cheap. ( not that i would). The problem lies in the economic policy the country has chosen and the attitudes towards immigration, the devaluing of skills and choosing a low wage low skill economy. 
    Per capita GDP has gone down and so the cash available gets spread thinner. Attitudes in respect of saving and how people choose to spend what they earn have changed. 
    As with so many things in life you can’t have everything.
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    The best measure of how affordable housing is, is earnings to property value ratio which in the UK in 1985 was 2.5x earnings and today is 5x earnings on average (chart from nationwide in attached article). Agree wholeheartedly with your other comments, though I think spending habits is a really complex topic. There are societal pressures, incredibly aggressive marketing (targeted online adverts, toxic social media expectations) and lots of new things to deal with that previous generations didn't have to, for both better and worse. I just think people are a product of their environment.

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    Yes, earning multiples are probably the best comparator, i chose inflation just a counter to the house price percentages used in the op. Without doubt its a very different world to 1975, which is why the whole millenial /baby boomer debate is pretty much non sensical , other than millenials seeming to think that the best of everything is denied them.
    The comparisons are very one sided yet appeal to huge numbers of people for whom the baby boomers can be decried as the source of all their ( millenials)woes , yet had the “best” of everything. 
    The government will be quite happy to see this argument pushed to the fore as it deflects attention from the real failures of policy and makes taxing the boomers both easier and popular.
    All plain daft at times.
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    Well inflation isn't necessarily a pure counter. Inflation can be fantastic for home ownership as it decreases the value of debt and most people would have had mortgages when purchasing a property. It is more complex than £1 then = £8 now. But of course you have to factor in interest rates as well which were much higher for that period.

    I agree it is non-sensical, my initial rant was because Graham seems to think Millenials were lazy or worse than his generation, and it is a view I hear again and again and it is just utter garbage and completely unfounded. I personally hold no grudge towards baby boomers, we all take what we can get in life and there was nothing to suggest at the time that things wouldn't remain the same or get better. There are simple facts though that houses are harder to acquire, pensions are not as good, social mobility is made more difficult with poor quality jobs, wage growth is fairly stagnant, services are generally worse - but I 100% wholeheartedly agree with you, the reason for these things is government policy. Blame games won't fix anything, but acknowledging that these things have become worse is key to fixing them.

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    FTBs do not buy at  average price point - they typically pay around 60%.

    CML data nationally shows average FTB borrows just 3.11 x gross household income of £38k  - with average 17%/£24k deposit - hence pay av £142,000.

    Across Greater London FTBs borrow 3.8 x household incomes of £60k - but with 30%/£100k deposit - hence pay av £328,000.

    Also noteworthy is that London FTBs have loan servicing costs of just £1000 pcm for their 70% LTV loans. That translates to a 25 yr loan at c.2.5% interest.

    DCLG say 75% of DFTBs are couples - underlining your earlier point.

    From the 1960s to 1990s it would have been rare for lenders to offer more than around 3 x a husband's income and 50/100% of a wife's income - so today's lending is very much on a par - especially post 2013's MMR which limits lending via the stress test at 7% interest.

    The major difference today compared to boomer era is of course far lower wage growth - so recent home buyers will be paying a far higher portion of their net lifetime earnings to service purchase costs. In the 1970s wages doubled every 4 yrs and in 1980s doubled in 8 yrs - which rapidly eroded loan to income ratio. That also serves to make it difficult to move up the property ladder from a starter home to a family home without exceptionally high earnings.

     

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    "We must urgently renew a property-owning democracy in Britain once more,"

    I wonder why the Cons are so keen to do this? We can all think of reasons, but for them it is the way forward in more & different taxation. They don't want people to be nomadic, moving around. They want us to be traceable, taxable...

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    Tenants tend to vote Labour so Labour supports them

    Owner-occupiers tend to cote Conservative so the  Conservatives support them.

    No need to come up with some sinister reason, basic politics covers it,


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    Do I trust any of our political freinds

    No I dont I was always a Tory supporter because I thought they were the party of ambition and low taxes

    How wrong I was

    It will take me a very long time before I trust a Politician again

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.