Crackdown on 'rich' council house tenants

[Ramrod]

Originally Posted by Damien

He is right though most new build flats are marketed as investments in London. Adverts on radio for them boast of the profit that could be made and paper advertisements are accompanied by yield rates. We can also expect it to get worse with the turmoil in the Asian stock markets too.

Yes but the point he & I are discussing atm is the real or imagined growth of 'buy to leave'.
There is nothing wrong (as far as I can see) in foreign investors investing in property here.

Originally Posted by Ramrod

Yes but the point he & I are discussing atm is the real or imagined growth of 'buy to leave'.
There is nothing wrong (as far as I can see) in foreign investors investing in property here.

Well it does impact upon the city. Those are by far the most profitable builds so cheaper apartments aren't built and unused residential homes mean less accommodation for a city that needs people to work in it.

Governments should ensure that properties are homes first and investments second. If there is a finite amount of space for a city of 8 million then allowing empty homes as investments, or even luxury rental apartments, is pretty bad planning.

[Ramrod]

The trouble with governments 'ensuring' things is that they are usually spectacularly bad at doing that. The law of unintended kicks in and it all ends in tears and recriminations.
Second point: I, and the article referenced didn't mention 'unused residential homes' & 'empty homes as investments' so why did you?
Third point: What's wrong with luxury rental appartments?

[Ignitionnet]

Originally Posted by Ramrod

The trouble with governments 'ensuring' things is that they are usually spectacularly bad at doing that. The law of unintended kicks in and it all ends in tears and recriminations.
Second point: I, and the article referenced didn't mention 'unused residential homes' & 'empty homes as investments' so why did you?
Third point: What's wrong with luxury rental appartments?

They're great for developers, great for those who have a bunch of equity they did nothing to earn in existing buy-to-let who can then use it as deposit and great for the cash-rich who can buy them outright

For actually housing people in the city in question, not so much, as most of population can't afford to live in them.

Look at the Battersea Power Station development. Studios being bought off-plan for £1 million, and back up for sale, again off-plan, for £1.5 million. Do you seriously think there are enough people in London who can both afford the rent a place like that would attract and actually want to pay it?

A family certainly wouldn't - £1.5 million will pay for a 4-5 bedroom house in a gated mews in Twickenham.

There are only so many single people with that kind of money.

In the case of 'cheaper' areas another problem arises - why would people with the kind of money to be able to rent a 'luxury apartment' want to live there when they can get far more property for their money in more established areas with similarly good transport links?

London may have more billionaires per head of population than anywhere else in the world, bar Monaco, however it massively skews income statistics. The amount of housing supply that is luxury apartments is way out of kilter with the actual requirements for housing in the city, leaving many of these properties as commodities, not places to live.

As far as evidence goes have a look at the changes in price of Prime London property.

Lastly another major problem - we import too much and export too little. The brief export boost that comes from selling off as much of our capital as is possible to, frequently dodgy, foreign money comes at the expense of an ongoing drain to our current account as rent goes abroad, and at the expense of an ongoing drain to our economy as a whole as high rents soak up money that could be buying goods and services and send that money abroad.

Housing as a whole is an overpriced mess, with the only thing keeping many mortgaged people afloat being 'emergency' low interest rates and tenants in huge swathes of the country paying rents regarding by the normal metrics as 'unaffordable' to service their landlords' mortgages, with investor demand in some areas ensuring their landlords have enough equity to go purchase their next investment while they themselves cannot save their deposit.

EDIT: That ignoring the government putting taxpayers' money behind keeping property prices up to avoid losing votes. Housing must remain a one-way bet, always.

Originally Posted by Damien

Well it does impact upon the city. Those are by far the most profitable builds so cheaper apartments aren't built and unused residential homes mean less accommodation for a city that needs people to work in it.

Governments should ensure that properties are homes first and investments second. If there is a finite amount of space for a city of 8 million then allowing empty homes as investments, or even luxury rental apartments, is pretty bad planning.

---------- Post added at 08:47 ---------- Previous post was at 08:46 ----------

Originally Posted by Ignitionnet

They're great for developers, great for those who have a bunch of equity they did nothing to earn in existing buy-to-let who can then use it as deposit and great for the cash-rich who can buy them outright

For actually housing people in the city in question, not so much, as most of population can't afford to live in them.

Look at the Battersea Power Station development. Studios being bought off-plan for £1 million, and back up for sale, again off-plan, for £1.5 million. Do you seriously think there are enough people in London who can both afford the rent a place like that would attract and actually want to pay it?

A family certainly wouldn't - £1.5 million will pay for a 4-5 bedroom house in a gated mews in Twickenham.

There are only so many single people with that kind of money.

In the case of 'cheaper' areas another problem arises - why would people with the kind of money to be able to rent a 'luxury apartment' want to live there when they can get far more property for their money in more established areas with similarly good transport links?

London may have more billionaires per head of population than anywhere else in the world, bar Monaco, however it massively skews income statistics. The amount of housing supply that is luxury apartments is way out of kilter with the actual requirements for housing in the city, leaving many of these properties as commodities, not places to live.

As far as evidence goes have a look at the changes in price of Prime London property.

Lastly another major problem - we import too much and export too little. The brief export boost that comes from selling off as much of our capital as is possible to, frequently dodgy, foreign money comes at the expense of an ongoing drain to our current account as rent goes abroad, and at the expense of an ongoing drain to our economy as a whole as high rents soak up money that could be buying goods and services and send that money abroad.

Housing as a whole is an overpriced mess, with the only thing keeping many mortgaged people afloat being 'emergency' low interest rates and tenants in huge swathes of the country paying rents regarding by the normal metrics as 'unaffordable' to service their landlords' mortgages, with investor demand in some areas ensuring their landlords have enough equity to go purchase their next investment while they themselves cannot save their deposit.

EDIT: That ignoring the government putting taxpayers' money behind keeping property prices up to avoid losing votes. Housing must remain a one-way bet, always.

[Ignitionnet]

Originally Posted by Ramrod

Yes but the point he & I are discussing atm is the real or imagined growth of 'buy to leave'.
There is nothing wrong (as far as I can see) in foreign investors investing in property here.

There is no imagined growth, the electoral roll for new builds is about as good as it gets but is indicative of this growth.

Strangely many of those investors come from Singapore, and they most certainly do have a problem with foreign investors investing in property there.

http://www.sla.gov.sg/Services/Restr...dProperty.aspx

Alongside hefty stamp duty for foreign investors and for Singaporean natives investing in second properties - 15% additional stamp duty for foreign investors, 7% additional for local investors.

Amusingly, the overwhelming majority of Singapore's housing is publicly built. People buy their government built property and then with the money they saved on that can come buy up London

I can't help but feel the strong vested interests that come with a £1.5 million property portfolio somewhat colour your views on this. I have no idea how much of that value is capital appreciation or, if you prefer, money for nothing, but if you're in the south-east it's unlikely to be trivial.

Getting serious about housing both inside and outside London, and cooling the investor market would likely impact both your rental income and capital gains. A pretty good reason to see nothing wrong with foreign or any other investment in properties that might keep their value excessive.

[Osem]

Anyone who thinks house prices only go one way didn't own one in the early 1990's or even as recently as the late noughties. What's worrying for me is that irresponsible borrowing and property price/rental inflation is still being effectively encouraged because, right now, property is seen as the only way to get any sort of return without significant risk. The BOE is in between a rock and a hard place because if they increase interest rates by any significant amount there'll be countless big losers who can't pay their mortgages and if they do nothing the bubble will inflate further. It's all a bit like what's happening with Greece - policymakers transfixed by the headlights of economic reality. The more I look at what's going on here and around the world, the more I feel we're on the verge of a perfect storm.

[Ramrod]

Originally Posted by Ignitionnet

I can't help but feel the strong vested interests that come with a £1.5 million property portfolio somewhat colour your views on this. I have no idea how much of that value is capital appreciation or, if you prefer, money for nothing, but if you're in the south-east it's unlikely to be trivial.

Getting serious about housing both inside and outside London, and cooling the investor market would likely impact both your rental income and capital gains. A pretty good reason to see nothing wrong with foreign or any other investment in properties that might keep their value excessive.

As Osem said, I've been through two property bubbles so I'm looking at this with the long view. The only people who come unstuck if a bubble bursts are those who need to sell and are in negative equity.
I honestly don't care about foreign investment because it drives up some prices (good for me) and if there is a bubble and it bursts I sit it out. I don't need to sell. btw, most of the appreciation in my case has come from taking something that isn't liveable (so you can't get a normal mortgage on it), doing it up and then renting it out or using it myself. The property I just took on doesn't have a floor downstairs and hasn't been lived in for ten years. I'm doing the local community & council a favour. So whilst there is a vested interest on my part, it's not as strong as you think.......the only time I will have an interest is when I finally do want to sell.
The argument about buyers from Singapore seems to hinge on how they treat foreign investors over there.
Not sure what point is being made in the post about central London properties being out of the reach of normal buyers. Those properties attract a lot of stamp duty, the building industry gets paid a lot to build them, developers make a mint and pay tax on that and then can reinvest their profits in building other developments......money goes round and at each stage tax gets paid to the government....which is what you surely want

[Ignitionnet]

Originally Posted by Ramrod

Not sure what point is being made in the post about central London properties being out of the reach of normal buyers. Those properties attract a lot of stamp duty, the building industry gets paid a lot to build them, developers make a mint and pay tax on that and then can reinvest their profits in building other developments......money goes round and at each stage tax gets paid to the government....which is what you surely want

No, I want the government to stop meddling in the housing market with their ridiculous schemes, liberalise it, and tax it properly.

What you've described exactly proves my point - the money goes in a circle, it's not being distributed to the wider economy. The taxation is crumbs off the table, units aren't sold in especially large quantities, especially second-hand, and the lack of ongoing property taxes besides council tax make it a cheap, safe asset to hold.

I want a low tax economy where possible, where people aren't spending huge swathes of the income on rents and mortgages in order that the government receives some stamp duty.

If it were as simple as you suggest Singapore and Hong Kong must've been committing economic suicide when they tried to dampen foreign demand for their property.

These must also all be completely wrong, and should be welcoming higher housing costs helped by foreign demand. They all advocate increased supply, however given their complaints focus around an average house price of £500k in London it seems fair to presume that million-pound flats aren't what they have in mind in terms of supply.

http://www.ft.com/cms/s/0/9dac9292-c...#axzz3fyAOOv5a
http://www.turnerandtownsend.com/moving-out/_23206.html
http://www.londonchamber.co.uk/lcc_p...e.asp?aid=4842
http://www.cityam.com/1411671893/why...n-s-businesses

When polled, a majority of employees said they find it difficult to pay rent or mortgage costs and work in London. Of particular concern is the group of employees aged 25 to 39, with 70 per cent reporting that they struggle with the cost of their rent or mortgage.

Seems reasonable to think that a combination of demand-side and supply-side reforms would be the best option. The obvious demand-side solution is further taxation / restriction on foreign ownership given supply seems to remain a major problem.

Developers don't want to develop too quickly, they are focused on maximum price per unit. UK housing has never responded well to increased demand, and there's zero reason to think this will change. The only time we've actually built enough is when the government step in to build. The Town and Country Planning Act ensures that supply is going to be difficult for the foreseeable.

[Ramrod]

Originally Posted by Ignitionnet

No, I want the government to stop meddling in the housing market with their ridiculous schemes, liberalise it, and tax it properly.

What you've described exactly proves my point - the money goes in a circle, it's not being distributed to the wider economy.

But it is being distributed to the wider economy- architects, surveyors, builders, scaffolders, glazing manufacturers, lift engineers, roofers....the list goes on.

I want a low tax economy where possible, where people aren't spending huge swathes of the income on rents and mortgages

Stop some of the unfettered immigration and build more houses

If it were as simple as you suggest Singapore and Hong Kong must've been committing economic suicide when they tried to dampen foreign demand for their property.

Perhaps they did. Govt meddling often does

[RichardCoulter]

After reading through this thread, I find it ironic that some of those lucky enough to be in a comfortable lifestyle are now squeeling.

It was perfectly alright to cut services and benefits to some of the most vulnerable members of society, yet now that "hard working families" etc that the Tories purported to support are now being hit, it's suddenly not fair.

Off the top of my head:

- Tax Credits cut.

- All mortgage help to be in the form if a loan.

- Increased rent for some better off social housing tenants.

Regarding the last point, ask yourself if you would rather be on a decent income and pay a little more for your accommodation, or be on £57.90 a week (like many people are) for day to day living expenses- yet now have to use some of this money to have to pay up to 25% of the rent (previously covered in full) and approx 29% of the Council Tax (previously covered in full)?

[Gary L]

Originally Posted by RichardCoulter

After reading through this thread, I find it ironic that some of those lucky enough to be in a comfortable lifestyle are now squeeling.

It was perfectly alright to cut services and benefits to some of the most vulnerable members of society, yet now that "hard working families" etc that the Tories purported to support are now being hit, it's suddenly not fair.

Yeh. as has been pointed out. they thought it was all going to be somebody elses problem. and agreed in the way that we have no money and cuts have to be made. and now because they're being 'asked' to help out they think it's unfair.

then they were told that they were hypocrites. and a little bit naive

[papa smurf]

Originally Posted by Gary L

Yeh. as has been pointed out. they thought it was all going to be somebody elses problem. and agreed in the way that we have no money and cuts have to be made. and now because they're being 'asked' to help out they think it's unfair.

then they were told that they were hypocrites. and a little bit naive

they'll find another way to milk the system they always do .

[Gary L]

Originally Posted by papa smurf

they'll find another way to milk the system they always do .

Then we should cut some more!