Brexit and the waning days of the United Kingdom

[Tamas]

https://www.theguardian.com/politics/2021/feb/27/sunak-budget-expected-to-offer-first-time-buyers-mortgage-guarantee

Well there goes my hope of property prices going down this year. They are probably poised to go up now.

What they are planning is extend the "help to buy" scheme from certain newly built properties to all.  This is a state guarantee on your mortgage so the banks can feel safe offering 5% deposit loans instead of the min. 10% they normally do.

The thing is, these help to buy properties I have been consistently seeing 25-50% over average prices when compared to the non-helped similar properties in the same area.

It's infuriating. They keep stoking the demand higher with tax funds as if it is demand we are short on.

At least it proves that I was right and prices were bound to fall, otherwise they wouldn't be doing this. Bloody rigged effin' game.

The theory of help to buy was that it would increase supply - because it's only available on new build properties there need to be new build properties. Similarly those flats, obviously, aren't available for landlords or buy-to-let and there is a regional price cap. Again the theory is to encourage developers to build properties that are not just for the rental market or luxury flats. Also it is easier to get developments approved if there's a big chunk of help-to-buy for all of those reasons because it's going to be for people to live in as opposed to absentee landlords and it is "affordable" because of the cap.

The issue with it, in my view, isn't that it's demand focused, but rather that I'm not sure it works as hoped from a supply perspective. It has increased the number of new builds but not enough. I feel like all of the policies of Tory governments since 2010 to increase supply have mainly been about avoiding that to fix supply the state needs to be involved in building again and that probably means an end in some way to right to buy.

There's been no earnest supply-increasing action that I have noticed in my 7 years here. The original help to buy in practice seems just a way to sell insultingly overpriced new builds. I think I posted pics of that two bedroom office-building flat for 375,000 recently - you can get the same size flat in the area for 25-50k less. Yes, the 375,000 was help to buy eligible. Have seen a lot of this over the last couple of years of paying attention to these prices.

It is quite very obvious the government has no intention of seeing a downward price movement. Apart from business interests I think any serious fall especially coupled with the interest rate hikes which might actually happen now fairly soon would mess with a lot of the middle class' investments into buy to let properties. Can't risk losing those votes, can they.

But funnelling tax money into keeping a bubble inflated will just make it burst that much harder. The problem for people like me is whether you wait for that to happen and be royally screwed if it doesn't, or assume it won't burst and the neo-feudalistic setup is to be permanent, in which case with any delay to buy you are screwing yourself.

[Sheilbh]

It is quite very obvious the government has no intention of seeing a downward price movement. Apart from business interests I think any serious fall especially coupled with the interest rate hikes which might actually happen now fairly soon would mess with a lot of the middle class' investments into buy to let properties. Can't risk losing those votes, can they.

I think the middle class investment point is true for Tories especially but home ownership is people's biggest lifetime investment and around two-thirds of the population are hom owners. That's their biggest asset and often sold on or downsized as people age. I don't think any government is going to explicitly say they want to see prices go down because it will hurt lots of people especially those scarred with 90s experience of negative equity. That's the big challenge for any political solution to housing is that you will need a government to tell most people that they're going to be made poorer.

Supply has increased since 2010 so the measures have had some effect (as well as general recovery from the financial crisis), but it's still not enough given that the population (especially in cities) has grown quite significantly in the last 30 years:


Population is a big part of it because when right to buy happened in the mid-80s the UK population was in the middle of about 20 years of stagnation. The effect of the state not building any more and people having a right to buy their own flat from the council is entirely different if there's a stagnant population than one that is growing

But funnelling tax money into keeping a bubble inflated will just make it burst that much harder. The problem for people like me is whether you wait for that to happen and be royally screwed if it doesn't, or assume it won't burst and the neo-feudalistic setup is to be permanent, in which case with any delay to buy you are screwing yourself.

I don't think it's a bubble. I mean there is growing demand because of population growth and constrained supply because of planning/building etc. I think there's possibly a bubble in high end properties and maybe bits of the buy-to-let market. But I don't see any reason to think that the rest of the market is a bubble as opposed to reflecting high demand and low supply. Since 1990 on average the population in the UK has grown by about 330k a year and there are lots of households within that looking for home - in the same period, on average, there's about 150k homes being built every year.

Having said that, even if I could, I probably wouldn't buy now because I'm not sure the long-term impact of covid and whether it will re-shape our cities.

[Josquius]

I don't think it was posted before but an interesting intersection of two issues :

https://www.reuters.com/article/us-hongkong-britain-property-idUSKBN2AP0JV

There's another thing that can be done to fix the housing crisis. Setting up laws to deincentivise buy to let landlords.
There's always going to be a need for private rents. In modern times especially being mobile is good. We don't want to stop people renting out properties all together....
But we do need to really crack down on buy to let by making the tax/mortgage structure such that it just isn't worth your while, especially as you start building a portfolio of properties.
In the article above shit like this especially....

She plans to re-mortgage her first property to buy a second one this year after getting a residence permit, as mortgage interest rates will be much lower.

Of course, the Tories are never going to go for that.

[Sheilbh]

Yeah and I think there's a real issue with everyone in the country wanting to be a rentier and aspiring to be a landlord - it's seen as a very safe investment that can supplement a pension if you can invest. I think it would be better for the country if that money was actually being invested in companies that are doing productive things.

I also think a lot of the shittier landlords I've had have been people with one or two properties who do not want to spend money and may not actually have the spare cash to spend money in the way that's necessary. I feel like it'd be better if we could discourage amateur landlords (which the last few governments have done - through tax measures property is not a very attractive investment now for individuals) and more professional companies that own properties and are landlords. Like housing associations but more purely private sector.

[Josquius]

I've heard that before. IIRC Orwell in Road To Wigan Pier made the same points. Doesn't match up with my experience to be honest. The worst experiences I've had have been with big rental companies. The last one really made me decide owning was the only way forward for me. Getting the simplest thing done was a legal battle.

I can see the reasoning behind small landlords being crap but then there's the factor that people renting out one property usually have more valid reasons for doing this than purely buying a property to rent it out. I've known quite a few people for instance renting out a property in one city whilst they work elsewhere or renting out an inherited property for a few years until their kid is old enough to live there.

Typing as I think maybe we need some kind of hybrid system where its heavily incentivised to put rental properties in the hands of large non profit management companies?

Investing in companies that do useful things.... Yup. That's a broader problem than housing. I'm sure in this thread we already discussed it with regards the stock market (or was that the stocks thread?). Too much money being spent trading paper back and forth rather into value add.

[garbon]

Yeah my amateur landlords have actually cared about fixing things. My corporate landlords have only begrudgingly fixed things after repeated harassment of their property managers.

[Syt]

My current landlord is a bank. Austrian banks have a reputation for being pretty easygoing landlords here.

[Zanza]

I am an unplanned amateur landlord. I bought an apartment some years ago and lived in it myself. Then moved in with my partner and rent out my own apartment.

It is not a good investment as I paid a lot for it and while the mortgage is now basically paid for by my renters, I could most likely make higher returns had I invested my money elsewhere, e.g. stocks. But it gives me a good feeling of security that I own a place, so keeping it is mainly about that, not the financials.

I understand the appeal of buy to let though. It is one of few forms of investment where you can borrow capital and invest fairly little of your own. Also not very risky. If you leverage your capital a lot, you can make very good returns on your own invested capital. The downside is that you have to take care of renters and managing a house is either expensively outsourced or a lot of work for yourself.

[Tonitrus]

Yeah my amateur landlords have actually cared about fixing things. My corporate landlords have only begrudgingly fixed things after repeated harassment of their property managers.

I think I am fortunate as well that my landlord is the same person who developed/restored the property, and is in the business of doing so...she is currently restoring a manor house in a local village as well.  The rental legalese was done through a letting agent (and she has openly trashed them them on a couple of occasions...but I assume the basic leasing/legal functions must make it worthwhile), but she handles all of the management/repairs...and has done a fantastic job in doing so.

[Sheilbh]

Interesting. My experience has always been with small/amateur landlords and it is mixed - my current landlord is great.  And the worst of all seems to be a small landlord but the property is managed by the estate agency as letting agent

And I'm the same as Zanza in part my natural instinct is that buy to let would be a great investment for those reasons, but you also have the security of a home in bricks and mortar.

[Tamas]

Perhaps it is also worth defining what we mean by big/professional landlords: if estate agents managing the property of someone, then they have been a varying degree of useless and humiliating. The one property I lived in which was owned by the company who managed it via a caretaker in the apartment building was most excellent. Pricey as well, but excellent.

[garbon]

I once lived in an apt building with a live in property manager. He hid from the residents which once lead to my sister chasing him down the street.

[celedhring]

I have only seen my landlady once, and it was by chance because she was taking some furniture out of the apartment before I moved in.

[Sheilbh]

So Anas Sarwar, the moderate candidate, won the leadership election for Scottish Labour. Well done him - now he's Leader of Scottish Labour which is probably the worst, most difficult and thankless job in British politics

But there's been an interesting - and quite nuanced debate since his victory. In his speech he noted that he was the first BAME party leader in any major UK party and the first Muslim party leader. It slightly raised the question of Jewish party leaders though - Disraeli, Michael Howard and Ed Miliband - who all, in one way or another, did face prejudice during their political careers including as leaders.

It slightly gets to Tamas' point of defining "minority ethnic". It seems that Jewishness is a "minority ethnic" group and one that does still face institutional bigotry. So it feels wrong to ignore the achievements of previous Jewish leaders, but I thought the most interesting take was Karim Palant's. He is Jewish, was a Labour Party staffer and an advisor to Ed Balls during the Miliband years - and, I think, gets the nuance/difficulty here:

Karim Palant
@KarimPalant
Feel genuinely conflicted seeing people picking up on the 'first BAME' claims about Anas and saying it shows #jewsdontcount . I totally get it and also feel that. But then would I ever have put myself forward for a BAME position in my time in politics? Don't think I would.
Should I have? Should we have made more of an effort as a party to make it clear that I should have? Or in reality would I have been taking the place of someone from an underrepresented group who needed the representation more? Genuinely don't know.
This isn't just in retrospect. I remember joking about it at the time. If I'd been honest I'd have felt more convincing as a potential BAME candidate for something because of my (entirely unrelated) Arabic name than because of my Jewish heritage.
I honestly didn't (and don't) instinctively feel like a member of an oppressed minority. Which is crazy on one level - my Grandad survived death camps where he lost most of his family! I spent five years unwelcome in my own Party because of the leaders' views on my ethnicity!

[Josquius]

Reminds me of that guy years ago (discussed earlier in the thread?) who everyone always thought was black and was treat as such through his life thus received a scholarship focussed on black people, despite just being of Irish descent.

Its difficult to say where Jewish people stand really as they are quite an invisible minority most of the time. You don't realise someone is Jewish unless it happens to come up in conversation or you notice some patterns in weekend behaviour or choice of sandwiches.... but if someone is visibly Jewish then they certainly can attract shit for it.
Imagine for instance where Ben Kingsley would have got to if he'd kept his real name as opposed to just blending in as a possibly Irish or Italian descent white guy.
...but then you've Disraeli who very definitely was pretty Jewish from his name.