Property prices thread

[Tamas]

The UK government is considering allowing 50 years inheritable mortgages.

[Sheilbh]

Sam Freedman
@Samfr
Govt: we need to something about lower home ownership?
Everyone: build more houses?
Govt: It's really tricky - maybe 100% mortgages?
Everyone: build...houses?
Govt: ooh or maybe forever mortgages
Everyone: houses?
Govt: maybe we could cut stamp duty again?
Everyone: HOUSES!

British housing policy is going to end up turning me Maoist

[Admiral Yi]

Build more high rises.

[Josquius]

The housing association where I used to work... They actually changed their goals in recent years from build more houses to build the right houses.
I do think that's the all important key to remember. I'm not sure the UK even does have much of a housing shortage in terms of pure numbers on a national level.
What it has is a mismatch of housing types, sizes, and locations to meet demand/necessity.
Oh. And ownership of course. A small but significant part of the mismatch there.

[Sheilbh]

Build more high rises.

Those are particularly difficult to get through planning in many areas.

Although interesting thread from housing policy wonk for the Centre for Cities:

The Levelling Up Bill's planning proposals will reduce local opposition to new homes
The Levelling Up Bill is the last and best chance for this Government to leave a positive and permanent legacy in housing.
Blog post published on 1 July 2022 by Anthony Breach

One of the most important bits of the Levelling Up and Regeneration Bill heading through Parliament are the changes it proposes to the planning system. These changes might sound technical, but they actually lay the basis for big improvements to the planning system and are a chance to achieve a significant supply-side reform.

If successful, they will make life easier for local authorities, make planning more certain and less confrontational for residents, and actually deliver more homes alongside the infrastructure they require. However, if these proposals don't make it through Parliament into law, then the Levelling Up Bill will fail to address not just England's housing crisis but also the political conflict generated by our gummed-up planning system.
England's planning system is unpredictable, fragmented, and slow

There are three relevant problems with the current system in England:
First, it is too uncertain and discretionary. This makes the housing crisis worse and the system unpredictable for everyone, including existing residents. Proposals to build on particular sites can be "defeated" on technicalities, only to then return several years later, damaging trust in the planning process.
Second, national government is not a proper referee of the system. As Centre for Cities has shown previously, there is not a clear divide between local and national responsibilities in the planning system, with local plans often running to hundreds of pages as they duplicate national policy while also struggling to set out clear local policy to solve local problems.
Third, many places are failing to agree local plans. York is the most famous example of this, having not agreed one since 1954, but currently only 42 per cent of Local Planning Authorities have up-to-date local plans. This damages local housing supply, but also the ability of the council to provide infrastructure and certainty in the planning process.

The Levelling Up Bill will make England's planning system more rules-based and predictable

Two sets of changes are proposed under Section 83 and 84 of the Levelling Up Bill:
First, local policy that duplicates national policy is to be removed from local plans. This is a common problem, especially when slight differences in phrasing mean that policies written with similar intent do not have precisely the same meaning.
Second, national policy is to be given much stronger weighting when making decisions on planning applications. The national guidance will now matter as much in local planning decisions as rules contained in the local plan, and applications to develop land now must comply with both local and national policy except under extreme circumstances.

The sum of these changes (sometimes described in commentary around the Bill as the National Development Management Policies) is that local plans will deal with local problems, and national policy will deal with national problems. It is the logical next step after the creation of the National Planning Policy Framework a decade ago, which consolidated 1,500 pages of national guidance into a single 60-page rulebook for developers, local authorities, and residents to use.

The changes will make the planning system simpler and stronger

In practice, the Levelling Up Bill's changes mean that local authorities will have a smaller number of rules to enforce, but greater ability to enforce them.

To give an example – local plans today often set out local policy to tackle climate change. Since climate change is a national and global problem though, these sections often have lots of duplication and contradiction of policy elsewhere. As a result, developments that may pass carbon policy in one local authority will be rejected in others; while places which reject proposals on climate grounds are likely to be subject to an appeal due to contradictions with national policy.

It's not just climate change. This type of duplication of policies is very common, and part of why local plans in England today are 500-page checklists, rather than map-based strategies that set out where development of varying types can and cannot take place.

Under the new system however, planning policy on climate change (and other national issues) will be simpler and more consistent across England, as duplication will be removed and national policy will be weighted appropriately. This does not mean it will be "one size fits all" – when appropriate national policy could set parameters on metrics (e.g. cycling infrastructure) that then leave room for local authorities to adopt the approach that suits local needs.

Planning will become much more certain for everyone involved. Developers will know that for the trickiest things, they face the same set of rules wherever they go to build. Local authorities will be able to focus on making sure developers get the local elements right, whether that's infrastructure, or social housing, or public services. It is town planning as it is meant to be – solving problems rather than creating them.

Greater certainty in planning is good for local authorities, local residents, and new homes

Combined with noises from central government that the role of housing targets is likely to diminish if the Bill is passed, the quid pro quo for councils is clear: if local authorities can agree local plans, then central government will get off local government's back.

The stronger role of local plans will increase both the responsibility of local authorities and certainty for residents. Residents will now know that if a local plan is agreed, development will happen in specific locations, be joined up with infrastructure (using the new Infrastructure Levy and the infrastructure delivery strategies that the Bill also contains), and that there is less chance of successful appeals by developers when planning permission is denied.

This will reduce conflict in the day-to-day planning process and ensure that more homes are built in appropriate locations, with greater consent by residents. Local plans will become much more effective tools of local government, while becoming shorter and easier to update, with less onerous evidence and policy requirements. Councils will likewise have strong grounds to reject speculative proposals that do not comply with local and national planning policy.

Of course, central government will have to uphold its end of the bargain, by absorbing some of the more difficult and controversial policy areas to make it easier for local authorities to agree local plans. However, local authorities that fail to agree local plans will leave themselves open to speculative development and a risky appeals process, because they will have omitted their responsibility to provide clear leadership for their local area.

Government must deliver on the Levelling Up Bill's supply-side reforms

In its planning changes, the Levelling Up Bill proposes a classic supply-side reform. Muddled Government waste and red-tape is to be cut and replaced with clear rules that increase certainty for private businesses, the public, and the state itself.

As further planning changes will likely be off the table for the rest of this Parliament, the Levelling Up Bill is the last and best chance for this Government to leave a positive and permanent legacy in housing. Sections 83 and 84 of the Levelling Up Bill must pass into law, or the Government's housing strategy will flop.

Just checked and my borough's local plan is over 600 pages long, plus supporting neighbourhood plans and obviously the wider Mayoral London plan

[DGuller]

The UK government is considering allowing 50 years inheritable mortgages.

Do they know that there is a limit to this?  Even if you make it a 1000 year mortgage, you still have to make interest payments on principal every month.    Well, technically, you can allow the borrowers to roll interest payments into higher principal.  I'll shut up now.   

[Tonitrus]

1000-year mortgage?  Isn't that called a leasehold over there? 

[Josquius]

I will say on inheritance, that seems to be an area where the UK does weirdly little. You don't run into too many people living in a house they inherited.
Amongst continental folks I know I've heard of lots of stories of this happening - Swiss friends say its pretty standard in many villages, houses are never for sale there and simply inherited forever.

I guess this is because so often our elderly are forced into selling or choose to sell to down size whilst folk in other lands don't?

[HVC]

Aren't all mortgages inherited? I mean if the estate wants to keep the house.

[Tamas]

Guardian article using Nationwide as a source assures everyone property prices are not going to decrease, despite the Bank of England recklessly hiking interest rates despite the slowdown in property price increase.

I especially like how the article's list of "why prices will stay afloat" they completely ignore the buy to rent sector which I imagine can be noticeably hit by the double whammy of higher interest rates and recession.

ationwide says UK property price rises have slowed for the third consecutive month and most recently from 11.2% in May to 10.7% in June. The slowdown in growth can be traced to the beginning of the Russian invasion of Ukraine and an escalation of Britain's cost of living crisis.

Unsurprisingly, property owners ask whether a crash is on the horizon, especially now that the economy is heading into a downturn and possibly a full-blown recession. Adding to the gloomy atmosphere, Bank of England officials, seemingly immune to the prospect of a slump, have begun to raise interest rates.

While it would be naive to dismiss the possibility of a large and sustained fall in home prices, the weight of evidence is to the contrary.

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For one thing, the property market is not homogeneous. London and the south-east have suffered from the Brexit-induced flight of continental workers since the 2016 referendum vote, depressing price growth in most central districts. Meanwhile Wales and south-west England have witnessed rocketing values following the trend for retired people and white-collar workers embracing coastal towns and rural areas that boast fast broadband. This shift is likely to persist, driving hotspots to fresh highs.

Just as important, thousands of sellers are able to ride out a lack of buyers. They want to move home, but they don't need to make the leap. In other words, their impulse is discretionary and when they find the number of buyers has dried up, they don't sell.

In June last year there were 213,000 transactions. By May this year the total had dropped to almost 100,000, according to HMRC figures, yet prices continued to climb.

The market is undoubtedly going to moderate as disposable incomes are squeezed and homebuyers become even more circumspect about making large outlays. Yet with unemployment low, banks reliant on mortgage business, and politicians aware property investment remains a British obsession, prices are unlikely to take a tumble.

[crazy canuck]

Aren't all mortgages inherited? I mean if the estate wants to keep the house.

No, at least not in Canada.  The mortgage stays as a charge on the land which is what you are thinking about.  But when the mortgagor dies, the mortgage accelerates and come due payable in full.  Either the mortgager has mortgage insurance or life insurance to cover the payment or the estate has to either refinance or sell.  If selling is the only option then it could turn into a foreclosure sale.

[HVC]

Interesting. Wonder how often people lose the family home because people can't refinance.

[Sheilbh]

Aren't all mortgages inherited? I mean if the estate wants to keep the house.

No and, as ever, it's not a new idea. This has been looked at in the 2000s and the 2010s as well - I think it's based on Japan where you can get 100 year mortgages - in the British state's long odyssey to try absolutely anything to solve the housing crisis except for building more houses

[crazy canuck]

Interesting. Wonder how often people lose the family home because people can't refinance.

Historically homes were mortgage free at the time of death. It's really in the last 20 or so years that it has become an issue.

[Valmy]

Interesting. Wonder how often people lose the family home because people can't refinance.

Historically homes were mortgage free at the time of death. It's really in the last 20 or so years that it has become an issue.

How is that possible? Surely historically people of all ages still died.