Re: The UK's economy becomes more unbalanced : Sat Mar 16, 2013 9:03 am  

Sal Paradise wrote:

According to your grand plan there is heaps of land ripe for development - you think it should be developed for rental properties but it could easily be developed for ownership - shortage of land is not an issue in this country - but you need to get the banks etc on side or give suitable people access to the necessary funds to get on the ladder.

The biggest problem at the moment is that the financial outlets, particularly the banks, have little desire to lend on mortgages and never had a social reason for lending on property, lending money from a banks point of view is about making a profit on the deal whilst at the same time protecting your loan by taking security.

In good times its not a problem, housing is seen as safe and we saw that the banks were prepared to fight each other for any scrap of business - for several years now they have pulled down the blinds and for some inexplicable reason no longer see house loans as "safe" particulalry high loan-to-value loans (ie first time buyers), and in doing so demonstrate absolutely that they have no interest in the long term social impact and absolutely every interest in making a profit with sufficient security - the rubbish that they state in their loan terms about long term investments is simply going through the routine, they have no interest at all in long term loans.

The government backed HomeBuyer style guarantees are the way forward as new housing is the riskiest sector of the business but also the most necessary to the economy - there just isn't enough emphasis on HomeBuyer and not enough money in the pot for it at the moment.

Re: The UK's economy becomes more unbalanced : Sat Mar 16, 2013 9:37 am  

cod'ead wrote: The latest figures show: home ownership (including mortgaged) of 14.5m Rented households of 7m So approximately 1/3rd of households are renting, a figure that has continued to rise against ownership over the last few years. SOURCE An easy way round this would be to scrap CGT on property sales (alot of long-standing landlords just hold until they die to avoid having to pay huge amounts in CGT) and replace it with a 5% annual value tax on 2nd properties, 7.5% on thirds, etc. That would free up loads of property and cause prices to fall.

cod'ead wrote: The latest figures show: home ownership (including mortgaged) of 14.5m Rented households of 7m So approximately 1/3rd of households are renting, a figure that has continued to rise against ownership over the last few years. SOURCE An easy way round this would be to scrap CGT on property sales (alot of long-standing landlords just hold until they die to avoid having to pay huge amounts in CGT) and replace it with a 5% annual value tax on 2nd properties, 7.5% on thirds, etc. That would free up loads of property and cause prices to fall.

Re: The UK's economy becomes more unbalanced : Sat Mar 16, 2013 9:41 am  

There is a proposal from turnaround practitioners that HMG should encourage banks to withdraw lending from 50,000 "zombie" companies to free up funds to lend to growing companies. That would give a short term spike in unemployment but may be better in the long-term.

Re: The UK's economy becomes more unbalanced : Sat Mar 16, 2013 9:50 am  

Dally wrote:

There is a proposal from turnaround practitioners that HMG should encourage banks to withdraw lending from 50,000 "zombie" companies to free up funds to lend to growing companies. That would give a short term spike in unemployment but may be better in the long-term.

Let me get this straight, insolvancy practitioners are suggesting that they be allowed to point a finger at up to 50,000 businesses who are currently trading and currently employing folk, but not at a level that they (the practitioners) consider to be viable, "they" being the arbitors of these things.

Of course "withdrawing lending" from these fingered businesses won't necessarily mean that the lending will go back to the lenders, in practice it will mean that the businesses will be given a few weeks to return their accounts to a positive balance after which time the overdraft will be denied and outgoing payments will be stopped until a positive balance returns, at which point a director is obliged to call in the insolvancy practitioner and the bank loses its loan (which is effectively what the overdraft is).

Sounds like a fekkin ace idea, if you're the insolvancy practitioner, because they are the only ones who will make a bean out of this barmy plan.

Re: The UK's economy becomes more unbalanced : Sat Mar 16, 2013 10:18 am  

Sal Paradise wrote:

You are struggling with reading again - I said a house is the biggest investment that 99.9% of the population that do invest in house purchase, will ever make. My house is worth 10 times more than my next biggest investment a car. That is why people see house purchase as an investment.

No you didn't. I can read, it appears that you are the one who struggles with the problem. This is what you wrote:

Sal Paradise wrote:

Your house is the beignets financial investment 99.9% of the population will ever make.

I did take the liberty of assuming you meant biggest, instead of waffling about a deep-fried pastry

Sal Paradise wrote:

According to your grand plan there is heaps of land ripe for development - you think it should be developed for rental properties but it could easily be developed for ownership - shortage of land is not an issue in this country - but you need to get the banks etc on side or give suitable people access to the necessary funds to get on the ladder.

There are thousands of hectares of land suitable for development, all owned by local and national governments. There are also institutional investors willing to make the necessary capital available to fund such projects, based on a 5-10% return over 99+ years. The political will to create such a scenario is the only element of the equation that is absent.

Sal Paradise wrote:

This is not rocket science - you have to accept the majority of people given a choice - for the reason El B stated - want to own their own house. With a bit of help from us both my son and my daughter - both in their early 20s - have bought their own house/flat. It is possible - renting is dead money.

I do accept that, what I also accept and you seem too blind to see, is that there are an increasing number of people who, for whatever reason, are being denied the opportunity to enter the house-ownership market. Not only can they not afford the deposits and mortgage payments, increasingly they are having to rely on taxpayer subsidies to afford their rents. Now Housing Benefit really is dead money, a taxpayer-funded subsidy that goes straight into the pockets of buy-to-let landlords.

Re: The UK's economy becomes more unbalanced : Sat Mar 16, 2013 10:41 am  

Dally wrote:

An easy way round this would be to scrap CGT on property sales (alot of long-standing landlords just hold until they die to avoid having to pay huge amounts in CGT) and replace it with a 5% annual value tax on 2nd properties, 7.5% on thirds, etc. That would free up loads of property and cause prices to fall.

Scrapping CGT on property sales wouldn't cause much of a surge in available properties, most would be bought by other landlords anyway. A far better stimulus would be to charge LVT on all Empty properties and land. If the LVT was based on the full council tax (for dwellings) or the UBR (for empty land or commercial properties) of adjacent properties, there'd soon be an increase in availability. A few thousand properties coming onto the market at any one time will not make a dent in pricing, nor will it stimulate building and employment. More importantly, it wouldn't reduce the amount of housing benefit the exchequer is funding.

My scheme to release publicly-owned land to be developed for the rental market would create the necessary employment stimulus and reduce rents and by extension, housing benefits. It requires policial will, unfortunately that will is not evident at the moment. The land is there, the funding would not be difficult to acquire from pension and insurance funds, if not in this country, then certainly from abroad. In the South West, agricultural land is being acquired by foreign investors because they see even the relatively low returns as being a safe bet.

Re: The UK's economy becomes more unbalanced : Sat Mar 16, 2013 1:55 pm  

JerryChicken wrote:

Let me get this straight, insolvancy practitioners are suggesting that they be allowed to point a finger at up to 50,000 businesses who are currently trading and currently employing folk, but not at a level that they (the practitioners) consider to be viable, "they" being the arbitors of these things.

Of course "withdrawing lending" from these fingered businesses won't necessarily mean that the lending will go back to the lenders, in practice it will mean that the businesses will be given a few weeks to return their accounts to a positive balance after which time the overdraft will be denied and outgoing payments will be stopped until a positive balance returns, at which point a director is obliged to call in the insolvancy practitioner and the bank loses its loan (which is effectively what the overdraft is).

Sounds like a fekkin ace idea, if you're the insolvancy practitioner, because they are the only ones who will make a bean out of this barmy plan.

Yes, the IPs have a vested interest in saying this! But, it does have merit. Our economy will be dragged down for years - looking like more than the 10 years I predicted in 2008 when everyone was saying 5 years max. If we'd allowed (or been in a position to allow) things to take their natural course these companies would have already gone bust, the crap banks would have and house prices would have plummeted. By now we'd be in recovery mode. As it is a nation we're propping up banks ('cos we have to), propping up mortagees ('cos we have to for the banks' sakes) and propping up bust companies (so the banks don't take a big bad debts hit they can't really afford). It is an unsustainable position and will almost inevitably end is another UK financial crisis of much greater severity than the 2008 one.

Re: The UK's economy becomes more unbalanced : Sat Mar 16, 2013 4:40 pm  

cod'ead wrote:

No you didn't. I can read, it appears that you are the one who struggles with the problem. This is what you wrote:

I did take the liberty of assuming you meant biggest, instead of waffling about a deep-fried pastry


There are thousands of hectares of land suitable for development, all owned by local and national governments. There are also institutional investors willing to make the necessary capital available to fund such projects, based on a 5-10% return over 99+ years. The political will to create such a scenario is the only element of the equation that is absent.

I do accept that, what I also accept and you seem too blind to see, is that there are an increasing number of people who, for whatever reason, are being denied the opportunity to enter the house-ownership market. Not only can they not afford the deposits and mortgage payments, increasingly they are having to rely on taxpayer subsidies to afford their rents. Now Housing Benefit really is dead money, a taxpayer-funded subsidy that goes straight into the pockets of buy-to-let landlords.

Are you saying a 5-10% return per annum - no wonder they are interested 10% compound over 99 years!! - or are you saying 5-10% over 100 years in which case I don't believe it. No institutional investor would stand a return like that. If they would I hope they are not managing my pension fund!!

That is where getting the funds available to suitable applicants - we need to get back to achievable deposits and available funds.

So under your scheme would taxpayer subsidies not simply be going to your institutional investors?

Re: The UK's economy becomes more unbalanced : Sat Mar 16, 2013 6:26 pm  

Dally wrote:

Yes, the IPs have a vested interest in saying this! But, it does have merit. Our economy will be dragged down for years - looking like more than the 10 years I predicted in 2008 when everyone was saying 5 years max. If we'd allowed (or been in a position to allow) things to take their natural course these companies would have already gone bust, the crap banks would have and house prices would have plummeted. By now we'd be in recovery mode.

Or alternatively we'd be bust and so would most of Europe, unemployment the highest ever recorded, house repossessions double or triple what they were in the early 90s and a government helpless to assist in any way.

There is a reason why all parliamentary party's voted to bail out the banks in 07/08.

Re: The UK's economy becomes more unbalanced : Sat Mar 16, 2013 6:57 pm  

JerryChicken wrote:

Or alternatively we'd be bust and so would most of Europe, unemployment the highest ever recorded, house repossessions double or triple what they were in the early 90s and a government helpless to assist in any way ...

Classic conditions for fascism.