Re: Austerity gone too far? : Thu May 02, 2013 9:06 pm  

Rather than the BofE printing money in QE and loaning it to banks, who then sit on it instead of lending, if we had issued 99 year bonds at 3% we could have raised the £50bn needed to build one million new homes to rent at truly affordable rates.

As I've stated before, the land is already available and is in public ownership. If that land was rented on a 99 year lease at true peppercorn rents (99p per year), to not-for-profit or charitable housing associations, then we can start to make serious inroads into a lot of this country's problems:

An average house (excluding land) can be built for £50k so the annual interest repayment on each house would be £1500 per year or £125 per month. Double that figure to cover admin and maintenance and we still end up with a rental of £250. Way below current market rates.

We currently shell out around £18bn per year in housing benefits, remember this isn't a benefit for scroungers or shirkers because most housing benefits are paid to those already in work who cannot afford their rents. Housing benefit is a landlord's benefit, nothing more or less. Building houses using the model above would put a serious dent in that housing benefit bill.

Re: Austerity gone too far? : Thu May 02, 2013 9:17 pm  

cod'ead wrote:

Rather than the BofE printing money in QE and loaning it to banks, who then sit on it instead of lending, if we had issued 99 year bonds at 3% we could have raised the £50bn needed to build one million new homes to rent at truly affordable rates.

As I've stated before, the land is already available and is in public ownership. If that land was rented on a 99 year lease at true peppercorn rents (99p per year), to not-for-profit or charitable housing associations, then we can start to make serious inroads into a lot of this country's problems:

An average house (excluding land) can be built for £50k so the annual interest repayment on each house would be £1500 per year or £125 per month. Double that figure to cover admin and maintenance and we still end up with a rental of £250. Way below current market rates.

We currently shell out around £18bn per year in housing benefits, remember this isn't a benefit for scroungers or shirkers because most housing benefits are paid to those already in work who cannot afford their rents. Housing benefit is a landlord's benefit, nothing more or less. Building houses using the model above would put a serious dent in that housing benefit bill.

As you know I agree with "council house" building and was saying it back in 2008. But, there is the big issue that a major incrase in housing supply could force prices down in absolute terms, which could destabilise our already destabilised financial sector. I think that's why the government are looking at other so called "infrastructure " projects to wate money on.

Re: Austerity gone too far? : Thu May 02, 2013 9:35 pm  

Dally wrote:

As you know I agree with "council house" building and was saying it back in 2008. But, there is the big issue that a major incrase in housing supply could force prices down in absolute terms, which could destabilise our already destabilised financial sector. I think that's why the government are looking at other so called "infrastructure " projects to wate money on.

With what's currently happening to those who have maturing interest-only mortgages, especially those involved in buy-to-let mortgages, a social housebuilding programme won't make much difference.

Re: Austerity gone too far? : Thu May 02, 2013 9:44 pm  

Dally wrote:

a major incrase in housing supply could force prices down in absolute terms.

You say that like it's a bad thing.

The house price bubble needs to burst, we can't carry on with double digit (in %age terms) house price rises and zero wage increases. House prices have a massive knock on effect with pressure to raise wages & benefits being the main one.

Re: Austerity gone too far? : Thu May 02, 2013 9:57 pm  

Big Graeme wrote:

You say that like it's a bad thing.

No. I just tried to point out the governments dilemma. On a personal level, I feel that the ownership of land (and with it property) is wrong in principle. Ideally all housing should have no cost attached to it. We ought to up with another way of supporting our economic system.

Re: Austerity gone too far? : Fri May 03, 2013 8:41 am  

Big Graeme wrote:

You say that like it's a bad thing.

The house price bubble needs to burst, we can't carry on with double digit (in %age terms) house price rises and zero wage increases. House prices have a massive knock on effect with pressure to raise wages & benefits being the main one.

What would happen to all the people losing money, being made homeless?

Re: Austerity gone too far? : Fri May 03, 2013 9:05 am  

El Barbudo wrote:

You are falling into the "all borrowing is bad" trap.
That's like letting a burns patient freeze to death.

No worse than the "more borrowing is good" trap you are falling into.
That's like ignoring the gross mistakes that got us into this mess in the first place.

Re: Austerity gone too far? : Fri May 03, 2013 9:19 am  

Lord Elpers wrote:

No worse than the "more borrowing is good" trap you are falling into.
That's like ignoring the gross mistakes that got us into this mess in the first place.

No it isn't, it's nothing like that at all.

Borrowing to fund tax shortfalls and pay an increased benefit bill (as we are currently doing), is the really stupid thing to do

Re: Austerity gone too far? : Fri May 03, 2013 9:24 am  

Standee wrote:

What would happen to all the people losing money, being made homeless?

Why would they be made homeless?

They would still have a home, just not a home that was worth as much as they thought

Re: Austerity gone too far? : Fri May 03, 2013 9:33 am  

cod'ead wrote:

Why would they be made homeless?

They would still have a home, just not a home that was worth as much as they thought

That was going to be my next question too, of course it may cause apoplexy in some financial institutions when they realise that a percentage of their loans have been made against assets that aren't worth anything like what they thought they were, but as they themselves say "the value of investments can go down as well as up" and they surely read their own small print didn't they ?

They need a change in the way they view their business, when you've made a 25 year 95% reducing loan against a property that isn't going to be valued at the 95% value for the next ten years but then will gradually come back into the black as the mortgage is paid off and the values creep slowly up, then all is well - at the end of it all they only want security, they don't give a damn about what the property is finally worth.