Trying to buy a house in this area is near impossible

[Jeremy]

Lots of us moved here because it was, at the time, relatively cheap. I would guess that most ED residents wouldn't be able to get close to the kind of prices being asked these days!

[miga]

.

[sophiesofa]

My boyfriend and I bought our flat in ED 5 years ago and we had then a joint income of about 58k and saved a ?34,500 deposit by living in a cheap, slightly crap tiny flat with another other couple for a couple of years to save up. We chose to not go on holiday and not going out much in order to save up. We didn't need much space so we picked East Dulwich because we liked it and could just afford a two bed flat do-er upper (230k). We have saved up for all the work we've done on our flat and done it ourselves when we could. If we were looking now with the same deposit we simply would have had to look further out - not ideal but that's just how it works, you look where you can afford. I think it's hard to get on the housing ladder but you need to work for it, compromise and not expect to get somewhere amazing for your first home. Our wages have actually stayed roughly the same yet the cost of living and my commute (I changed jobs) has increased so whilst we're not struggling we rarely can afford to treat ourselves to a meal out and still can't go on holiday. But... we're glad we did it and we're going to sell and move further out and reduce my commuting costs and our monthly mortgage payments. We're in a very fortunate position now as we'll have a healthy deposit.

I have friends looking at the moment and it just sounds horrible with this offers over business and open days. The people I feel the most sorry for are my single friends who want to buy. Some people I know are buying with a friend just so they can get on the 'ladder' but don't particularly want to live with someone else.

I don't know what my message is really but I just wanted to give a different example.

[PokerTime]

That all makes sense now Miga. And yes, the problem is one of growing multiples of salary, not appreciation of value over time per se. I think everyone understands that. Where I take issue is in the defense of that trend, especially with comments like 'things have always been like that'. They haven't always been like that, at all.

History tells us a few things about how unregulated landlords work for example, and in every instace it has taken regulation to guarantee fair rents and decent standards of accomodation. Removing regulation was never going to do anything but take us back there.

Similarly history tells us a few things about private housing markets too.

[Zebedee Tring]

Rachmanism was one of the great curses of the late 50s and early 60s until rent controls were re-established in 1964. We basically are back to rampant Rachmanism today in many areas, with the added disadvantage that the type of people who could have afforded to buy in those days can't do so now.

[PokerTime]

I think your post is a useful example Sophie. There is one thing you say that I think typifies a major shift in affordability. 30 years ago, just one salary in a family on an average wage could support a mortgage. Many of us will have had fathers or grandfathers that went out to work, whilst mum stayed at home bringing up kids. Those fathers may have worked in factories, or driven buses, but they could do it (with maybe a little overtime here and there). Today it is impossible for a like for like salary to support a mortgage. Increasingly both parents are having to work full time and for what? A retirement funded by downsizing and released equity? I think we've become enslaved to the housing market.

Editied to add; I completely agree Zebedee.

[PokerTime]

And the other thing to add Zebedee, is that in all of these debates, you find homeowners taking part. You also find those looking to buy participating, as well as social tenants and sometimes social landlords. What you never find in any debate are the direct views of private landlords. They are notably silent. It's a silence seen in the media and parliament too.

80% of private rented accomodation is cash bought and/or mortgage free. As much as we talk of the rise in value for a private homeowner over a short time, these are not the poeple benefitting most from the inflation of the last 30 years. The 80% of private landlords with no mortgage overheads are the real beneficiaries. So for me, it makes perfect sense to regulate those rents. I think it would go a long way to improving some things without plunging Landlords into loss making entities.

[Blackcurrant]

PokerTime Wrote:

-------------------------------------------------------

> I think your post is a useful example Sophie.

> There is one thing you say that I think typifies a

> major shift in affordability. 30 years ago, just

> one salary in a family on an average wage could

> support a mortgage. Many of us will have had

> fathers or grandfathers that went out to work,

> whilst mum stayed at home bringing up kids. Those

> fathers may have worked in factories, or driven

> buses, but they could do it (with maybe a little

> overtime here and there). Today it is impossible

> for a like for like salary to support a mortgage.

> Increasingly both parents are having to work full

> time and for what? A retirement funded by

> downsizing and released equity? I think we've

> become enslaved to the housing market.

>

> Editied to add; I completely agree Zebedee.

That's the unfortunate flipside of sexual equality. House prices have been bid up by combined salaries of couples to such high levels that both partners now have no choice but to stay in work to service the huge mortgage. Inequality has been replaced by debt servitude.

[Otta]

StraferJack Wrote:

-------------------------------------------------------

> So if house prices decreased you would be able to

> buy cheaper no?

I'm not that clued up but surely not If I end up with a load of negative equity?

[Alex K]

@PokerTime --

"The 80% of private landlords with no mortgage overheads are the real beneficiaries [of the inflation of the last 30 years]. So for me, it makes perfect sense to regulate those rents."

That is: Not private home-owners, but private landlords without mortgages to pay.

I don't follow. Why should that class of persons be excluded from seeking the return on investment that buy-to-rent affords? Why should that return be reserved for owner-occupiers? Connect the dots for me. (Yes, I'm thick...)

Thanks in advance.

[PokerTime]

LOL...you are not thick Alex, I'm sure of that.

We are talking about two different things. Cash buying Landlords are different to the person buying a second home for rent, and very different to buy-to-let investors.

Cash buying Landlords have always been around, and they are less concerned with short term value increase. They expect to own the property for a very long time. If you rent regulate, they won't suddenly sell up. They won't won't be making any loss either. They make the most money from property because they always have a return on the original capital investment in addition to rental income. They often buy at auctions too and snap up bargains. 80% of private rental accomodation falls into this group.

Comapare that to a buy-to-let investment, where the landlord is servicing a mortage. The only real value in that investment, is the appreciation in value of the property. There may be some return on rental income but it won't be much. 20% of private rental accomodation falls into that bracket.

So a rent control could work by limiting the rate of increase, and locking it to an annual formula (which is how social hosuing works). This would make renting a sensible alternative to ownership again. There are many other benefits too.

'Inequality has been replaced by debt servitude'.

I agree blackcurrant. But I would also say that cheap borrowing has been part of the problem too.

[miga]

Ignore.

[Blackcurrant]

PokerTime Wrote:

----------------------------------------------------

> I agree blackcurrant. But I would also say that

> cheap borrowing has been part of the problem too.

Cheap borrowing, yes. Still propping up the market by deterring would-be forced sellers from releasing supply. Planning restrictions and insufficient building in the SE. Also inadequate taxation. More of the tax burden should fall on wealth rather than income. Income tax suppresses economic activity and is easily avoided by high net worth individuals with good lawyers. Taxing wealth, particularly property, is a much better idea and one that is gaining currency. You can't hide a London house off shore. A true land value tax would make more sense than a mansion tax, but there are vested interests to overcome either way. Almost everyone in power has a stake in the London property market.

[PokerTime]

The land tax debate is an interesting one and is where I think we should go. Of course it has some detail that needs to be worked out but has always made more sense to me (in terms of equality) than taxing labour for example.

This article pretty much illustrates the point....

http://www.newstatesman.com/life-and-society/2011/03/million-acres-land-ownership

[Loz]

Blackcurrant Wrote:

-------------------------------------------------------

> More of the tax burden should fall on wealth rather than income.

No, no, no. The problem with this is that assets (generally) have intrinsically no value. How much is a picture worth? How much is a car worth? How much is 10000 shares in a company worth? How much is a house worth? The answer to all of those is nothing... until the point they are sold. Only then can the value be understood.

Also, taxing wealth means that the money must either be found from an alternative source, or the asset liquidated to pay the tax.

Taxing income and capital gains is a much more sensible approach. Which is why governments do it.

[PokerTime]

That is all true Loz but there are some things that can be taxed, like land and empty properties for example. These are things that can be leased or brought into use to pay for it. Liquidation is not the only option. Land and homes can't be moved offshore either. As the article link I post states, we are all crammed into a tiny fraction of UK land. Most of the land is owned by people who have never worked for it. And we in turn subsidise the owners of that land. Either we want a fair society, were effort and work is rewarded equally, or we continue as we are.

[Blackcurrant]

Loz Wrote:

-------------------------------------------------------

> No, no, no. The problem with this is that assets

> (generally) have intrinsically no value. How much

> is a picture worth? How much is a car worth? How

> much is 10000 shares in a company worth? How much

> is a house worth? The answer to all of those is

> nothing... until the point they are sold. Only

> then can the value be understood.

This clearly isn't true. I can look up share prices from one second to the next and if I sell shares, I will get the current price. The value of houses is easy to determine to within 5% of the actual sale price.

I don't think the current government will move in this direction but the libdems definitely want to and Labour are likely to.

Liquidation would be a good thing if it frees up land for development or releases underoccupied houses onto the market. But if the system is introduced sensibly and gradually, it shouldn't cause a sudden shock - retired widows forced to sell up etc.

[Penguin68]

The issue about a tax on landed property is that many (often elderly) people are asset rich but cash poor. There are people living now in property in ED they bought 30 years ago whose income bears no resemblance to that required to service a current mortgage at current prices on their property. So if a 'mansion tax' is brought in they will be forced to sell because they won't have income/ cash to pay the tax. No doubt that will free-up property for the urgent-to-buy-in-ED brigade whose incomes don't rely on e.g. pensions, but that will force these elderly people away from their friends so that a new batch of yummy mummies can clutter the streets and desirable little cafes with their double buggies. If you tax assets like shares (or oil paintings) these can at least be sold without giving up your home, but tax property (I'm not talking here about local usage taxes but about punitive envy taxes) and you will create a class of dispossessed who will far outnumber those oppressed by the 'bedroom tax'. Mainly in London, of course, because that is where hyper-inflated properties are mainly found.

The ?2m 'mansions' in ED are of course not now that plentiful (more in Dulwich itself) - but start that rot and soon you will find that the price ceiling is dropped to ?1.5m, then ?1m (where the Lib Dems started their bidding war).

You must not confuse those now living in houses that would cost a lot to buy with 'the wealthy' - unless they have brought them very recently - in which case they are probably anything but awash with disposable income as they work to pay down their housing debts.

Forcing pensioners (such as me, in fact) out of their homes to satisfy the young employed's desire to live in nice places will look increasingly less a 'fix' to the problem as you (my readers) approach old-age.

[KidKruger]

Good point and well put, Penguin.

[nxjen]

"Forcing pensioners (such as me, in fact) out of their homes to satisfy the young employed's desire to live in nice places will look increasingly less a 'fix' to the problem as you (my readers) approach old-age."

Even if it was brought in, the nature of a change like this works so slow it's more likely to affect those paying off their mortgage in 20-30 years' time than current pensioners. Also, like capital gains tax, unlikely to affect a primary residence which would not be classed as wealth.

[Penguin68]

Also, like capital gains tax, unlikely to affect a primary residence which would not be classed as wealth.

That's not what's in the policy, it's a wealth tax and houses are treated as wealth, the tax concession on sale of a primary home doesn't extend to e.g. inheritance tax when the owner dies, even when the inheritor (other than a spouse) is still living in the house - and the Lib Dem and Labour intent is to bring in such a confiscatory tax immediately on election. So expect to start paying a tax within, I'd guess, 12-15 months (given the time it takes to get fiscal bills through) of the next election. Maybe quicker, since it will be in the first Labour budget if they or the Lib Dems in partnership with them win the next election.

[mikeb]

There should be capital gains tax on sale of any property - if we're going to treat houses as investments then they should be taxed as such.

[Jeremy]

Who's treating their house as an investment, mike? Most people just want a place to live...

[StraferJack]

"Who's treating their house as an investment, mike? Most people just want a place to live.."

But that's patently untrue these days - even people who aren't speculating with BTLs are viewing their property as their pension

And if it isn't true of everyone, it's true of enough people to be distorting the market

Several people on this thread alone are explicit in their view of property as investment - I'm surprised you haven't said as much

[nxjen]

"That's not what's in the policy"

Would be grateful if you could post a link to this policy, Labour or Lib Dem? Also, not sure that talking about what is due to the tax man when an owner dies has a lot of relevance to taxes liable to be paid by the living.