Why do people think they are entitled to home ownership?

[carosio]

Is that how it works in Germany then?

 

Rather interesting explanation about German rental market, and the associated article on their preference for dealing in cash.

 

http://qz.com/744854/joseph-stiglitz-euro-future-of-europe-book/

[Mister M]

So are all landlords bad? You are blaming landlords for investing their money? Are they expected to be a charity?

 

No of course not all landlords are bad, is anyone saying that they are?

I'm not sure where you're coming from - first you seem to be castigating the Government for encouraging home ownership, and for the people thinking they're entitled. Now you're accusing people of thinking that landlords are a charity. We all know landlords aren't a charity.

Lots of people have been encouraged into the BTL market due to a number of factors, principally that interest rates are at a historic low, & the performance of the stock market in terms of people's pensions hasn't been good for a while now. Hence people are investing in property.

It's just a shame for families with young children that would like to buy but cannot.

[Love2print]

I never thought I was entitled to own a home, more that it seemed to make more sense to me because the cost of paying the mortgage would go down over time and eventually paid off.

 

But that is not to say renting is bad, I think it is a shame that renting is not like it is in other European countries. From what I have read, renting on average costs less (percentage wise) of a person's income plus people stay in the same property for a lot longer - so more of a stable long term prospect.

 

Also with renting you don't have to worry about major repairs as this is the landlord's responsibility.

 

The big problem is that we don't build enough properties for sale or for rent. If house builders suddenly started building loads of homes then house prices would reduce. This does not make business sense for them. It makes more sense to keep hold of land and build less properties than what is needed and keep house prices higher.

 

If I had a realistic chance of getting a council house I may have chosen this option over owing my own home especially if the rent had been cheaper. Knowing that I was likely to not get kicked out after 6 months and knowing that I didn't have to budget for major work to the house would have been tempting. But I knew that getting a council house was nearly impossible so it was private rent versus buying. I knew of several times where people have rented privately and after only 6-12 months having to move because their landlord wanted to sell. I didn't like the instability of this.

[poppet2]

The big problem is that we don't build enough properties for sale or for rent. If house builders suddenly started building loads of homes then house prices would reduce. This does not make business sense for them. It makes more sense to keep hold of land and build less properties than what is needed and keep house prices higher.

 

The opposite is happening in London. Property developers are building luxury apartments near good transport locations and exclusive post codes. The properties are all sold, off-plan, to overseas buyers, then just left empty while they watch their investments increase in price. The odd affordable flat may be built in the same complex, as part of the planning permission deal, but at over £400k, who can afford that?

 

Less than 3% of land in the UK is built on. We have plenty of space.

 

http://www.bbc.co.uk/news/uk-18623096

Edited August 17, 2016 by poppet2

[unbeliever]

I

The big problem is that we don't build enough properties for sale or for rent. If house builders suddenly started building loads of homes then house prices would reduce. This does not make business sense for them. It makes more sense to keep hold of land and build less properties than what is needed and keep house prices higher.

 

How do you suppose this could have happened.

The house builders are in competition with each other. It's a race to the bottom in terms of house prices until you hit the floor of selling just above cost or running out of product.

In this case the floor is created by regulation which restricts the supply of product (land and planning permission) and increases the building price through regulatory compliance costs.

Unless of course the house builders are colluding illegally like a cartel, which I'd have to see evidence of.

[truman]

The opposite is happening in London. Property developers are building luxury apartments near good transport locations and exclusive post codes. The properties are all sold, off-plan, to overseas buyers, then just left empty while they watch their investments increase in price. The odd affordable flat may be built in the same complex, as part of the planning permission deal, but at over £400k, who can afford that?

 

Less than 3% of land in the UK is built on. We have plenty of space.

 

http://www.bbc.co.uk/news/uk-18623096

 

Do you want to start building on the open areas and gardens in towns because if I read it properly this sort of space is counted as not being built on..

[unbeliever]

Do you want to start building on the open areas and gardens in towns because if I read it properly this sort of space is counted as not being built on..

 

There's also the all-but-inaccessible depths of the Scottish highlands.

[Love2print]

The opposite is happening in London. Property developers are building luxury apartments near good transport locations and exclusive post codes. The properties are all sold, off-plan, to overseas buyers, then just left empty while they watch their investments increase in price. The odd affordable flat may be built in the same complex, as part of the planning permission deal, but at over £400k, who can afford that?

 

Less than 3% of land in the UK is built on. We have plenty of space.

 

http://www.bbc.co.uk/news/uk-18623096

 

I have heard about this before but outside of London I don't imagine foreign investment is as big a problem.

 

But yes some of these "affordable" homes are anything but for the average person.

 

Even the more reasonably priced homes I wonder how good they are as long term homes. For example my house is worth around 95K, we have parking for 2-3 cars on the drive plus a large garage. We have a decent sized garden and 3 reasonable sized bedrooms (one is a box room but not a bad sized one). Really I think we don't need to move, of course we may want to but that is different.

 

Round the corner from me Gleeson are building new homes. There are none for sale at the moment according to their website but I saw their biggest 3 bedroom house being advertised at around £132k and was tiny in comparison, especially the downstairs because it has an attached garage with one bedroom over the garage. Small gardens and limited parking (one space on drive plus garage).

 

Looking at these houses I wonder how long it will be before the people who have bought them to get fed up and want a bigger house. And I wonder what chance they have of selling their house without being in negative equity.

 

I don't see these as long term homes. I appreciate some might want a starter home and plan to go up the property ladder. But surely 3 bed homes are aimed at families or at least those thinking of starting one?

 

I wonder if the Help to Buy scheme will bite many people in the bum when trying to sell. They will have to pay back what they owe or if the sell for more than the original purchase price then a percentage of the sale price. But if they sell for less they may well owe more than they can afford to pay back. I can see many stuck in unsuitable houses unable to move.

 

---------- Post added 17-08-2016 at 13:29 ----------

 

How do you suppose this could have happened.

The house builders are in competition with each other. It's a race to the bottom in terms of house prices until you hit the floor of selling just above cost or running out of product.

In this case the floor is created by regulation which restricts the supply of product (land and planning permission) and increases the building price through regulatory compliance costs.

Unless of course the house builders are colluding illegally like a cartel, which I'd have to see evidence of.

 

I have read about it before after I quick search I came up with this: http://www.bbc.co.uk/news/magazine-30776306

 

"Housebuilders in possession of large sites will often develop them gradually rather than build and sell the homes off quickly, says Pointon.

 

It's supply and demand - release a few at a time and the price remains high. Release a lot at once and the value of the properties falls.

 

"By building them out more slowly it means they can maximise the value of their assets," Pointon says.

 

It may be in their business interest to do this, says Henderson. But what it means for the country is that developers are sitting on land for houses that could be put on the market and relieve the housing shortage. It shows the need for the state to take charge of developing large sites so that not all the homes are under the control of the big housebuilders, she says."

 

BTW I am not trying to say it is all down to house builders trying to maximize profits but it is part of the problem. They want to make money like all businesses.

Edited August 17, 2016 by Love2print
Typos and add info

[Guest]

So are all landlords bad? You are blaming landlords for investing their money? Are they expected to be a charity?

 

I don't mind landlords that buy a derelict property and do it up, or even build from scratch, and let it out. They're helping to provide people with somewhere to live. But I have to laugh at all those that snap up existing perfectly liveable homes, rent them out, distort the market contributing to prices increasing, and kidding themselves on that they're providing places to live and doing society a favour!

[Cyclone]

How do you suppose this could have happened.

The house builders are in competition with each other. It's a race to the bottom in terms of house prices until you hit the floor of selling just above cost or running out of product.

In this case the floor is created by regulation which restricts the supply of product (land and planning permission) and increases the building price through regulatory compliance costs.

Unless of course the house builders are colluding illegally like a cartel, which I'd have to see evidence of.

 

Are you saying that land banking doesn't happen?

 

I'm amused that you think that the supply/demand curve is in such a position that house builders are selling on slim margins at just above cost. Amused in a "how could he possibly be so naive?" kind of way.

 

There is no shortage of land or planning permission, there are large portions of land that are suitable to be built on that are being sat on and will probably continue to be sat on whilstever land values continue to appreciate. And whilstever we have a shortage of housing and high (latent) demand values will continue to go up.

 

The government could create a new tax on land of course, particularly land that has been zoned for development and where no development is taking place (thus neatly excluding private gardens, greenbelt, agricultural land and so on).

 

---------- Post added 17-08-2016 at 14:09 ----------

 

I have heard about this before but outside of London I don't imagine foreign investment is as big a problem.

 

But yes some of these "affordable" homes are anything but for the average person.

 

Even the more reasonably priced homes I wonder how good they are as long term homes. For example my house is worth around 95K, we have parking for 2-3 cars on the drive plus a large garage. We have a decent sized garden and 3 reasonable sized bedrooms (one is a box room but not a bad sized one). Really I think we don't need to move, of course we may want to but that is different.

 

Round the corner from me Gleeson are building new homes. There are none for sale at the moment according to their website but I saw their biggest 3 bedroom house being advertised at around £132k and was tiny in comparison, especially the downstairs because it has an attached garage with one bedroom over the garage. Small gardens and limited parking (one space on drive plus garage).

 

Looking at these houses I wonder how long it will be before the people who have bought them to get fed up and want a bigger house. And I wonder what chance they have of selling their house without being in negative equity.

Alternatively, they simply won't sell at the advertised price. People will look on rightmove and realise that they could get more house for less money.

 

I wonder if the Help to Buy scheme will bite many people in the bum when trying to sell. They will have to pay back what they owe or if the sell for more than the original purchase price then a percentage of the sale price. But if they sell for less they may well owe more than they can afford to pay back. I can see many stuck in unsuitable houses unable to move.

There is no sign of negative equity at the moment, so they will have to pay back a portion of the profit, that's fair enough.

I have read about it before after I quick search I came up with this: http://www.bbc.co.uk/news/magazine-30776306

 

"Housebuilders in possession of large sites will often develop them gradually rather than build and sell the homes off quickly, says Pointon.

 

It's supply and demand - release a few at a time and the price remains high. Release a lot at once and the value of the properties falls.

 

"By building them out more slowly it means they can maximise the value of their assets," Pointon says.

 

It may be in their business interest to do this, says Henderson. But what it means for the country is that developers are sitting on land for houses that could be put on the market and relieve the housing shortage. It shows the need for the state to take charge of developing large sites so that not all the homes are under the control of the big housebuilders, she says."

 

BTW I am not trying to say it is all down to house builders trying to maximize profits but it is part of the problem. They want to make money like all businesses.

 

Indeed, this is part of the land banking problem I was referring to. There are surprising companies involved in it when you look though. Tesco's I think was one.