Bank of England to Government – we need powers to rein in the housing market
Threadneedle Street is asking the chancellor, George Osborne, for powers to restrict the size of mortgages compared with the value of a property and borrowers’ income, in what is a major policy shift following the 2008 banking crisis. The buy-to-let market will be part of its considerations when deciding to apply any restrictions.
Government to, well pretty much anyone
Sod that for a game of tin soldiers, we want more people paying more money for homes – so we’ll give them a 20% bung to make it happen
Are they ever going to learn? Imagine a parallel universe where house prices were half the cost they are. Where the Bank of England operated credit controls, like they did in the 1970s, so that you could only borrow so much of your wages. We still wouldn’t have any more houses, because we hate everything about building houses. Niccolo Machiavelli told us why, in The Prince
It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them.
So it is that everyone who already lives in a place, no matter how mean and ugly their hovel, thinks “I don’t want that development of mean little hovels, because it will inconvenience me/spoil the view/just piss me off”. So no more houses would be built than now. Some would say fewer would be built, but the cost of a house is determined not by the cost of building it but by the value of the land. If stupid people could be stopped from overbidding for this, these costs would fall. Nevertheless, there would be a massive boost for the common weal.
Why? Just think of the extra fun we could all have with the money that’s no longer ticking up the numbers on our mortgages, at least. The poor could go on holiday/afford to buy food and the rich could afford to send Tarquin and Jemima to public school, although they would probably bid the price up with the new found money they weren’t pouring into housing. That’s not such a bad thing as nobody needs public schooling, whereas everybody needs to take shelter from the rain.
No more bloody pork for the housing market, Dave. Just don’t go there. Don’t fight the tape, don’t add fuel to the fire, butt right out of it. Everything about housing is so deeply wrong in the UK, this is an area where we need Government – to stop the self-harm. But until we can put something in the water supply that cans the meme that paying rent to a landlord is wasted money, because paying rent on the money rented from a bank for a house you will never get to own outright is so much better – even though it’s just a change of counterparty. The Telegraph tells us the average working life is no longer long enough to be able to afford to buy a house. So you are renting that money.
It’s been a bad week for a lot of proposals that will have some ghastly consequences. At the risk of sounding like David Icke here’s some obvious actions and reactions
Ros Altmann tells us Seven things you need to know about George Osborne’s abolition of the pensions death tax. Dear Ros, and all the others who call this a death tax –
You can’t take it with you you stupid berks, there are no ‘king pockets in a shroud!!! The dead pay no taxes.
Rich people will featherbed their kids, who will outspend their compatriots on housing. After a couple of generations of this, we will have a dog-eat-dog society if we are lucky. If not we will have the English Revolution as the dispossessed battle the possessed in a war of all against all. The Ermine is not of the opinion that people’s children have unlimited rights to the fruit of their ancestor’s labours once these ancestors are pushing up daisies. An awful lot of people died in the past to wrest the wealth of the country, first from the King with all that Magna Carta malarkey and then from the aristocracy after the World Wars. I am all for property rights and the rule of law, and I don’t want to see the politics of envy and wealth creators stripped of the fruit of their labours. In life their property is theirs, but in death, well, they really can’t take it with them.
To forestall the usual I worked hard for this blah blah blah, note that a) you can give money to your kids tax-free over a period while you are alive, b) ahem, you’re dead, pal, and past caring, and c) a couple can pass £600,000 to their children before IHT is charged. Divvied up across two rugrats who have zero other wealth would put each of them into the 5th decile of wealth in the UK. It would be sad to see a New Aristocracy rise from the ashes. I am sure that solutions can be found to address Pa deceasing when the child is a minor and other edge cases, but in general we are living longer – particularly the richer among us.
I know it’s an unpopular view, all I can say is be careful what you wish for the precious fruit of your loins, and hope there’s no afterlife so you never get to hear about the results of these best laid plans 😉 The obvious side to be on in this Hobbesian choice is on the side of ancestral wealth. Just don’t mention this dude and the Reign of Terror, eh? The trouble for the ancestral wealth is that all the bad guys are already inside the country’s borders, and they will have little to lose. Also see #3 – they may not have to take up arms…
Help to buy, or any other cobblers like that under the banner of “assistance for people to pay too much for a house”
People pay too much for houses. D’oh. That’s what you want, Mr Cameron. yes? So that ties up loads of capital in an unproductive asset. In theory if I own a car factory and invest twice as much into it I get to make more cars in the same time, or better cars, or cheaper cars. If I pay twice as much for a house in real terms than the last person who buys it, it still keeps the same amount of rain off my head. The only people who win from that game are Buy to Letters. Who can look after themselves, thanks.
Loads of the proletariat earning less than £12k get to pay no tax at all. And yes, an Ermine will benefit no end, indeed I may shift my affairs as to get a higher proportion of income from ISAs if necessary.
Loads of people vote for stuff without any regard for the cost of provision. It’s a particularly hard one to undo because of all the new losers in a one person one vote system where an increasing percentage of the voters pay no tax at all. Let’s face it, turkeys don’t vote for Christmas, do they?