6 ms·

Over the last 50-70 years the UK made the choice to stop building social housing and to sell off the existing stock with aggressive government subsidies. Compl

by nly 1y ago

Over the last 50-70 years the UK made the choice to stop building social housing and to sell off the existing stock with aggressive government subsidies. Complaining now is a bit like complaining there's no milk after you sold the dairy farm to build a casino. I read TFA but I'm not seeing anything but useless outrage that would have been better placed 20-30 years ago I became a first time property owner at 36 and it took a top 2-3% percentile income + my partners more median salary to do it on the outskirts of London My mortgage runs until I'm 70 and I, like most owners now, are entirely dependent on the housing casino game continuing. If houses ever return to good affordability I'm screwed. I have to refinance every 5 years, because that's the game in the UK, so if rates spike I'm also screwed. Everyone in UK housing, owner or rented, is screwed and it's been this way for decades.

daedrdev 1y ago
Its not even that, the restrictions on new homes in the UK make it impossible to build any significant amount of housing, social or not.
- matthewmacleod 1y ago
  Be specific - what restrictions are these and how do they affect building?
  - fifticon 1y ago
    I can answer part of that. Very few areas are even opened up to allow building private housing, all kinds of "neighbours" can veto anything, just to name two problems
  - mattdneal 1y ago
    Page 8 of the recent CMA study into housebuilding in the UK: https://assets.publishing.service.gov.uk/media/65d8badb6efa830011dcc5bc/_Summary_of_housebuilding_final_report_.pdf https://assets.publishing.service.gov.uk/media/65d8badb6efa8... A prior condition for building houses is having permission to build them. We have found that the planning system is exerting a significant downward pressure on the overall number of planning permissions being granted across Great Britain. Over the long-term, the number of permissions being given has been insufficient to support housebuilding at the level required to meet government targets and measures of assessed need. In particular, we have seen evidence of three key concerns with the planning systems which we consider are limiting its ability to support the level of housebuilding that policymakers believe is needed: (a) Lack of predictability; (b) Length, cost, and complexity of the planning process; and (c) Insufficient clarity, consistency and strength of LPA targets, objectives, and incentives to meet housing need. We have also seen evidence that problems in the planning systems may be having a disproportionate impact on SME housebuilders.
  - DrQian 1y ago
    The three main important ones: 1) Green belt policies prevent the expansion of cities outwards. Compare the footprint of London to other major European cities and you'll see it's barely moved at all for decades. 2) Discretionary planning policies that mean local councils can turn down development, even when it adheres to stated rules. See for example this brownfield development in Brighton, a city that has one of the worst housing delivery records in the country: https://www.bbc.co.uk/news/articles/cwygkz57k1vo https://www.bbc.co.uk/news/articles/cwygkz57k1vo The professional planning board recommended it for approval, but it was turned down by the political committee because of local complaints. A well specified zoning system would avoid this. Reduced uncertainty would make it possible for smaller builders to enter the market 3) affordable housing mandates (known as Inclusionary Zoning elsewhere). These specify that some amount of the new building must be offered at below market rates. Although there's a strong moral case for capturing some of the value produced by giving planning permission, this effectively acts as a tax on building homes in places with shortages. Ideally, people would be most incentivised to build where prices are highest, but this policy removes that incentive.
  - adammarples 1y ago
    In short, the Town and Country Planning Act
- budududuroiu 1y ago
  Not fully, but a sizeable part of this problem is due to NIMBY-ism and power that local councillors have
  - nly 1y ago
    If you'd spent 8-10x income on a home you'd be a NIMBY about some dick building directly overlooking your garden too
globular-toast 1y ago
> If houses ever return to good affordability I'm screwed. Uhh, why? Unless you were planning on selling up and spending it all on a cruise or something house prices are immaterial to home owners. > I have to refinance every 5 years, because that's the game in the UK, so if rates spike I'm also screwed. This is the real problem. It's partly our fault, of course, for agreeing to a mortgage which we couldn't afford if the interest rates doubled. You know exactly what you're signing up to, but you still do it. The trouble is there's no choice. The finance industry has us by the balls. I don't even think of it as a housing crisis, I think of it as finance crisis. The real problem is banks control far too much of our lives. The entire money supply is essentially just mortgages. This abstraction we call money has been taken way too far.
- dustincoates 1y ago
  > Uhh, why? Unless you were planning on selling up and spending it all on a cruise or something house prices are immaterial to home owners. I don't know how it is in the UK, but in Paris, I hear from a lot of people that their retirement plan is to sell their Parisian apartment and move to a lower cost area with what they've gained. Doesn't work out if your "investment" is underwater.
  - globular-toast 1y ago
    If the Parisian apartments become undesirable and the low cost areas become desirable then, yeah, it wouldn't work out. But that's not what we're talking about. House prices going down across the board makes no difference. You sell your apartment for a lower number but you buy the new place for a lower number too. The numbers are just made up and don't matter. You can't eat a number and it won't keep you warm or dry. It's so weird to me that even in a place like this people can't see beyond the numbers.
    - dustincoates 1y ago
      You don't need the high cost and low cost areas to flip to be caught out. You just need the high cost areas to decrease in price and then it's immaterial whether the low cost areas increase in cost or not. There's no way they can decrease the same amount as the high cost areas, seeing as there's a floor. Then that excess that people had planned for is no longer there. > The numbers are just made up and don't matter. You've asked why people care. They care because they've made their retirement plans on a made up number. Is that reasonable? I don't think so, and it's why I'm renting not buying. But you're tilting at windmills at this point to explain to people who have a vested financial interest why they're wrong.
graemep 1y ago
> If houses ever return to good affordability I'm screwed. Which creates a huge pool of people who are opposed to making houses more affordable.
- petesergeant 1y ago
  100%, and it’s not clear there’s any solution to that, because voters will punish anyone who tries to fix it.
  - tarkin2 1y ago
    Well, the renters will reward any government that pushes down house prices i.e. builds more houses. And I assume there are more renters than home owners.
    - floydnoel 1y ago
      but which group is more active in voting and politics?
      - tarkin2 1y ago
        I would assume home owners are more likely to vote. But even with a lower voter turn out, there could still be more voting renters. A sibling post has stats from 15 years ago but a lot has changed since then. My gut feeling is that more people are struggling to buy than to pay back mortgages but I have no stats to back that up.
        Jensson 1y ago
        > But even with a lower voter turn out, there could still be more voting renters. Almost every country has more home owners than renters, so no. In USA its 65%.
      - switch007 1y ago
        Which group lives in cities where their vote counts far less than a vote in the countryside
red369 1y ago
I much prefer the system the US, where you know your rate for longer. Some other countries, I think the Netherlands is one, also let you fix for longer than 5 years. But why are you, and other people in your position, screwed if the prices return to affordability? High Loan-To-Value ratio so if the prices fall, the bank would force a sale?
- Elte 1y ago
  Germany here, I have a fixed rate for 30 years.
  - StopDisinfo910 1y ago
    Fixed rate for the full duration is also standard in France. People only refinance if the new rates are advantageous (and they find a bank which accepts). Variable rates for mortgage are virtually unheard of.
- bingo3131 1y ago
  I would assume it would be because the poster would find themselves in negative equity (depending on how much was left to repay on the mortgage) with all the potential pitfalls that come with it, such as if you want to borrow further money against the value of the property or if you want to sell up and move.
- jodrellblank 1y ago
  If they put 1M into a house, then sell it and buy a 500k bungalow at retirement age, that unlocks 500k living/care money. If they put 1M into a house, prices fall, they sell it for 100k and buy a bungalow for 50k, that unlocks only 50k to live on. They lose decades of saving/investment money even though they can still sidestep one house to another.
  - margalabargala 1y ago
    I fully take your point, but I would point out, if housing prices drop 90% across the board, that would cause such an immense deflationary shock to the entire economy that $50k would go further than one would think.
scotty79 1y ago
> I have to refinance every 5 years, because that's the game in the UK, so if rates spike I'm also screwed. Could anyone explain why is that the case? If the mortgage is till 70 then why are you forced to remake the agreement every 5 years? Can't you stick to original one?
- milesrout 1y ago
  A bank would be mental to commit to a fixed interest rate on a mortgage for 30 years. Economic conditions change.
  - Ekaros 1y ago
    Fixed rates are possible, but often the margins are pretty significant especially when rates are very low. Say rate is 0.25%, margin is 0.5-1%, fixed rate might be 1.5%+0.5-1%... When leveraged to max this could be big chunk...
  - sirwhinesalot 1y ago
    In a lot of countries banks have to do that.
- twelvechairs 1y ago
  Most(?) UK loans are fixed for a 5 years or so and then revert to the standard variable rate of the bank. Variable rates can make financial planning uncertain. But the bigger issue is often just the standard variable rate you get put on isn't the best rate, so you are generally advantaged to review and move. US loans on the other hand are government backed to allow for longer fixed terms (30 years etc.)
- bingo3131 1y ago
  No idea how it works in other countries but in the UK there are fixed-rate mortgages and variable-rate mortgages. Fixed rate ones are where the interest rate is locked in at the time the mortgage is taken out so any changes to the national base rate (positive or negative) do not change how much you have to repay, variable-rate mortgages are when the interest rate will fluctuate as the national base rate rises and falls. Fixed-rate mortgages are time-limited (typically between 2-5 years) and after that you either switch to a variable rate mortgage or you take out a new fixed-rate mortgage based on the interest rates at the time. People that bought properties just before COVID got dirt-cheap fixed-rate mortgages as the Bank of England base rate was 0.5%. Anyone sensible locked it in for 5 years which is typically the maximum available. After those 5 years were up, the base rate was about 5% which is a huge jump. I think most people have locked theirs in for 2 years now in the hopes that in a couple of years the base rate will be much lower.
brutus1213 1y ago
Did you buy a home > 10 years ago? Given inflation, isn't your mortgage not easy to pay off at this point (even if you did pay the minimum?). I can imagine one of two scenarios: (a) at the start, you really stretched and got a nice place to live (bravo!! in hindsight that was a genius move as you enjoyed many years of good quality living) or (b) your income has been stagnant (sorry :( ) I got a place 5 years back and did not overstretch at all ... now, the biggest challenge is our place is too small and has other inconveniences (lack of commute) that is painful. Selling and rebuying is trauma I don't want to inflict again.
tareqak 1y ago
It doesn’t have to be this way. Mainstream media made fun of China for building “ghost cities” in the middle of nowhere. Now, those cities are full of people. “Chinese ghost cities are finally stirring to life” https://norcalapa.org/2021/09/chinese-ghost-cities-are-finally-stirring-to-life/ https://norcalapa.org/2021/09/chinese-ghost-cities-are-final... https://www.bloomberg.com/news/features/2021-09-01/chinese-ghost-cities-2021-binhai-zhengdong-new-districts-fill-up https://www.bloomberg.com/news/features/2021-09-01/chinese-g... https://en.wikipedia.org/wiki/Underoccupied_developments_in_China https://en.wikipedia.org/wiki/Underoccupied_developments_in_... First Edit: removed unnecessary snark. Second Edit: Added sources.
- adammarples 1y ago
  "Now", it is 2025, not 2021, and there are one billion empty apartments in China, and the local government selling land to developers magic money tree ponzi scheme is running out of road.
  - Jensson 1y ago
    > there are one billion empty apartments in China I don't believe that, a billion is a lot.
switch007 1y ago
10 year mortgages are available too from Nationwide et al

by nly 1y ago

daedrdev 1y ago

Its not even that, the restrictions on new homes in the UK make it impossible to build any significant amount of housing, social or not.

matthewmacleod 1y ago
Be specific - what restrictions are these and how do they affect building?
- fifticon 1y ago
  I can answer part of that. Very few areas are even opened up to allow building private housing, all kinds of "neighbours" can veto anything, just to name two problems
- mattdneal 1y ago
  Page 8 of the recent CMA study into housebuilding in the UK: https://assets.publishing.service.gov.uk/media/65d8badb6efa830011dcc5bc/_Summary_of_housebuilding_final_report_.pdf https://assets.publishing.service.gov.uk/media/65d8badb6efa8... A prior condition for building houses is having permission to build them. We have found that the planning system is exerting a significant downward pressure on the overall number of planning permissions being granted across Great Britain. Over the long-term, the number of permissions being given has been insufficient to support housebuilding at the level required to meet government targets and measures of assessed need. In particular, we have seen evidence of three key concerns with the planning systems which we consider are limiting its ability to support the level of housebuilding that policymakers believe is needed: (a) Lack of predictability; (b) Length, cost, and complexity of the planning process; and (c) Insufficient clarity, consistency and strength of LPA targets, objectives, and incentives to meet housing need. We have also seen evidence that problems in the planning systems may be having a disproportionate impact on SME housebuilders.
- DrQian 1y ago
  The three main important ones: 1) Green belt policies prevent the expansion of cities outwards. Compare the footprint of London to other major European cities and you'll see it's barely moved at all for decades. 2) Discretionary planning policies that mean local councils can turn down development, even when it adheres to stated rules. See for example this brownfield development in Brighton, a city that has one of the worst housing delivery records in the country: https://www.bbc.co.uk/news/articles/cwygkz57k1vo https://www.bbc.co.uk/news/articles/cwygkz57k1vo The professional planning board recommended it for approval, but it was turned down by the political committee because of local complaints. A well specified zoning system would avoid this. Reduced uncertainty would make it possible for smaller builders to enter the market 3) affordable housing mandates (known as Inclusionary Zoning elsewhere). These specify that some amount of the new building must be offered at below market rates. Although there's a strong moral case for capturing some of the value produced by giving planning permission, this effectively acts as a tax on building homes in places with shortages. Ideally, people would be most incentivised to build where prices are highest, but this policy removes that incentive.
- adammarples 1y ago
  In short, the Town and Country Planning Act
budududuroiu 1y ago
Not fully, but a sizeable part of this problem is due to NIMBY-ism and power that local councillors have
- nly 1y ago
  If you'd spent 8-10x income on a home you'd be a NIMBY about some dick building directly overlooking your garden too

globular-toast 1y ago

> If houses ever return to good affordability I'm screwed. Uhh, why? Unless you were planning on selling up and spending it all on a cruise or something house prices are immaterial to home owners. > I have to refinance every 5 years, because that's the game in the UK, so if rates spike I'm also screwed. This is the real problem. It's partly our fault, of course, for agreeing to a mortgage which we couldn't afford if the interest rates doubled. You know exactly what you're signing up to, but you still do it. The trouble is there's no choice. The finance industry has us by the balls. I don't even think of it as a housing crisis, I think of it as finance crisis. The real problem is banks control far too much of our lives. The entire money supply is essentially just mortgages. This abstraction we call money has been taken way too far.

dustincoates 1y ago
> Uhh, why? Unless you were planning on selling up and spending it all on a cruise or something house prices are immaterial to home owners. I don't know how it is in the UK, but in Paris, I hear from a lot of people that their retirement plan is to sell their Parisian apartment and move to a lower cost area with what they've gained. Doesn't work out if your "investment" is underwater.
- globular-toast 1y ago
  If the Parisian apartments become undesirable and the low cost areas become desirable then, yeah, it wouldn't work out. But that's not what we're talking about. House prices going down across the board makes no difference. You sell your apartment for a lower number but you buy the new place for a lower number too. The numbers are just made up and don't matter. You can't eat a number and it won't keep you warm or dry. It's so weird to me that even in a place like this people can't see beyond the numbers.
  - dustincoates 1y ago
    You don't need the high cost and low cost areas to flip to be caught out. You just need the high cost areas to decrease in price and then it's immaterial whether the low cost areas increase in cost or not. There's no way they can decrease the same amount as the high cost areas, seeing as there's a floor. Then that excess that people had planned for is no longer there. > The numbers are just made up and don't matter. You've asked why people care. They care because they've made their retirement plans on a made up number. Is that reasonable? I don't think so, and it's why I'm renting not buying. But you're tilting at windmills at this point to explain to people who have a vested financial interest why they're wrong.

graemep 1y ago

> If houses ever return to good affordability I'm screwed. Which creates a huge pool of people who are opposed to making houses more affordable.

petesergeant 1y ago
100%, and it’s not clear there’s any solution to that, because voters will punish anyone who tries to fix it.
- tarkin2 1y ago
  Well, the renters will reward any government that pushes down house prices i.e. builds more houses. And I assume there are more renters than home owners.
  - floydnoel 1y ago
    but which group is more active in voting and politics?
    - tarkin2 1y ago
      I would assume home owners are more likely to vote. But even with a lower voter turn out, there could still be more voting renters. A sibling post has stats from 15 years ago but a lot has changed since then. My gut feeling is that more people are struggling to buy than to pay back mortgages but I have no stats to back that up.
      - Jensson 1y ago
        > But even with a lower voter turn out, there could still be more voting renters. Almost every country has more home owners than renters, so no. In USA its 65%.
    - switch007 1y ago
      Which group lives in cities where their vote counts far less than a vote in the countryside

red369 1y ago

I much prefer the system the US, where you know your rate for longer. Some other countries, I think the Netherlands is one, also let you fix for longer than 5 years. But why are you, and other people in your position, screwed if the prices return to affordability? High Loan-To-Value ratio so if the prices fall, the bank would force a sale?

Elte 1y ago
Germany here, I have a fixed rate for 30 years.
- StopDisinfo910 1y ago
  Fixed rate for the full duration is also standard in France. People only refinance if the new rates are advantageous (and they find a bank which accepts). Variable rates for mortgage are virtually unheard of.
bingo3131 1y ago
I would assume it would be because the poster would find themselves in negative equity (depending on how much was left to repay on the mortgage) with all the potential pitfalls that come with it, such as if you want to borrow further money against the value of the property or if you want to sell up and move.
jodrellblank 1y ago
If they put 1M into a house, then sell it and buy a 500k bungalow at retirement age, that unlocks 500k living/care money. If they put 1M into a house, prices fall, they sell it for 100k and buy a bungalow for 50k, that unlocks only 50k to live on. They lose decades of saving/investment money even though they can still sidestep one house to another.
- margalabargala 1y ago
  I fully take your point, but I would point out, if housing prices drop 90% across the board, that would cause such an immense deflationary shock to the entire economy that $50k would go further than one would think.

scotty79 1y ago

> I have to refinance every 5 years, because that's the game in the UK, so if rates spike I'm also screwed. Could anyone explain why is that the case? If the mortgage is till 70 then why are you forced to remake the agreement every 5 years? Can't you stick to original one?

milesrout 1y ago
A bank would be mental to commit to a fixed interest rate on a mortgage for 30 years. Economic conditions change.
- Ekaros 1y ago
  Fixed rates are possible, but often the margins are pretty significant especially when rates are very low. Say rate is 0.25%, margin is 0.5-1%, fixed rate might be 1.5%+0.5-1%... When leveraged to max this could be big chunk...
- sirwhinesalot 1y ago
  In a lot of countries banks have to do that.
twelvechairs 1y ago
Most(?) UK loans are fixed for a 5 years or so and then revert to the standard variable rate of the bank. Variable rates can make financial planning uncertain. But the bigger issue is often just the standard variable rate you get put on isn't the best rate, so you are generally advantaged to review and move. US loans on the other hand are government backed to allow for longer fixed terms (30 years etc.)
bingo3131 1y ago
No idea how it works in other countries but in the UK there are fixed-rate mortgages and variable-rate mortgages. Fixed rate ones are where the interest rate is locked in at the time the mortgage is taken out so any changes to the national base rate (positive or negative) do not change how much you have to repay, variable-rate mortgages are when the interest rate will fluctuate as the national base rate rises and falls. Fixed-rate mortgages are time-limited (typically between 2-5 years) and after that you either switch to a variable rate mortgage or you take out a new fixed-rate mortgage based on the interest rates at the time. People that bought properties just before COVID got dirt-cheap fixed-rate mortgages as the Bank of England base rate was 0.5%. Anyone sensible locked it in for 5 years which is typically the maximum available. After those 5 years were up, the base rate was about 5% which is a huge jump. I think most people have locked theirs in for 2 years now in the hopes that in a couple of years the base rate will be much lower.

brutus1213 1y ago

Did you buy a home > 10 years ago? Given inflation, isn't your mortgage not easy to pay off at this point (even if you did pay the minimum?). I can imagine one of two scenarios: (a) at the start, you really stretched and got a nice place to live (bravo!! in hindsight that was a genius move as you enjoyed many years of good quality living) or (b) your income has been stagnant (sorry :( ) I got a place 5 years back and did not overstretch at all ... now, the biggest challenge is our place is too small and has other inconveniences (lack of commute) that is painful. Selling and rebuying is trauma I don't want to inflict again.

tareqak 1y ago

It doesn’t have to be this way. Mainstream media made fun of China for building “ghost cities” in the middle of nowhere. Now, those cities are full of people. “Chinese ghost cities are finally stirring to life” https://norcalapa.org/2021/09/chinese-ghost-cities-are-finally-stirring-to-life/ https://norcalapa.org/2021/09/chinese-ghost-cities-are-final... https://www.bloomberg.com/news/features/2021-09-01/chinese-ghost-cities-2021-binhai-zhengdong-new-districts-fill-up https://www.bloomberg.com/news/features/2021-09-01/chinese-g... https://en.wikipedia.org/wiki/Underoccupied_developments_in_China https://en.wikipedia.org/wiki/Underoccupied_developments_in_... First Edit: removed unnecessary snark. Second Edit: Added sources.

adammarples 1y ago
"Now", it is 2025, not 2021, and there are one billion empty apartments in China, and the local government selling land to developers magic money tree ponzi scheme is running out of road.
- Jensson 1y ago
  > there are one billion empty apartments in China I don't believe that, a billion is a lot.

switch007 1y ago

10 year mortgages are available too from Nationwide et al