Tax Research UK » George Osborne is going to spend a fortune keeping house prices high
Wearing a hard hat: George Osborne will need one when people realise he is artificially keep house prices high.
Were you keen on George Osborne’s plan to subsidise house-buying? Think again.
Here’s Richard Murphy of Tax Research UK:
Those earning less than £80,000 out of London and £90,000 in it (or let’s for simplicity say well over 90% of the population) will be allowed to buy homes on a subsidised basis.
But let’s be clear what this does. This is not a subsidy to buy homes. This is a subsidy to keep up house prices and to ensure people borrow the maximum possible.
George’s economic plans are critically dependent upon house prices increasing at 6% per annum, and they are not. The result is that he is giving state subsidies to make sure that they do. As a result he is using state money to increase the wealth divide in society, keep housing unaffordable and keep the vast majority off the housing ladder.
This is no panacea – except for the debt free, ageing baby boomer, and a desperate Chancellor. Please don’t read it any other way.
Source: Tax Research UK » George Osborne is going to spend a fortune keeping house prices high
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Rich Man’s Tricks. Francis Connolly. YouTube.
Using our tax money they consider theirs.
When so many are homeless and being increasingly criminalised and food bank and malnutrition soaring totally immoral.
I would add to the above that to pay a mortgage off the mortgagee requires 25 years of payments, in practice without any missed payments. The loan is often based on 3-4? times combined income, so there is no room for one to be off work with the other picking up the slack. In the past years of high wage inflation has made this a lot easier as wages rise and the repayment remains fixed as year one wage rates. That is to state, ceteris paribus, repayments are 50 % of disposable income for year one, but this quickly falls as a percentage of income as annual wage rises raises the income side of the equation. Now George’s England, has millions on zero hour contracts, an employment market that he has made a lot easier for employers to off-load excess workers and a real wage rate that have fallen over the last decade. Now does George’s brave new world seem to you to be at odds with a nation of ever increasing numbers of mortgage holders or one where large numbers of people would not be able to sustain long-term on-going mortgage repayments?
The other thing to keep in mind about current house price rises is its geographic aspect. In addition the number of buyers and sellers in the market (.i.e. volumes) are very low. So prices are not being driven up by masses of people with agreed mortgages chasing a few homes. Rather, it relates to small number of people who believe they qualify for a certain value mortgage chasing a relatively small number of house sellers – a lot of people do not get the mortgage they think they ought to be able to obtain, leading to chains that break down. In short there are a lot of people who can not afford to enter the market or are deemed not worth the risk of being granted a mortgage.
shaunt