Monday, 21 November 2011

Bulding a few Houses

David Cameron and Nick Clegg announcement  a £400m initiative to build up to 16,000 new homes by allowing an acceleration of investment in "ready-to-go" construction sites where work has stalled.

The prime minister and his deputy will hail the initiative, which involves new money and could see the start of building work next July, as a sign of the coalition's determination to reverse the slow rate of house building

Once again it is difficult to see that this strategy is one for England or the whole of the UK.

But if it is for England then if the Welsh Government  were to follow  suit  then this would be just under 1000 houses to be built or about 45 houses divided between the 22 Welsh Unitary authorities.

And this assuming that these Housed will be built on top of any that would have been done so anyway.

More welcome is a new scheme, running to hundreds of millions of pounds, to underwrite a small percentage of mortgages for "new-build" homes. The scheme is designed to reduce the size of a deposit, particularly for first-time buyers, by shifting the "loan-to-value" ratio. Banks are currently demanding deposits of up to 20% of the value of a property from first-time buyers.

Though it may well be the case that it will only make it easier for first time buyers to secure a mortgage not more likely and will not result in a grater number of first time buyers securing their mortgages..

What we have here is publicity exercise where numbers are thrown in which at first look impressive but in reality a just a drop in the ocean.

Some will claim that its a start.But what we need is a radical revue of housing especially social housing one solution would have been to use Northern Rock which was owned by the British Taxpayer, to provide the sort of Loans that the government have been talking about. But they have already missed that opportunity by selling the bank to Richard Branson. We could have used this bank as a means to setting the template for all banks but it was not to be.

We need a government whether in Westminster or Wales (or both) with vision and commitment.What we have today  is the equivalent of adding a few more bowls to the soup kitchen


  1. I must disagree. This policy of underwriting mortgages by government (ie you and me) is known as "Sub-Prime" and we have seen where that leads.

    The policy is not designed to help first time buyers at all - far from it. What would help first-time buyers would be houses faling to realistic prices. This policy is specifically to stop house prices falling any further, start them rising again and start to fuel another boom.

    My daughter and a fair few of my friends live in Germany. It is extremly rare for people to buy a house before they are 40 in Germany - not because of price (they are way cheaper than here) but because they prefer being able to move quickly in search of work.

    To buy a house in Germany you need to open a special savings account to save the deposit. You need a deposit of 20% and a 3% handling fee. You can only have a 20 year mortgage (or less) and the interest rate is fixed for it's lifetime the day you take it out. You are not allowed to have interest only mortgages, roll them over or borrow against any equity in the house or use it as security for any form of loan - it's not yours until you pay for it.

    As a result, they do not have property booms in Germany and housing is not an investment or a cash-cow. House prices remain broadly in line with incomes at roughly 3.5 X mean income in an area for an average house in that area.

    Two examples. Two years ago my daughter bought a brand new 2 double bedroom apartment, fully fitted, underground secure parking, in Trier in the Moselle Valley. €85,000 and €120 a month service fee that includes outside area maintenance, staoirwell cleaning, basic phone line, basic cable tv and basic internet (fibre optic, 50Mb). Last year one of my mates bought a 3 bed detached house, double garage, front and rear garden, small pool in a little village midway between Hannover and Hamburg (40 minutes from the centre of each). €105,000.

    Then you have the dogs breakfast we have over here and morons bragging about how much their house prices have risen.

    As for rents, €350 a month will get you a pretty tidy 2 bed house. You have far more rights than a tenant over here. Each property has to have a licence. The Landkries (like local council) inspects it before you move in and will not allow you to move in until any outstanding repairs and/or routine maintenance have been carried out. Likewise they will inspect it (along with the owner) when you move out and will decide whether any damage is fair wear and tear or neglect and if the latter how much the tenant should pay.

    Whereas we have that plague of locusts known as buy-to-let.

  2. I don't understand people such as yourself saying that a scheme whereby the tax payer under-writes deposits. What they are in fact doing is supporting higher house prices by introducing these types of schemes. What is needed, is for house prices to decrease so that the become affordable and not for the tax payer to help buyers purchase houses which are unaffordable. it's quite simple really. Then there are those who argue that buyers should be able to borrow 5x salary or whatever.....but you then again only cause house prices to reflect the ease of getting credit. The only people laughing in the end are those bankers once again ....well maybe some developers and EA's etc......until it all comes crashing down again and the tax payer once again picks up the tab. This has got to be the worst initiative to date by the London coalition.

  3. I must admit both of the above have a point but my argument was to create a National Bank that would be a source for providing those with the help they need.And in doing so create the sought of initiative that exist in Germany or elsewhere in Europe. It would not be sub-prime as the bank would not be allowed to sell this form debt as happened in the U.S.A.

    Indeed they could look to the German method as Red Flag

    Of course we really need to look at social housing and how to fiance and improve it but the Con/Lib coalition seem to have decided that people who do not meet their criteria should be denied.