Thursday, Aug 28, 2008
Sounds familiar
Times: Mortgage rescue at the ready as property slump gets even worse
Alistair Darling, the Chancellor, and Caroline Flint, the Housing Minister, are planning to announce an emergency “mortgage rescue” package next week.
Under the plans councils will be encouraged to offer low-income families at risk of repossession the chance to sell a stake of their houses in return for financial help. First-time buyers will also be given council-backed assistance with deposits and town halls will be given extra money to buy up empty unsold new-build properties from developers.
A more radical proposal under which councils would have competed as mortgage lenders has been vetoed by Darling.
Posted by little professor @ 11:08 PM (1187 views) Add Comment
17 Comments
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1. Damo said...
Stupid. Stupid. Stupid. More subsidies. Let the developers go to the wall.
2. enuii said...
Note the careful choice of words such as 'encouraged', 'assistance' and 'extra', these terms imply that any scheme is non-mandatory and unquantifiable. I also imagine that any prospective purchases would be from insolvent builders at the lowest possible price in the absence of any other offers to creditors.
Sounds like typical NeuLiebor Soundbite Government full of Spin and B.S. to me.
3. justwatching said...
No.
4. quiet guy said...
little professor,
Interesting, mordbid posting.
Deep down, I suspect that we taxpayers are soon to be sacrificed on Gordon Brown's NuLab altar (not the rich though you understand ...) I feel like a rabbit stuck in headlights. It's coming and there is nothing I can do about it.
5. Ijjhall said...
So you have racked up a huge mortgage debt to get on the property ladder only to learn that not only is that new build everyone insisted you should buy is crashing in value, but icing on the cake some deadbeats are now earmarked to move in next door..
Should make for interesting smalltalk at the next round of smug dinner parties...
6. Dundee said...
"Under the plans councils will be encouraged to offer low-income families at risk of repossession the chance to sell a stake of their houses in return for financial help" what if there is no equity? does the council stake in the property have first shout if payments keep being missed, or dare I say prices drop further, and the bs or other secured lender wants to take legal action to take back the property, or are we going to have councils evict people and pursuing them for any shortfall on sale of house? and may I ask where this money is comming from? More nl hair brained scheme.
Alan
7. Lord D'arcy Pew said...
Under Margret Thatcher people could buy their own council houses, with Gordon Brown they can now give them back. First nationalizing the banks, then bringing the housing stock back into government ownership!
8. growler said...
It's essentially what Vince Cable is talking about - helping those in the real mire. But as has been said, it's very light on facts - such as "the Government has set aside £x M" - meaning no commital to anything except spin as enuii says. The daft Government can't seriously think they can prevent morgagees from reposessing by investing money in peoples houses that are losing money. Furthermore - this is another policy that hasn't been thought throuigh like Stamp Duty. Imagine you are thinking of buying in a private development that has lots of unsold property? Imagine you've negotiated a deal from the developer who you know is looking shakey? Now with the thought that the Goverment could have to turn the rest of the esate into council housing, is the price such a good deal after all? Could your nice place soon look on half stripped cars and end up turning into not such a prime location? It would put me totally off spending any money on a new development if I thought the long term future of the whole development had the risk of CPO for council housing.
9. mark wadsworth said...
AARRGH.
What the gummint could do - quite reasonably IMHO - is build some more council housing on state-owned land. Land is cheap, it's only land with planning permission that is enormously expensive (and falling). Building is cheap (cost per dwelling £40k to £80k). So there's plenty of space to rehouse people who get repossessed.
Result - the gummint spends a lot less money, it can collect a bit of rental income, there's more housing and house prices in free market drop even faster.
10. Tenyearstogetmymoneyback said...
Good comments Growler.
A question about any kind of "Shared Equity Scheme" which seems to be what is being suggested for those
with mortgage difficulties is whether the depreciation on the property is shared.
In the late eighties there were lots of schemes (especially on the Bradley Stoke / Sadly Broke estate near where I lived.
However I don't think any of the minority stake holders (builders) with their 20% stake
were prepared to say "because you house has dropped 25% you only owe usthree quarters of the money now.
:- Duncan
Bought 1989 £65000 Sold 1999 £70500
11. Pundit said...
For many of these families facing repossession it is not the mortgage debt that is the cause of their problems, but the fact they have amassed other large debts, buying new cars, TVs, computers, holidays etc - on credit. I know of a number of low-income families that have remortgaged several times to clear large credit card debts - only to start the credit spending cycle again. They have squandered the equity they had in their homes, always believing that with ever rising house prices they could pull off the remortgaging trick again and escape the consequences of their profligate spending. The game is now up.
12. d'oh said...
I cannot bear this country sometimes. I'd call this a serious moral hazard, but that would imply that morality was in someway involved in this.
13. bystander said...
If Nu Lab seriously wanted to increase the number of council housing then they have had 10 years of huge income to save and invest in affordable housing, but no their snouts were so firmly in the trough that they have missed the opportunity to really do some good, and are back peddaling purely for votes. The unfortunate truth is that many of the great British public may well be fooled into thinking these moves are meant to improve their lot, when the truth is that Gordo and his gang are terrified that they will soon be out of a job.
14. alan said...
I suspect that NuLab is trying to create a more caring image. They will need to try harder to convince anybody I know!
The tiny amounts that Caroline Flint has to offer won't stop the house price falls. It's a cosmetic exercise, Caroline, and we all know it. This government is broke, anyway!
15. Soundman74 said...
I shouldn't worry, the government has a knack of looking at a situation and really getting a feel for what needs to be changed and then implementing those changes.
I mean look at the HIP's - a perfect opportunity to think outside of the box, take a long hard look at the problems with buying and selling houses - you know, long chains, being able to pull out of a sale right up until completion, having offer after offer made on the same house followed by survey after survey - unregulated EA's that kind of thing. And what did they do? Come up with an energy performance certificate!
No, I don't think anything this government can do can make any difference to the inevitable
16. Hermitage said...
Ok, even if this plan works, how is it going to save the economy? What we need are jobs that create wealth and a consumer economy cannot ever hope to continually do so. Surely Gordon's priority is to invest in industry/business (safe restrictions from the EU, I guess). Even if the money went on improving the infrustructure of the country, it would create jobs. Trying to pump up property prices is just immoral and cuts into any available monies that people might have to spend in this consumerism country. Furthermore, do all these possessions really make anyone happy in the long run. As you get older, they start to become a millstone round your neck.
17. Chilli said...
In 1929 ( the great depression), the powers that by (at the time) didn't interfere in the market when it was going sky high, as they didn't want to be accused of spoiling the party. In other words if they stopped speculation in the stock market at the time they would have dramatically cut demand in the stock market which would have precipitated the crash. Instead they let it get even bigger until it crashed by itself. They recognized back then that they were headed for trouble. Anyone with a brain could have recognized it this time around too. The question is; How does our current state of government 'willingly spoil the party' to its own interest? What I really mean is how do they spoil the party (and do what is right for the country) against the wishes of the electorate?
That's why, IMHO, we have these hair brained schemes; Its mere media spin invented by spin experts (a politician isn't anything else these days).
d'oh - priceless!!!!!!