.comment-link {margin-left:.6em;}

Hoses of the Holy in the Parallel Universe

May 23, 2005

It's a trap!

Housing is much in the air. Be good if it actually was. Floating houses will surely come when we have anti-gravity.

There's a couple of reasons I think things like shared ownership schemes don't work. As a caller to Five Live mentioned last night, the banks have it all their own way with shared ownership. First of all, they demand a higher-than-usual deposit from the punter.

So the punter scrapes begs borrows a deposit and borrows enough from a bank to buy 50% of a house. The bank is happy, having covered any economic downturn with your deposit, they can evict said punter and sell the house again to get their money back.

Meanwhile, the punter pays the mortgage on the 50% of the house and pays rent on the other 50%. In other words, it's not about a smaller monthly payment, oh no. In fact, if you add together the rent and the mortgage, what's the point? You're still on a low income and you still can't save any money.

What's the point? The point is that in owning the 50% of the house, you stand a chance of making a bit of capital to use as a deposit on your next house purchase.

So the scheme only works if the market value of the house increases substantially. In other words, the punter hopes to make 10 grand on their 50% and then buy a whole house, which means that the next punter on a low income can't even afford the original 50%, let alone the 50% plus the rent on the other half, which will no doubt increase too.

The sickness in this country is that people need a roof over their heads, shelter from the storm, warmth in winter, a place to rest, cook, eat, sleep. Everybody needs that, but they forget the utility and insist on viewing a house as an investment, a get rich quick scheme.

I think this government (and the one before it) pays far too much attention to getting people onto the so-called property ladder. Our towns are full of shitty little one- and two-bedroom so-called "starter" homes, which are ugly and cramped, not fit for one person to live in, let alone two or more.

So unfit are they for habitation that people can't wait to get out of them, and the market plays along with this by artificially inflating the price, so they can grab a profit and move on - except all of this is play money - not real money. All houses increase in price, and you still cripple yourself with debt in order to proceed.

My opinion, people should get used to the idea that they won't be getting a mortgage till their mid-30s. Until then, live with mum and dad or rent, yeah rent, and try to save. Believe it or not, our nation is more or less unique in Europe for this ridiculous Starter Home mentality. Knock down those shitting 1-bedroom insults, those crappy 2-bed places, and increase the rental stock. Council houses, remember those?


  • I agree.

    I saw this yesterday and had a number of thoughts.

    Mostly to do with South Sea Bubbles.

    And it whiffs a bit of council housing rebranded with added sugar, salt and lard.

    I personally find it offensive that the house I live in, has generated more income than I have earned during the time we've had it.

    That HAS to be wrong and unsustainable. There is no such thing as a free lunch, particularly in a society that sells pre packed salads for £1.75.

    Again, its another examply of "who gives a shit if we live in an expanding economic bubble so long as everyone keeps saying that it's real". Lies and cheating again.

    Personally, I'll be investing in tulip-bulb futures.

    By Blogger SimonHolyHoses, at 3:14 am  

Post a Comment

<< Home