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'We got it wrong on housing', Labour admits

Monday 14th February 2011
Written by Rosalind Renshaw

All three main political parties appear to be acknowledging that they are completely at sea over the housing market.

Civil servants in the Communities and Local Government department are to carry out a review of the private housing market, whilst Labour is also to carry out one of its own after admitting that it failed the market during its administration.

The Coalition Government review will be led not by housing minister Grant Shapps but by Oliver Letwin.

A CLG adviser confirmed that housing policy is being reviewed, but did not say which policies are being looked at.

Richard Capie, deputy chief executive of the Chartered Institute of Housing, told ‘Inside Housing’ magazine that he understands the review is looking at house building and the state of the housing market.

“With housing markets in such a fragile state, it is positive news that the Government is willing to look in detail at what are fundamental and systemic problems,” he said.

Meanwhile, not to be outdone, Labour's review of the housing market is to be led by Caroline Flint, shadow CLG secretary and – briefly – one of Labour’s many former housing ministers.

Labour’s review is to be called ‘How do we meet families’ aspirations for good housing and a good home?’

The year-long review will examine all aspects of housing and housing benefit policy, but it has not been made known whether it will look at the Home Information Packs shambles.

Labour's review comes as shadow welfare secretary Liam Byrne has admitted the Labour government failed the housing sector while in power.

Byrne, who will work on the review, said: “We just do not think we did a good enough job on housing.”

Other members of the panel include shadow housing minister Alison Seabeck.

Interim results are due this summer.

(35) Comments

Added by on 2011-02-17 15:43:42

Yes the Blair/Brown government didn't govern as a responsible entity and been allowed to get away with it. And a tsunami is a small wave that might spoil a day out at the beach
Added by wooden top on 2011-02-15 17:11:37

So the verdict is the market forces (sellers and buying public) set the property prices not the estate agent. Thats not news but a shock for Joe Public who is anti estate agent.

Yes the Blair/Brown government didn't govern as a responsible entity and been allowed to get away with it.

Yes the mortgage lenders filled their pockets with bonus's at the expense of those that couldn't afford what they were being offered and got away with it.

Joe Public is still carrying the can, lost out big time and hasn't got away with it. It will continue for many years before the recovery is over, meanwhile big business is using it as an excuse to raise prices and earn more bonus's at the little mans cost.

Something is seriously wrong when people in power can ruin peoples lives. When it's on the other foot, they are the first to complain....... hypocritical and criminal?
Added by Ray Evans on 2011-02-15 16:15:07

Gavin:
Please do not be so insulting.
Added by Gourmand Gossip on 2011-02-15 16:03:26

Perhaps all those involved should be indicted!
A good start might be to insist on a full disclosure of all properties bought/owned/ sold by MP’s and related persons. It will make the expenses scandal look fiddling the petty cash.
Announcing the flogging off the country’s Gold reserve is another act of collusion or criminal negligence worthy of investigation.
Added by on 2011-02-15 13:34:21


I generally agree with Gavin;

IMO: House prices - and thereby housing costs - have increased unrealistically due to the over-supply of credit (low deposits and interest rates) in the 10 years prior to the credit crunch.

25% deposits are unattainable for most FTBs, and I don't think repayments of £1k/month can really be classed as affordable for most people.

Rents have been subsidised by housing benefit, pushing them up and making BTL more attractive, thus increasing competition for purchases.

Who's to blame? Ultimately the government, for not putting the appropriate checks and balances in place to control the deregulated financial markets.
Added by Daniel on 2011-02-15 13:16:39

Presumably the fear that the houses value will nose dive is evidenced by the amount of down grading of valuations that surveyors have been doing recently?
Added by wardy on 2011-02-15 09:32:43

Gavin: well obviously a high intrest rate is based on risk, but its the risk of a 90% borrower defaulting the mortgage, not that the property will take a nose dive.

Shame this was a good debate until you started getting arsey with agents. Mind the door dosnt hit your arse on the way out.
Added by George Daws FNAEA on 2011-02-15 08:57:37

"You cannot win the economic, intellectual, or moral arguments for high house prices"

You must ne the latest bloke from Letsusbuyyourhouse.com
sponsored HPC to wander down here to have a pop.

If you wander back through all the threads on the subject, you might find that in fact we haven't lost a debate yet.

After about 3 days your numpty mates catch on to the fact that Estate Agents do not control property prices, Agents monitor what is happening in the market and advise their clients. Mr/Mrs/Ms Property owning public are in control of property prices.

Added by Gavin on 2011-02-15 01:26:49

Wardy
The 90% mortgages have a far higher interest rate than that of a 75% mortgage. That is due to the higher risk and thus to mitigate the higher risks of the lower deposit deals.

Ray Evans
I'm sorry you don't understand the issues. I am aware that not all estate agents are graduates and have difficulty understanding certain concepts. I suggest some wider reading may help you out for example some of speeches of Right honourable Ron Paul may assist you, google him.
Added by Gavin on 2011-02-15 01:26:48

Wardy
The 90% mortgages have a far higher interest rate than that of a 75% mortgage. That is due to the higher risk and thus to mitigate the higher risks of the lower deposit deals.

Ray Evans
I'm sorry you don't understand the issues. I am aware that not all estate agents are graduates and have difficulty understanding certain concepts. I suggest some wider reading may help you out for example some of speeches of Right honourable Ron Paul may assist you, google him.
Added by wardy on 2011-02-14 23:36:19

duhhhhhh, thank you for your contribution you plank
Added by James on 2011-02-14 20:54:05

Duuuhhhh just sums you up matey

When you graduate you may be able to polish our white mint in the loos if you like, or will that be too taxing for your pee brain????
Added by Duuhhhhhhh on 2011-02-14 17:57:26

What a nasty parasitic joke these estate agents are.

The games over chumps.

You cannot win the economic, intellectual, or moral arguments for high house prices.

Duhhh, duhhhhh So what is House prices drop 50% in every other country. Duhhhh duhhh it wont happen here, cos we just keep tellin people they never drop innit?

Duhhhhh
Added by Ray Evans on 2011-02-14 17:20:18

Gavin:
'............present WE need to keep higher deposits such as 25% to keep the banks books safe......' Nonsense, and in my opinion not much else of what you say adds up!

Many, but not all, first time buyers could afford the actual mortgage repayments if offered with a ten percent deposit, a ‘reasonable’ interest rate and without extortionate ‘arrangement fees’
Added by wardy on 2011-02-14 17:16:34

Gavin, for the purpose of this thread, you can assume I understand the purpose off a deposit.
Banks do not foresee the drops in houseprices that you do, there are 90% products already out there.
Added by Gavin on 2011-02-14 17:01:58

Wardy the high deposits are there to protect the lenders against price falls. They wouldn't be that high if there wasn't a realistic chance of big falls. This mitigation measure is now an entrenched part of the lenders business continuity plans.

You talk of FTB being able to afford mortgage payments but that is with 0.5% base rate. To base your biggest financial purchase on today's historic low emergency base rates without factoring in a return to normal is suicidal. The markets themselves are factoring in a 0.75% increase in rates this year alone.

You are quoting £170,000 first time buyer flats which is about 6 times their salary twice the historical average. Surely that should set alarm bells ringing and purchasing one without or little deposit is risk lunacy for both the lender and first time buyers.

I think the solution for a return to healthy housing market would be an expansion of negative equity mortgages thus unclogging the chains.

House prices will fall significantly as markets always eventually correct themselves. There simply is no money left to keep the housing bubble inflated.

Added by wardy on 2011-02-14 16:14:00

I’m sorry Gavin, property prices are not going to fall 25%. The FTB’s we talk to CAN afford mortgage repayments, it’s the deposits they haven’t got. Lets take the average FTB property on our books. £170,000 flat. That’s £42,500 deposit. (no chance) Your suggestion will not bring prices down it will simply mean that no one moves. (which is what we are seeing now) Landlords keep their buy to lets and push rents up as a result.
Added by wooden top on 2011-02-14 14:44:39

"Labour’s review is to be called ‘How do we meet families’ aspirations for good housing and a good home?’"

How about putting those mortgage lenders in prison who cooked the books or turned a blind eye for profit for starters, then the previous Balir/Brown government for incompetance, spin/lies and dishonesty ... the lot of them, as we can now see not fit for purpose, did not show due care and diligence. There worse than estate agents!

"Labour's review comes as shadow welfare secretary Liam Byrne has admitted the Labour government failed the housing sector while in power".

Ha ha ha, your going to let "failed has beens" who couldn't get it right, now advise us .......... Your having a laugh........I'm emirgrating.

Added by on 2011-02-14 14:38:02

"Labour’s review is to be called ‘How do we meet families’ aspirations for good housing and a good home?’".

How about putting all those mortgage lenders in prison for fiddling the books or turning a blind eye for a start. Then put the Blair government in the dock for the same reason ... all of them!

"Labour's review comes as shadow welfare secretary Liam Byrne has admitted the Labour government failed the housing sector while in power".

Ha ha ha ha, evereyone was telling you that when in power, would you listen, NO and now we right in the s%%%, thanks alot. Politicians are worse than estate agents for misreprsentation, lies and corruption .... as we know see.

What we don't need now are "has beens" who couldn't get it right before advising us, are we mad?
Added by Gavin on 2011-02-14 14:05:17

At present we need to keep higher deposits such as 25% to keep the banks books safe. Lending on 5% deposits to buy over valued properties is pure lunacy as house prices correct downwards. If we would to do that I am sure tax payers money again would be needed to bail out the banks and we can't afford that. As prices return down to a historical norm then the % of deposit can be safely reduced.

Labour over saw the countries biggest housing bubble ever and did nothing to stop it. In fact they did everything to prop up the bubble with shared equity, shared ownership and too low interest rates.

Labour completely ignored the mass fraud in buy to let and self cert mortgages despite from warnings from top economists and investigative journalism. Even in 2003 the BBC did a program on how brokers were encouraging first time buyers to inflate there wages on self certs as the only way to afford a property. The fraud was rampant not just Ealing West London, it was nation wide.

Mortgage Madness - BBC Money Program:
http://www.youtube.com/watch?v=vT1UnGS91BY

Added by wardy on 2011-02-14 13:24:53

Peter,
MIG (mortgage indemnity insurance, I think) or higher lending charge is good in principle as long as its not coupled with a massive arrangement fee.
Added by Peter Bolton King on 2011-02-14 12:44:17

Ray,
I can assure you that I do spend quite a lot of time trying to do exactly that. I have a further meeting this week with the Department talking about finance for first time buyers.
Does anyone think that MIG (Mortgage Insurance Guarantee) is an answer assuming the Insurance industry was remotely interested.
Added by Deeks on 2011-02-14 12:27:22

What a disingenuos bunch of crap from Labour.

We got it wrong on housing!!!

For ten years my Labour MP completely and utterly ignored tens of Emails asking about affordable housing.

We got Not ONE single response.

Gordon Brown purposefully inflated the bubble, whilst his MP's were flipping houses under a secret expenses system, using taxpayers money to make personal profit, and making themselves an absolute mint.

My Labour MP ended up on the front page of the daily telegraph, for making over 200k profit from flipping her house. [She then sold the house and retired]

Of course its amazing we ever even found out about it, as Gordon Brown formed a three line whip to try and exempt MP's housing expenses from the freedom of infomation act.
Enabling them to keep their filthy snouts in the trough.

We go tit wrong on housing they whine, whilst in opposition?

Whilst weve been forced to waste tens of thousands in rent, and now after the bank bailouts, the UK taxpayers who do not own property, Are paying to recapitalise Banks like Lloyds via the bailouts.

It was blatant fraud, [unpunished and unacounted for,] which drove rising house prices. [These criminal acts have in fact been rewarded, in the forms of bonuses for example]

Without this recapitalisation, property prices would have plummeted back to their median long term historic average affordability. So the only choice FTBers are being given, is to accept massive debt which is not ours. This is theft.


And NOW labour try and sneak an apology out?

God help me, if I ever see one of them on the street. I think I would end up in prison.

The Labour Party are enemies of the people of this country. Real enemies.
Added by PeeBee on 2011-02-14 11:49:18

Mr RR/PM/whoever (why not PropertyMatch any more by the way...?) : The practice of using fictitional offers or interest is, as you are aware, in direct breach of the Estate Agents Act 1979, as well as the NAEA/RICS/TPO codes of conduct.

It is your duty as a law-abiding citizen to report breaches of the law to the relevant authorities. If you have proof, then do your duty.

Otherwise you are no better than those who you allege carry out these acts...
Added by wardy on 2011-02-14 11:33:07

Agree with Ray, Is a decent 5% deposit not unreasonable? Our 'own' banks should be leading the way with this. I doubt a 95% product would be considered toxic.
Added by Ray Evans on 2011-02-14 11:06:35

Peter Bolton King:

Why not use whatever weight the NFoPP has to urge the government to use its not inconsiderable weight to push the banks etc (it owns most of them) to make mortgages available to qualified buyers at a reasonable interest rate with a 10% deposit? The Association would then be seen by their members to be doing something useful.
Added by wardy on 2011-02-14 11:00:20

RR,
what are you banging on about? you have had to much time running your website from the front of your tele mate. Why dont you tell the wife to put the kettle on while you get out of your dressing gown and go and join a bowling club or something.

Remember what i said? most of us here could do what you do in half an hour on a £5 note. So shhhh your getting boring.
Added by AceofSpades on 2011-02-14 10:48:24

@RR

a) Your site is very tedious to operate and could do with an update.

b) Your stock that you proudly display is generally in the same bracket as estate agency pricing. However, some properties are noticably higher.

It escapes me how you can bash agents for "over-pricing" when your stock is the same level or higher.
Added by Ray Evans on 2011-02-14 10:47:00


S A Longden:
Not the only factor but certainly a major one.
Added by S A Longden on 2011-02-14 10:09:06

It would help immensely if there was not such strain on the housing market. There are too many people in this country due to unrestricted immigration, and in response our homes become tinier and tinier and without any gardens, or very little patches. The prices then rise, and decent people have non-decent accomodation.

Britain was happily neutral on population growth until businesses realised they could get immigrants to take lower wages and encouraged Government to let all and sundry in, and now the EU is getting its way of destroying our country by sheer weight of numbers of foreigners here.

Solve the real problem for once and stop pussyfooting around the actual issue.
Added by Soulcharger on 2011-02-14 09:53:48

The housing market in the UK will only be "normal" when 2 things happen. First the government has got to disappear from anything to do with producing housing and leave it to the privte sector, sure let them stay around for planning, building regulations, etc., but the building of council houses (subsidised by the taxpayer) is pre WW II econmics. Secondly and more importantly is that the UK population have got to stop kidding themselves that they are all property speculators, when you buy a house make your home not some short term investment that's going to rise in value and make you a millionaire. When I read or hear about the nations mood being dependant on rising house value it makes you wonder what kind of national physch there is.
Added by Realising Reality on 2011-02-14 09:34:50

I'm glad they've all admitted it. To start the restoration process lets first examine possible definitions of 'Market Value', as opposed to 'Meerkat Value'!

Definition of 'Meerkat Value' - compared to 'Market Value':
'Meerkat Value' is the amount paid when an agent finds the purchaser, considered 'right' for a property. That ONE purchaser is a human, that appears to be the most interested in the house in question. Someone who is prepared to increase the price initially offered, when a meerkat agent pretends that there are further negotiations taking place between fictitious other parties. In fact the meerkat agents are simply doing this in order to extract the highest possible offer from any poor unsuspecting buyer!

'Meerkat Value' is synonymous with BEST price, a term also quoted by meerkat agents wanting to avoid comparing anything with real 'market' value!
"So remember, beware of meerkat value; compare the market value!"


Note:
Significant overpricing results from such underhand negotiations (usually being carried out between unscrupulous agents and genuine buyers), especially when asking prices are already well above true market value.

This should only go above the heads of those who are not used to frequently burrowing below the surface, i.e., non-meerkats.

So, to start with who here can define current, or open market value?
Added by Anna on 2011-02-14 09:29:41

Pete me old china, do not expect to be a serious political player heading that shower you “lead”!
Added by Peter Bolton King on 2011-02-14 09:23:18

Interesting as it is less than two weeks since I received an official letter from CLG confirming that they were not involved in a formal review of Housing Policy! I am aware that they are however looking at various elements including First Time Buyers which I assume is part of their Growth Review.
Added by James on 2011-02-14 08:53:03

Sounds like jons for the boys time at Westminster once more

Most of the sensible posters on this site could offer solutions to the crisis, and it would not take a year I guess

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