The Times again outlined New Labour’s mortgage rescue plan to prop up the housing market. This is how the Times described it:
"Alistair Darling, the Chancellor, and Caroline Flint, the Housing Minister, are planning to announce an emergency “mortgage rescue” package next week. Under the plan 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 more council-backed assistance with deposits and town halls will be given extra money to buy up empty, unsold new property. A more radical proposal under which councils would have been freed to compete as mortgage lenders with access to a pot of £2 billion in government borrowing has been vetoed by Mr Darling. Instead he is likely to extend a Bank of England guarantee designed to boost confidence among existing lenders."
So what do we have here? Local authorities will provide mortgage deposits, buy unsold properties, and take over the debts of people on the edge of repossession. Darling rejected the idea of turning our councils into mortgage providers, but will be extending government guarantees through our central bank.
The plan provoked an outraged response from readers. I picked up a few of the comments, which give a flavour of how this scam will go down with the public.
“This is throwing good money after bad. Please can the government explain the rationale for trying to keep house prices inflated above an historical equilibrium? The government is basically giving our taxes away to the reckless and greedy. “ A Nelson, Newcastle, UK
“Great, so my tax money, money I've worked hard for, is to be used to prop up a grossly unfair and unsustainable system. This is robbery of the young to keep the house price party going for the soon-to-retire. Criminal, simply criminal. “ Bob Jones, London, London
“The taxpayer is being asked to foot the bill for the folly of foolish buyers who have paid far too much for their houses. More fool them - why should I, as a prudent non-debtor, prop up their excesses and the crazy prices they have paid? Peter Kiddle , St. Neots, UK
“Will the council help me out if I fall behind on payments for my new plasma TV and Lexus? No, why should housing be any different? Let’s also factor in the fact that half of them can't even afford weekly bin collections, now they're selling mortgages. Sometime I wonder why I work and save!” Paul, Camberley,
“Why should the taxpayer be asked to bolster a grossly over inflated property market? Local authorities will be taken for a ride when buying unsold property from developers at inflated prices.” Allan, Inverness.
Of course, I sympathize with these people. I share their pain and anger. However, we are missing the big picture here. This mortgage rescue plan is not about helping the housing market; it is about reversing a key pillar of the Thatcher legacy – council house sales. Labour – new and old – always hated those sales, and the popularity it gave the Conservatives. Now, the housing crash has offered the opportunity of some payback, or should I say buy-back.
Socialized housing is about to make a come back.
11 comments:
I'm reading Atlas Shrugged at the moment and Darling should play the role of Wesley Mouch in the upcoming moview. He wouldn't even by "acting" cos he IS Mouch.
Labour doesn't seem to realise how close they are to a total tax revolt.
Anyway rather than condemn the plan, which is too easy, I'm more interested in the "can it work" question, or more appropriate "what fearsome unintended consequences will these idiot socialists unleash upon us?"
Some thoughts:
- it's a non-starter because the money isn't there to buy the houses and councils will resist the massive capital loss they'll take
- Should it happen, the pound sinks under the unpayable debt load and the CPI rockets
- Tax rates finally inch over the tipping point and the ensuing braindrain and work-to-rule from the able turns off the motor of the UK economy
- Everyone with negative equity who isn't at risk of repossession suddenly tries their damndest to get a notice of default
- All foreign investment flows to the UK cease immediately
- What little value is left in the owner-occupied new builds will be wiped out as all the benefit scroats move in, triggering a new round of negative-equity induced defaults
Hows that for starters? BTW, I think the plan will simply die in the womb. It's political theatre so it looks like they are doing something, just like the Hope Now Alliance was in the US.
Nick
Somewhere in the current mess there is an opportunity. Housing provision is insufficient in the UK, a factor in the Bubble, while unemployment remains high amongst the unskilled (NEETs).
Maybe complulsory three-year apprentice schemes linked to completing new housing left unfinished and renovating unusable housing, and e.g. to a start on the Thames gateway development, extended also to some necessary work on creaking infrastructure.
The taxpayer is funding this kind of unemployment anyway, and with high consequent social costs.
Such schemes would not exclude apprentices entering higher education later if they see it as economically advantageous.
B. in C.
B in C
So essentially you want to create unemployment amongst private sector craftsmen and labourers by subsidising public work projects that crowd out their jobs and replace their willing skilled labour with that of unwilling unskilled charvers?
There's no shortage of housing, just a shortage in the places with jobs. Much better to rehouse all NEETs in shithole welsh and yorkshire ex-pit villages and free up the decent stock for people prepared to pay rent.
Nick
The bulk purchasing of cheap, repossessed housing will enable Nu Lab to further its social engineering project by distributing the underclass into middle-class areas.
Pray that your immediate neighbour doesn't go under.
Hope you enjoy 'Atlas Shrugged' Nick - one of the best books I have ever read. Here is a quote from Francisco's speech on money:
"When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and lose their lives for the purpose of becoming the fodder of the immoral. Do not expect them to produce, when production is punished and looting rewarded. Do not ask, 'Who is destroying the world?' You are."
Fitting.
Nick,
I hope you are right, and that this plan is just some political theatre. These ideas are so flawed it is hardly worth the effort of enumerating them.
So it has come down to this; the government buying up unwanted over priced housing.
VADO
Err, what houses are they buying? It's just a NuLab blowout wanky PR blurb. They don't have a clue how they would do it, what houses they would buy, what rents they would charge and who would service them.
Can't we all recognise the signs? This "policy" (vomit) was thought up by someone with a degree in political masturbation on the tube between Westminster and Earls Court.
John Miller is absolutely right. This is not a long term policy of reversing the Council house sell-off, or anything thoughtful, but just a knee-jerk reaction of how they think every problem can be solved: Throw money at it.
Give it to the councils, when it goes wrong, blame them - if by some miracle it goes right - take the credit.
I support increased levels of social housing, but this new wheeze ignores what I write about: many repossessed properties are shoddily built, unwanted bought to let one or two bed rabbit hutches. It there was an excess of family homes, my view would would be different. But buying up repo flats is a very bad idea.
NIck,
No - I was suggesting employment schemes skewed towards apprentices, i.e. two or three skilled tradesmen and four or or five apprentices in need of training. I think many of the young male NEETs need exactly that kind of relationship with responsible, skilled older men to get them out of the mess their own families have often put them in. And I suspect that among the women one might discover more talent than anticipated.
B. in C.
B in C
So long as I don't have to pay for it, fine. If it'll cut down my adopt-a-scoat income taxes, then even better.
Nick
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