The Politics Thread

[Bruce Rioja]

how come everybody suddenly knows how much better or worse off a month they are?

It's the start of the new tax year.

[thebish]

how come everybody suddenly knows how much better or worse off a month they are?

It's the start of the new tax year.

ahhh - I got out of self-assessment a couple of years ago... still not sure I should be - but I did answer all the questions honestly!

even when I was IN self-assessment, though, I didn't know in April how many £s better or worse off I was a month!

[clapton is god]

^ I've just had to tot up my income and my out goings so have a rough idea how much 'better off' I am. Income down and expenditure slightly up. Not had a change in pay rates since 2007. Bucking the trend again.

[Bruce Rioja]

Was listening to summat ont' wireless this morning about banks calculating the amount that they'll lend for mortgages against a person's disposable income rather than gross, and how difficult it'll make it for people to take out a mortgage. So, this fella did the sums on someone earning £20K a year and took out the statutory expenditure - Poll Tax, TV, Internet and whatnot and came up with the figure of a shade under £60K. My rule of thumb has always been to never borrow more than 3 x gross annual income anyway.

[Athers]

Was listening to summat ont' wireless this morning about banks calculating the amount that they'll lend for mortgages against a person's disposable income rather than gross, and how difficult it'll make it for people to take out a mortgage. So, this fella did the sums on someone earning £20K a year and took out the statutory expenditure - Poll Tax, TV, Internet and whatnot and came up with the figure of a shade under £60K. My rule of thumb has always been to never borrow more than 3 x gross annual income anyway.

This actually makes some sense I think, although my bank asked me all about my household bills & personal finances when I got a mortgage two years ago.

A guy in the industry told me that they also must work it out presuming your credit card & overdraft are maxed out and that the rate of interest goes up 3%, although there may be some company choices around this, not sure.

[BWFC_Insane]

Was listening to summat ont' wireless this morning about banks calculating the amount that they'll lend for mortgages against a person's disposable income rather than gross, and how difficult it'll make it for people to take out a mortgage. So, this fella did the sums on someone earning £20K a year and took out the statutory expenditure - Poll Tax, TV, Internet and whatnot and came up with the figure of a shade under £60K. My rule of thumb has always been to never borrow more than 3 x gross annual income anyway.

I think the 3x rule became the 5x rule. I mean it very much depends where you live in the country as well.

In some places the mortgage rule changes could make buying virtually impossible for some people. The problem with our culture is that renting is seen (incorrectly) as throwing money away and buying seen as something everyone should do as soon as they can.

And of course everyone has been told houses are investments and not places to live.

But I've read they're looking at all fixed expenses now, like gym memberships to assess affordability - and demanding they drop said expenditure first. Which somewhat makes sense but on the other hand I think it is merely taking personal responsibility away.

People should have to do their own affordability sums and decide what stuff they have to give up to make it affordable.

[Bruce Rioja]

People should have to do their own affordability sums and decide what stuff they have to give up to make it affordable.

Exactly that. Don't get me wrong, when I was moving three years ago they were trying to throw 4 x gross at me, the 3 x gross has always been own rule of thumb though.

I'm definitely of that 'don't rent anything' mindset though, I must admit. That stuff along with - 'if you can't afford it then go without' was drummed into me from an early age.

[thebish]

Was listening to summat ont' wireless this morning about banks calculating the amount that they'll lend for mortgages against a person's disposable income rather than gross, and how difficult it'll make it for people to take out a mortgage. So, this fella did the sums on someone earning £20K a year and took out the statutory expenditure - Poll Tax, TV, Internet and whatnot and came up with the figure of a shade under £60K. My rule of thumb has always been to never borrow more than 3 x gross annual income anyway.

I think the 3x rule became the 5x rule. I mean it very much depends where you live in the country as well.

In some places the mortgage rule changes could make buying virtually impossible for some people. The problem with our culture is that renting is seen (incorrectly) as throwing money away and buying seen as something everyone should do as soon as they can.

And of course everyone has been told houses are investments and not places to live.

indeed... this does annoy me.

in fact - were I the kind of person who has occasionally been known to watch "Homes Under the Hammer" - then I probably would have got cross when very occasionally someone buys a house that they actually want to make a long-term home in - and the format of the show INSISTS on going through the whole rigmarole of having estate agents in to predict whether they might have made a profit on their investment even though they have already said they are not going to be selling it an are actually going to just live in it....

I guess this is also why people say that property prices INCREASING is somehow good news... they never say that jam price increases is good news or petrol price increases!

[Bruce Rioja]

And of course everyone has been told houses are investments and not places to live.

indeed... this does annoy me.

Indeed, indeed. I plan to pull the garage down (If I did park the car in it I'd have to get out via the boot) to open the back garden out further, and to rip the bath out to create a wet room. Everyone that I've mentioned this to has immediately jumped on 'lessening the value of the house'. So fecking what? I own more than half of it and have no intention of moving anywhere.

[BWFC_Insane]

People should have to do their own affordability sums and decide what stuff they have to give up to make it affordable.

Exactly that. Don't get me wrong, when I was moving three years ago they were trying to throw 4 x gross at me, the 3 x gross has always been own rule of thumb though.

I'm definitely of that 'don't rent anything' mindset though, I must admit. That stuff along with - 'if you can't afford it then go without' was drummed into me from an early age.

It is drummed into us as a society. But people that can't afford a mortgage or a deposit or whatever in my view shouldn't see renting as second class. The pressure always gets put on banks, the treasury etc to help out first time buyers and to an extent that is ok. But giving people mortgages they couldn't afford has partly led us to where we are.

In European countries renting is far more common as is long term renting.

You need to live somewhere. Why is renting necessarily so bad? It only seems bad if you revert back to the "my house is an investment" mindset IMO.

[Abdoulaye's Twin]

Part of the problem with renting in the UK is a lack of regulation. If folk were able to rent long term then it would be more palatable to many.

[Prufrock]

It's not difficult to see how people get to that mindset though. I get the point that houses shouldn't only be seen as an investment, but that doesn't mean that they aren't. If you're paying £700pm rent, it seems to make a lot more sense to be paying that in mortgage payments and so having something to show for it. You're paying yourself rather than someone else.

[Prufrock]

And of course everyone has been told houses are investments and not places to live.

indeed... this does annoy me.

Indeed, indeed. I plan to pull the garage down (If I did park the car in it I'd have to get out via the boot) to open the back garden out further, and to rip the bath out to create a wet room. Everyone that I've mentioned this to has immediately jumped on 'lessening the value of the house'. So fecking what? I own more than half of it and have no intention of moving anywhere.

What about the person who owns the rest ?

Fun fact of the day. If you buy a house with a mortgage and then smash up your 'own' living room, it's technically criminal damage. So think on everyone!

[BWFC_Insane]

It's not difficult to see how people get to that mindset though. I get the point that houses shouldn't only be seen as an investment, but that doesn't mean that they aren't. If you're paying £700pm rent, it seems to make a lot more sense to be paying that in mortgage payments and so having something to show for it. You're paying yourself rather than someone else.

Answer is you need somewhere to live.

If you can't afford to buy, you can't afford to buy.

End of the day if you buy and pay off your mortgage you only have something more if your house goes up in value. That isn't guaranteed. And hence you're back to thinking investment rather than somewhere to live.

[LeverEnd]

It's not difficult to see how people get to that mindset though. I get the point that houses shouldn't only be seen as an investment, but that doesn't mean that they aren't. If you're paying £700pm rent, it seems to make a lot more sense to be paying that in mortgage payments and so having something to show for it. You're paying yourself rather than someone else.

Answer is you need somewhere to live.

If you can't afford to buy, you can't afford to buy.

End of the day if you buy and pay off your mortgage you only have something more if your house goes up in value. That isn't guaranteed. And hence you're back to thinking investment rather than somewhere to live.

Not spending your wage/pension on rental payments is obviously a big deal as well, once it's paid off. I don't understand why you wouldn't do it if you could. My mortgage payments are about 60% of the going rate for rent in the area.

[bobo the clown]

Once upon a time, as a Personnel Officer/Manager, I would regularly have to complete proof of earning forms for Building Societies on behalf of people seeking a mortgage. That would state the person's basic, overtime & bonus earned in the past 12 months but shown as a separate item and some reference to how long the person had been employed and if there were any redundancies pending.

I have had people ask, cajole, beg ... and threaten ... for me to falsify those statements. To exaggerate earnings, to consolidate the earnings figures to make the basic seem larger.

Though I didn't actively notice at the time, these requests stopped being made about 12 years ago when the industry took to letting people self-reference. This was certainly part of the ease of access to unaffordable mortgages.

[Prufrock]

It's not difficult to see how people get to that mindset though. I get the point that houses shouldn't only be seen as an investment, but that doesn't mean that they aren't. If you're paying £700pm rent, it seems to make a lot more sense to be paying that in mortgage payments and so having something to show for it. You're paying yourself rather than someone else.

Answer is you need somewhere to live.

If you can't afford to buy, you can't afford to buy.

End of the day if you buy and pay off your mortgage you only have something more if your house goes up in value. That isn't guaranteed. And hence you're back to thinking investment rather than somewhere to live.

I get the first two. I'm not saying people should always buy, and never rent, I'm saying I absolutely get why people want to buy if they can rather than rent.

And your final paragraph only works for mortgages when you only pay the interest.

When it comes to a repayment mortgage, it's almost a no-brainer:

If I rent for 25 years at £700 per month, then after 25 years I've had somewhere to live for 25 years, but no more. If I get a £200k repayment mortgage and pay £700 per month then at the end I've had somewhere to live for 25 years and I've got a house worth whatever it's worth at the time. Even if it's only worth £150k (which seems extraordinarily unlikely 25 years later) I'm still £150k better off.

Even with a mortgage where you only pay the interest, all the house has to do is keep up with inflation over 25 years and you're in the same position as if you'd rented. Every extra pound up in value is a pound gained.

It's a bit more tricky when it comes to buying second homes, because then your investment has to do better than other comparable investments (stocks, bonds, art, cars, whatever). But if it's the home you're living in, then any 'profit' is better than renting, because you have to live somewhere and so you'd be spending it in rent.

It's not quite that simple, because you're not necessarily going to be able to buy a house for £200k in the same area as you can rent for £700pm, but even factoring that in you'd have to be spectacularly unlucky to end up worse off buying than renting IMO.

Edit: ^ It wouldn't even have to do that? If it stayed the same price you'd be the same place right? The repayment cost isn't inflation linked is it?

[Montreal Wanderer]

It's not difficult to see how people get to that mindset though. I get the point that houses shouldn't only be seen as an investment, but that doesn't mean that they aren't. If you're paying £700pm rent, it seems to make a lot more sense to be paying that in mortgage payments and so having something to show for it. You're paying yourself rather than someone else.

Answer is you need somewhere to live.

If you can't afford to buy, you can't afford to buy.

End of the day if you buy and pay off your mortgage you only have something more if your house goes up in value. That isn't guaranteed. And hence you're back to thinking investment rather than somewhere to live.

Not spending your wage/pension on rental payments is obviously a big deal as well, once it's paid off. I don't understand why you wouldn't do it if you could. My mortgage payments are about 60% of the going rate for rent in the area.

Well, my wife and I certainly have enough money to buy a house without needing a mortgage. I owned one (with my first wife) for thirty years. Now I choose to rent for a number of reasons. Basically it is a lot easier. We are not tied down if we decide to leave for somewhere warmer. We don't have to worry about maintenance - if something breaks call the janitor. I don't have to shovel snow or mow the lawn. As for the economics, I have the $500,000.00 I would have spent on the house invested at over 8% so it generates $40,000.00 per year. My rent for the town house (three bedrooms upstairs and a half basement - the other half indoor parking - three bathrooms with a living room, dining area and kitchen downstairs) is less than $19,000. So I gain no equity in property (assuming values rise) but I am putting money in the bank which keeps on compounding. I'm not suggesting buying is wrong - it is certainly worth doing when one is younger. I'm just saying there could be many reasons not to buy beyond not being able to afford it.

[Bijou Bob]

Personally, I rented for six months and hated filling my landlord's pockets every month whilst adding to his long term wealth. As a landlord, I now love the fact that my tenant is contributing towards my retirement fund on a monthly basis.

Buying is undoubtedly becoming more difficult for a wide number of reasons. What strikes me, is that property prices have always gone in cycles of boom and depression. My daughter and her boyfriend are due to finish university. Their student loans are relatively small in comparison to most, but the repayments will mean that buying will be incredibly difficult for them. My niece is likely to have around 50-60 grand's worth of debt after her teaching degree is finished and between her and her partner, they will be carrying 100k's worth of student loans before they even look at any other debt. What chance the next generation of house buyers is ever going to be there and what impact is this likely to have on both rental and buying markets? Boom, or bust? The mind boggles. I feel gutted for this generation, but should I be??

[bobo the clown]

Fun fact of the day. If you buy a house with a mortgage and then smash up your 'own' living room, it's technically criminal damage. So think on everyone!

... and there, ladies and gentlemen, you have the difference between lawyers and normal people !!