So, the Budget 2013 was announced recently and although I don’t want to go into the whole thing as I’m a busy woman and I don’t have time to list all the reasons I can’t stand George Osbourne I do want to address the house buying stuff it detailed. That being said I do want to subtly get across my feelings on dear old George, so to save time I will use one or two pictures like the one below. 
Anyway, onto house buying. Buying a house is a daunting and difficult thing to do if you want to be considered a Proper Grown-Up. I rent currently and have been renting for 7 years come the 1st of April. I have been eager to buy my own place, but it’s not been possible. Part of the reason house buying, especially for first time buyers, is such a challenge is because we have to drum up the funds for a deposit worth a certain percentage of the house’ value. Before my daughter was born there was the option of saving, but then there was time out of work for redundancies and so forth, plus all those other things that eat your money like vehicles. Ideally my then boyfriend and I should have stayed at home and saved our incomes to pool our resources for a deposit, but hey, we were 20 and 21 and I had already lived away at university and we were adults and we wanted to make our own home and basically we were, like, totally over living at home, know what I mean?
This brings me to point the first on my threefold list: Deposits. Hey, George? Want to stimulate the housing market and encourage folks to buy their own homes? Great! The Budget has announced two new schemes to help. One of them sort of already exists, but don’t tell George.
This is the Help To Buy scheme and is pretty similar to the First Buy and New Buy schemes already in place for first time buyers for new build homes. You raise a smaller deposit (from 4%) than most mortgage companies require, then the Goverment assists you buy loaning you another percentage (up to 20%) and then boom! That New Build house is yours.
My alternative: Why not do away with deposits in the first place? Deposits, no matter the percentage, in no way prove whether or not you can afford monthly mortgage payments. Purely and simply they exist to make the banks feel better about handing over vast sums of money to Joe Bloggs. I suppose I see the logic in it, but these aren’t loans given so that Joe Bloggs can buy a jet pack or hire a tent and have Circe de Soleil perform for his kids every Saturday for a month. This is so people can buy houses. Homes, if you will. And you know what? I know that the Tories and certain newspapers who shall remain nameless would LOVE to convince us all that all our money problems were the fault of those feckless scroungers on benefits who are probably also immigrants, it was kind of more to do with banks. Who we, the tax payers, “bailed out”. So maybe, just maybe, those banks could grant us some trust and relax a little bit on mortgages. I’m not saying they should just hand out mortgages without doing any checks. I would be very happy to show the mortgage lender my last few years bank statements that show how much I’ve been paying for my rent and equally happy to sit down with them and work out what I can afford to pay each month based on my income and current bank of England rates and perfectly willing to tell them my age so that we can project how long I’m likely to be in employment and therefore how long a length of time I could realistically pay off a mortgage loan. I can meet them half way, but please don’t expect me to save a deposit, because I work part time and have two children in childcare so I got stuff to pay for.
Onto point number 2: the second part of Georges plan to get folks a’buying is more worrying. A lot more worrying. Remember how I was all “I’m not saying they should just hand out mortgages without doing any checks”? Well it’s not quite that bad, but there is a scheme announced in the Budget that will essentially force the hand of the mortgage providers buy offering to guarantee mortgages for those who would otherwise be denied such a loan. It will run for three years and cannot possibly be a bad idea.
My alternative: I briefly mentioned the global crisis earlier in this article and I’d like to talk a little bit more about it because history may well be about to repeat itself. My husband and I very nearly bought a house once before. It was before we were married and before kids and we had a deposit of 5% graciously loaned to us by my paternal grandparents. We had a mortgage agreed and found a house. And then…it went a bit wrong. The bank started to get shifty and suddenly went incommunicado with us. The estate agents got arsey with us as the sellers were probably getting arsey with them and eventually we heard the truth: our deposit amount was no good any more. It wasn’t just us: it was happening everywhere. The Great Recession had begun. Oh, did I mention this all happend in the first few months of 2008?
The issue then was that mortgage providers were merrily doling out mortgages to anyone who asked nicely and house prices were rising sharply. And what do they say? What goes up…
Basically everything crashed a little bit. It sucked. We’re still very much feeling the effects now. And dear old George thinks that doing the exact same thing as occured before the housing bubble burst will save the economy.
“I have every confidence in this ship”
The Final Point: Ok, so his fool proof plan was actually two fold, but there’s one more thing I’d like to address. The schemes that already exist to help folks buying currently only help first time buyers buying new builds. The new schemes have expanded on that to help buyers who are stuck where they are to move and also applies to existing houses (I don’t want to call them Old Builds, but basically houses that haven’t been newly built). This is good. So far I have no issues. What has been glossed over for the time being is how the scheme applies to second home buyers or property developers.
My alternative: It’s controversial, but stick with me a moment. I have grown up in villages where residents grow up and have to move away from their community into cheaper towns as they cannot afford to live in their home village. I have seen property prices rise because houses on a street have suddenly gotten particularly expensive. You know why this is? It’s because some people can afford to buy more than one home, so they either buy a big family home in the country and commute to the city to stay Monday to Friday in a crash pad or they have the family home in the city, but spend Friday evening to Sunday and various holiday weeks in second homes in the country. Do you know what some people do for a living? They buy cheap houses, sometimes falling down houses, that they do up and make all fancy for as little as possible so that it gets valued much higher than they bought it and then they sell it for a profit.
Both of these types of people helped to cause the housing bubble, pushing prices up. It wasn’t just them; the banks helped. But they were complicit. Georges schemes have said nothing about these people, so it stands to reason that they are as yet included in these schemes and thus will benefit from the cuts. Yay them, sad for the rest of us.
…except the rich
My conclusion and proposal: George has said that his scheme should run for 3 years, so I shall stick to that template. How about for 3 years, as a test, we get rid of deposits, offer help and support to get everyone and anyone who wants to on the housing ladder in new and older buildings (although not with risky loans as it would be nice to avoid another recession) and we put a stop on buying a second home or house to let/do up and sell for profit? We focus on getting those who want to own their own property or who want to move out of their current home where they want to be. Those who have their own homes and don’t want to move will be unaffected. Those who want to buy a second or third home won’t be able to and property developers will just have to make do with playing with dolls houses instead. Just for 3 years. Just to see what happens.
Gavel!
Discuss…
Gavel! Discuss... 