Home-Owner-Ism - Guardian and NewsThump on top form
Firstly, from the Guardian.
A good summary of the overall catastrophic outcomes, the interesting bit is this:
Boris Johnson’s latest proposal to expand home ownership by asking housing associations to sell off homes to their tenants at a discount, and allowing people to put benefit payments towards a mortgage, is just the latest in a long line of bad ideas that purport to expand these benefits to more people…
In fact, one minister’s estimate that the scheme could help just a few thousand is probably on the optimistic side: housing associations are independent bodies, which the government would have to bribe rather than force to sell off their stock, and people with modest levels of savings are disqualified from benefits, which begs the question of how many could afford a deposit
This is a bizarre gimmick of a policy, but I’m sure the Tories ran it past their focus groups. Short term, it might keep the bubble going another three (bubble due to pop in 2025). But long term, the main winners are the banks, who now have a steady stream of rising future income each time the homes are sold to the next mortgaged borrower, as NewsThump explains.
This comparison is slightly misleading:
The monthly cost of the average mortgage is cheaper than rent for the equivalent home; private renters spend 36% of their income on housing, compared with 12% for mortgage owners.
For FTBs on Day One, there isn’t much difference. Over the long term, your mortgage payment stay the same or go down and general price and wage inflation exaggerates this effect.
But there is some truth in it, as NewsThump illustrates:
As Boris Johnson began operation ‘Save Boris’ with a pledge to let plebs own bricks, many have said letting benefits count towards the affordability of a mortgage is a good start, but that the amount you are currently successfully paying in rent is probably a better indicator of what you can afford for a house.
Simon Williams, a renter from Wokingham told us, “My wife and I pay just over a thousand pounds a month to rent our modest two-bed house. To buy one on the same street would require a mortgage of about £700 a month, but apparently we can’t afford that.”
Backbench Tory MP Derek Despenser-Matthew told us, “Helping people like Simon and his wife is all well and good, but cannibalising the buy-to-let market it doesn’t make as good a headline as appearing to help people on benefits.
“Plus a lot of our donors are buy-to-let landlords, and it would not make good political sense to suddenly start decimating their core customer base. No, it’s much better to get a headline grabbing policy that will unlikely make it into law before the next election cycle and give Boris a few days of breathing space.”
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