Corbyn - I don't get it

Heartfeltdawn

ToneControl said:

After a few recent random puchases of Private Eye, I have now added that  to my regular news input with a yearly sub.  They seem to uncover more inside stories than all the papers combined, twice over,  and it's funny

It certainly is. No media source gets everything right but they do tend to get things on the button and aren't particularly partisan. Certainly having Hislop on telly doesn't stop them ripping into the BBC as they have done over the years. It's also one of the best value magazines out there.

Garthy

stickyfiddle said:

jpfamps said:

I think the main issue with living standards / low wages in the UK is massive cost of accommodation.

It would be FAR better to reduce the cost of living in the UK than to try to chase the market up by increasing wages.

Just came to say exactly that. The cost of housing in the UK is vast. The house market is overheated by almost every measure but no government wants to be the guy who causes it to drop significantly, because they'll be hugely unpopular and out for 2 terms. Osborne has been trying to depress it gradually and let inflation do the job, but combined with the various measures aimed at stopping it crashing (help to buy, etc) it hasn't really worked.  

In a weak economy a huge number of people are turning to BTL for their pensions (not least because penions have been raided for tax so many times now), which only makes it worse.

As someone without any property but keen to buy at some point in the next few years, I wouldn't mind a housing crash, but I can absolutely appreciate why a lot don't want one.

Whatever measures the Treasury have put in have not worked in many areas. I'm in Bucks and recently moved during 2015/2016 so we got to see first hand the horrific rise in asking and selling prices, mostly for 3 bed semis. Many houses we saw or neigbouring houses changed hands for £240-260k in 2014 yet 12 months later their asking prices were £340-375k. Almost every offer we put in at asking price was not nearly enough and every house but one went to sealed bids, including one at £392k for a house at an asking price of £380k and we still lost out. That buyer has already put it on the market at £425k and have had plenty of viewings. The biggest reason prices rise is because there are not enough houses, there are 8 couples chasing each house in our area. The thing is there is nowhere to build the amount of houses we need. South Bucks wants to build 10,000 homes over the next 20 years- enough for 45,000 people or in other words a fair sized town - where do you put a town that big? We already have a 3 year waiting list for many primary schools for people moving into the area so we also need dozens of new schools too.

Chalky

On the housing front, here in Cameron's parish there are lots of East European accents moving in and I hear they are pushing rents up. I didn't believe it last year but now my little ones are big enough for me to take them to the park regularly, I notice a lot of the other parents are East European - impeccably polite and friendly.  I didn't understand how they provide references to their landlords but it seems they do AND they pay the whole year's rent up front.

The South East desperately needs more housing and there is plenty of room to build.

Sporky

Chalky said:

The South East desperately needs more housing and there is plenty of room to build.

Agreed, but it also needs much better transport links. Or for more stuff to move out of London, and I can't see that happening.

Chalky

Sporky said:

Chalky said:

The South East desperately needs more housing and there is plenty of room to build.

Agreed, but it also needs much better transport links. Or for more stuff to move out of London, and I can't see that happening.

You're right of course, just expand outside the M25 and build lots more rail links from this outer edge to the centre.

Axe_meister

House prices would have to drop a massive amount to be affordable.
Lets take a House hold income of £30K.
That means you can get a  mortgage of 3*30K = 90K (bugger all really).

Now in London you can get a one bed flat for about £180k (real cheap end), a decent flat in an ok area is about £300k
So for the cheap flat you have to find about £90k deposit to afford the flat. for the decent one £210.

When house prices where affordable you normally had to find about a 10% deposit and then got a mortgage 3*Salary.
To go back to where we were. That would mean the cheap flat would have to go down to £99k to be affordable.
So a 45% drop in house prices would be required. Great for those looking to get on the ladder, but.
There are millions of people out there who would go into negative equity. Meaning nobody would sell to move (upgrading/moving job,etc). That would mean the housing market would completely stop unless a massive amount of new
builds came onto the market.
Again is a stagnant housing market builders are not going to build and/or will go bust.

p90fool

Chalky said:

Sporky said:

Chalky said:

The South East desperately needs more housing and there is plenty of room to build.

Agreed, but it also needs much better transport links. Or for more stuff to move out of London, and I can't see that happening.

You're right of course, just expand outside the M25 and build lots more rail links from this outer edge to the centre.

Or instead of constantly fighting a losing battle, just ignore the southeast of England altogether. Leave transport, schools, water, power and the rest of the infrastructure exactly how it is, stop trying to compete.

In a year or two house prices will fall naturally, businesses will start to move to better-serviced parts of the country and we might start approaching some kind of sensible equilibrium, instead of piling all of our resources into one tiny corner.

Businesses don't all need to be jammed cheek-by-jowl in the same street any more, it's the 21st century, they can be anywhere.

Sporky

It's a beautiful dream, but decades of overcrowded transport links and so on haven't had much impact on the M25 and surrounding areas. House prices keep rising, trains keep not having seats empty, traffic keeps on being horrible...

Myranda

Chalky said:

Sporky said:

Chalky said:

The South East desperately needs more housing and there is plenty of room to build.

Agreed, but it also needs much better transport links. Or for more stuff to move out of London, and I can't see that happening.

You're right of course, just expand outside the M25 and build lots more rail links from this outer edge to the centre.

Rail... South East... Have you heard of Southern Rail? He said better transport... Not more cancelled trains

Chalky

p90fool said:

Chalky said:

Sporky said:

Chalky said:

The South East desperately needs more housing and there is plenty of room to build.

Agreed, but it also needs much better transport links. Or for more stuff to move out of London, and I can't see that happening.

You're right of course, just expand outside the M25 and build lots more rail links from this outer edge to the centre.

Or instead of constantly fighting a losing battle, just ignore the southeast of England altogether. Leave transport, schools, water, power and the rest of the infrastructure exactly how it is, stop trying to compete.

In a year or two house prices will fall naturally, businesses will start to move to better-serviced parts of the country and we might start approaching some kind of sensible equilibrium, instead of piling all of our resources into one tiny corner.

Businesses don't all need to be jammed cheek-by-jowl in the same street any more, it's the 21st century, they can be anywhere.

Maybe, but more and more people choose to live in the South East.

p90fool

But perhaps they wouldn't if water was rationed and there were nowhere near enough schools. 

People flock to the southeast because we help them to. Maybe we should just stop. 

hungrymark

Heartfeltdawn said:

ToneControl said:

After a few recent random puchases of Private Eye, I have now added that  to my regular news input with a yearly sub.  They seem to uncover more inside stories than all the papers combined, twice over,  and it's funny

It certainly is. No media source gets everything right but they do tend to get things on the button and aren't particularly partisan. Certainly having Hislop on telly doesn't stop them ripping into the BBC as they have done over the years. It's also one of the best value magazines out there.

Ditto that, I'm a subscriber too. It's incisive ace witty and, even better, uses a plethora of in-jokes that you'd only get if you're a regular reader so it makes you feel line part of the club and better and than everybody else haha. 

jpfamps

stickyfiddle said:

jpfamps said:

I think the main issue with living standards / low wages in the UK is massive cost of accommodation.

It would be FAR better to reduce the cost of living in the UK than to try to chase the market up by increasing wages.

Just came to say exactly that. The cost of housing in the UK is vast. The house market is overheated by almost every measure but no government wants to be the guy who causes it to drop significantly, because they'll be hugely unpopular and out for 2 terms. Osborne has been trying to depress it gradually and let inflation do the job, but combined with the various measures aimed at stopping it crashing (help to buy, etc) it hasn't really worked.  

In a weak economy a huge number of people are turning to BTL for their pensions (not least because penions have been raided for tax so many times now), which only makes it worse.

As someone without any property but keen to buy at some point in the next few years, I wouldn't mind a housing crash, but I can absolutely appreciate why a lot don't want one.

Actually George Osborn has implemented two tax policies that are directly aimed at deflating house prices.

Firstly he has added 3% extra stamp duty for second homes.

Secondly he has legislated to remove higher rate tax relief on interest only mortgages.

Both these policies, with which I agree, were not stolen from other party's manifestos, but seem to have originated from Osbourne  (or his advisers), and in my opinion he deserves credit for this.

stickyfiddle

jpfamps said:

stickyfiddle said:

jpfamps said:

I think the main issue with living standards / low wages in the UK is massive cost of accommodation.

It would be FAR better to reduce the cost of living in the UK than to try to chase the market up by increasing wages.

Just came to say exactly that. The cost of housing in the UK is vast. The house market is overheated by almost every measure but no government wants to be the guy who causes it to drop significantly, because they'll be hugely unpopular and out for 2 terms. Osborne has been trying to depress it gradually and let inflation do the job, but combined with the various measures aimed at stopping it crashing (help to buy, etc) it hasn't really worked.  

In a weak economy a huge number of people are turning to BTL for their pensions (not least because penions have been raided for tax so many times now), which only makes it worse.

As someone without any property but keen to buy at some point in the next few years, I wouldn't mind a housing crash, but I can absolutely appreciate why a lot don't want one.

Actually George Osborn has implemented two tax policies that are directly aimed at deflating house prices.

Firstly he has added 3% extra stamp duty for second homes.

Secondly he has legislated to remove higher rate tax relief on interest only mortgages.

Both these policies, with which I agree, were not stolen from other party's manifestos, but seem to have originated from Osbourne  (or his advisers), and in my opinion he deserves credit for this.

He's added various measures around inheritance tax for owners of british houses living abroad (whether expats of foreign nationals), plus removal of tax relief/offsetting for BTL owners (not sure if that's for all or just for expat owners). 

I don't think he's gone quite far enough tbh, but he's also been desperate not to trigger anything that could be labelled a crash, so it's a nightmare.

ToneControl

^^
he set BTL tax relief to be only available at the lower tax rate

here's an example of when someone is not making a profit, hoping for capital gains (i.e. speculating on the housing market)

what that effectively means is that if you are a higher-rate taxpayer (and until retirement, almost everyone buying BTLs will be), and you buy a house for  £250k on a 75% loan, at 4%, interest -only, it's £624 a month = £7488
Near me that would rent at £800 a month
Assume it's empty 15% of the time, that's  £8160 a year
the letting agent takes 12%, that's  £7180 left
repairs could be anything. Let's assume £500, leaves  £6680
tenant finding fee is usually half a month's rent, leaves  £6480
some towns charge council tax on empty properties, so  8 weeks void could be £200 at least
so £6080 net rent

so that's a £1408 loss over the year - you previously paid no income tax on this - since you made a loss
There's a book that explains how this is still a good idea, if you plan to sell or remortgage after 2-3 years, assuming property value increases

with the new rules, you can only effectively claim half the  mortgage payments against your income tax,
so that means  a  £5152 loss per year

This aims to discourage people from speculative  BTL
Trouble is, you can still do this within a Limited company, and not pay the 50% tax on the mortgage payment, since it's still seen as a fair business expense (most firms borrow then offset interest as a business cost)

jpfamps

ToneControl said:

^^
he set BTL tax relief to be only available at the lower tax rate

here's an example of when someone is not making a profit, hoping for capital gains (i.e. speculating on the housing market)

what that effectively means is that if you are a higher-rate taxpayer (and until retirement, almost everyone buying BTLs will be), and you buy a house for  £250k on a 75% loan, at 4%, interest -only, it's £624 a month = £7488
Near me that would rent at £800 a month
Assume it's empty 15% of the time, that's  £8160 a year
the letting agent takes 12%, that's  £7180 left
repairs could be anything. Let's assume £500, leaves  £6680
tenant finding fee is usually half a month's rent, leaves  £6480
some towns charge council tax on empty properties, so  8 weeks void could be £200 at least
so £6080 net rent

so that's a £1408 loss over the year - you previously paid no income tax on this - since you made a loss
There's a book that explains how this is still a good idea, if you plan to sell or remortgage after 2-3 years, assuming property value increases

with the new rules, you can only effectively claim half the  mortgage payments against your income tax,
so that means  a  £5152 loss per year

This aims to discourage people from speculative  BTL
Trouble is, you can still do this within a Limited company, and not pay the 50% tax on the mortgage payment, since it's still seen as a fair business expense (most firms borrow then offset interest as a business cost)

Indeed you can do BTL (that should be "borrow-to-let" as most BTLers aren't actually buying anything) through a Limited Company, but this is no free lunch, as there are more hoops to jump through, and it can more expensive and harder to raise finance due to money laundering regs. Furthermore you won't be able to avoid tax (not of course than any BTL landlords are doing this, oh no), and banks are MUCH more likely to pull the plug on a Ltd Company in the event of getting into financial difficulties.

There are many economists (eg Andrew Smithers, Steven Wright, Anthony Hilton) who think that interest on ANY business loans shouldn't be tax deductible as it encourages debt finance over equity finance, and thus exacerbates asset bubbles.

ToneControl

jpfamps said:

ToneControl said:

^^
he set BTL tax relief to be only available at the lower tax rate

here's an example of when someone is not making a profit, hoping for capital gains (i.e. speculating on the housing market)

what that effectively means is that if you are a higher-rate taxpayer (and until retirement, almost everyone buying BTLs will be), and you buy a house for  £250k on a 75% loan, at 4%, interest -only, it's £624 a month = £7488
Near me that would rent at £800 a month
Assume it's empty 15% of the time, that's  £8160 a year
the letting agent takes 12%, that's  £7180 left
repairs could be anything. Let's assume £500, leaves  £6680
tenant finding fee is usually half a month's rent, leaves  £6480
some towns charge council tax on empty properties, so  8 weeks void could be £200 at least
so £6080 net rent

so that's a £1408 loss over the year - you previously paid no income tax on this - since you made a loss
There's a book that explains how this is still a good idea, if you plan to sell or remortgage after 2-3 years, assuming property value increases

with the new rules, you can only effectively claim half the  mortgage payments against your income tax,
so that means  a  £5152 loss per year

This aims to discourage people from speculative  BTL
Trouble is, you can still do this within a Limited company, and not pay the 50% tax on the mortgage payment, since it's still seen as a fair business expense (most firms borrow then offset interest as a business cost)

Indeed you can do BTL (that should be "borrow-to-let" as most BTLers aren't actually buying anything) through a Limited Company, but this is no free lunch, as there are more hoops to jump through, and it can more expensive and harder to raise finance due to money laundering regs. Furthermore you won't be able to avoid tax (not of course than any BTL landlords are doing this, oh no), and banks are MUCH more likely to pull the plug on a Ltd Company in the event of getting into financial difficulties.

There are many economists (eg Andrew Smithers, Steven Wright, Anthony Hilton) who think that interest on ANY business loans shouldn't be tax deductible as it encourages debt finance over equity finance, and thus exacerbates asset bubbles.

I know it's impractical inside a company since the banks won't lend much, and charge 1% more interest, but it illustrates the principle that the playing field is not level. 

interesting point on equity finance. 

DrJazzTap

I confess I like Corbyn. He doesn't seem interested in becoming a celebrity. I just wish he had more balls. He just seems a timid fellow.

jpfamps

ToneControl said:

jpfamps said:

ToneControl said:

^^
he set BTL tax relief to be only available at the lower tax rate

here's an example of when someone is not making a profit, hoping for capital gains (i.e. speculating on the housing market)

what that effectively means is that if you are a higher-rate taxpayer (and until retirement, almost everyone buying BTLs will be), and you buy a house for  £250k on a 75% loan, at 4%, interest -only, it's £624 a month = £7488
Near me that would rent at £800 a month
Assume it's empty 15% of the time, that's  £8160 a year
the letting agent takes 12%, that's  £7180 left
repairs could be anything. Let's assume £500, leaves  £6680
tenant finding fee is usually half a month's rent, leaves  £6480
some towns charge council tax on empty properties, so  8 weeks void could be £200 at least
so £6080 net rent

so that's a £1408 loss over the year - you previously paid no income tax on this - since you made a loss
There's a book that explains how this is still a good idea, if you plan to sell or remortgage after 2-3 years, assuming property value increases

with the new rules, you can only effectively claim half the  mortgage payments against your income tax,
so that means  a  £5152 loss per year

This aims to discourage people from speculative  BTL
Trouble is, you can still do this within a Limited company, and not pay the 50% tax on the mortgage payment, since it's still seen as a fair business expense (most firms borrow then offset interest as a business cost)

Indeed you can do BTL (that should be "borrow-to-let" as most BTLers aren't actually buying anything) through a Limited Company, but this is no free lunch, as there are more hoops to jump through, and it can more expensive and harder to raise finance due to money laundering regs. Furthermore you won't be able to avoid tax (not of course than any BTL landlords are doing this, oh no), and banks are MUCH more likely to pull the plug on a Ltd Company in the event of getting into financial difficulties.

There are many economists (eg Andrew Smithers, Steven Wright, Anthony Hilton) who think that interest on ANY business loans shouldn't be tax deductible as it encourages debt finance over equity finance, and thus exacerbates asset bubbles.

I know it's impractical inside a company since the banks won't lend much, and charge 1% more interest, but it illustrates the principle that the playing field is not level. 

interesting point on equity finance. 

Essentially the economic argument for not allowing tax relief on loans is a compelling one.

The main issue is that it encourages people to engage in economically unproductive financial engineering which is only profitable due to the massive tax advantage of debt finance. The leveraged private equity buyouts are a prime example.

i.e. people are making investment decisions based on the tax breaks and NOT whether it's a good investment.

The problem with leveraging is that if it works in your favour, it massively beneficial, however if it goes against you are very quickly in trouble.

The BTL market is a prime example of both the two phenomenon, especially as "conventional wisdom" is that the housing market can only go in one direction (which of course breaks the fundamental rule of economics: "there is no such thing as a free lunch".)

If you assume that the market is only going in one direction, i.e there is no risk premium, and thus no thought needs to be applied as to whether any asset in the market is fairly priced, and even a derisory real return is acceptable. Added to this the benefits of leveraging and the tax advantage of interest only loans and you have, in my opinion, a recipe for disaster.

jpfamps

p90fool said:

I get most of my news from the Today Programme or PM on Radio 4, which is probably the most analytical and liberal news source being broadcast in this country.

I hear about 2 hours of it every day and he's barely a presence on it. The reason he's unelectable is because he's crap at media stuff, if he has nothing notable to say on the Today Programme he's not going to get much change out of Murdoch's mob. 

It's not bias, he could walk into Radio Four and give a momentous interview at peak breakfast time whenever he liked, he just doesn't really seem have a lot to say. I find it astonishing that in the most exciting couple of weeks in British politics for a generation the Leader of the Opposition is practically invisible. 

It's not media bias, it's total incompetence on his part, and I say that as someone who agrees with a lot of his policies. If he can't even reach out to me then he's fucked.  

Indeed.

Jeremy Corbyn could easily have a higher profile in the media, but chooses not too, as he doesn't want to engage with media outlets that he sees as "against" him, which would certainly include the BBC.

For example, on the day that Theresa May was announcing her cabinet Jeremy Corbyn was attending a Cuba Solidarity meeting!