Simple way to stop runaway house prices

[Mich the Tester]

most people these days have just an interest only mortgage (and no means to pay off the capital!).

wtf is the point of that? Isn't that just paying lots of money to delay being homeless until you're too old and decrepit to do anything about it?

[AtW]

wtf is the point of that?

Otherwise they could not afford to buy a house!!!

[doodab]

wtf is the point of that? Isn't that just paying lots of money to delay being homeless until you're too old and decrepit to do anything about it?

The theory is that by the time you have to repay the loan the amount you need to repay is equivalent to perhaps 2 weeks salary rather than 3 years.

[TimberWolf]

The theory is that by the time you have to repay the loan the amount you need to repay is equivalent to perhaps 2 weeks salary rather than 3 years.

Sounds like a good theory: Hyperinflation + low interest rates = house paid for.

[Scary]

wtf is the point of that? Isn't that just paying lots of money to delay being homeless until you're too old and decrepit to do anything about it?

Otherwise the banks wouldn't get any money, then they'd have to repossess the houses of people who overstretched themselves and at some point sell it at a loss and this would push down prices and make houses affordable for the prudent and the banks would lose money and couldn't pay out big bonuses.

Not an option.

[ThomasSoerensen]

Nationalize all houses - Gordon can be your landlord.
No more selling and buying of houses.
Prices become a hypothetical number with no meaning.
Simples.

[Moscow Mule]

Surely one does not need a degree in Finance & Credit (like myself) to understand these basics?

I think you're deliberately mixing it up to promote your high interest agenda, so I'm not playing anymore.

Where's my Millennium Falcon, I'm going home.

[Julius Caesar]

At the moment, your primary residence (and all other properties if you are an MP) is not subject to CGT.

Change the rule, so that CGT is charged after indexation against inflation is taken off.

So if for example, you buy at £500K and after a few years you sell at £1M, and £500K after adding inflation is then worth £700K, you owe CGT on the £300K difference.

This would tend to stop all housing rising above inflation as everyone would be shelling out CGT and so the price rises would tend to follow inflation.


Simples.

And charge the notional rent saved by living in your own house as a taxable benefit. That'd cut down on the relentless drive to "be on the housing ladder".

[Mich the Tester]

Otherwise they could not afford to buy a house!!!

But they’re not buying a house. They’re renting a house from the bank.

[DimPrawn]

But they’re not buying a house. They’re renting a house from the bank.

The benefit of doing this rather than renting is you don't have some gobtulipe landlord telling you what you can and cannot do with your home and you don't worry about getting a notice to quit letter from your landlord.

You don't have a landlord hiking the rent up at whim.

And at the end of it, house prices having risen 100000000000% means you become a billionaire at the end of the 20 year mortgage, where as the renter has nothing.