House Prices

[ck1]

How can growth be capped at 5% increase?

[factor-fiction]

I will read the articles later. Maybe by increasing lending rates?

[Gromit]

Er, the Government tell the vendor that they cannot sell the house for more than 5% of what it is worth.

[factor-fiction]

So a £200,000 house can't be sold for more than £10,000 Gromit?

[Gromit]

If you buy a flat for £100,000 you cannot resell it for £110,000 in the next 12 months. You would only be allowed to sell it for 105,000. Capped.

[douglas9401]

COMMUNISM!!! :)

[factor-fiction]

I can't see who would monitor that- the Land Registry?

[Gromit]

Sorry, that first post didn't make much sense. Hope the second one explains what I meant better.

[LazyGun]

This is not a measure aimed at individual prospective homeowners seeking a mortgage, nor is it an attempt to impose some kind of cap upon those seeking to sell their homes - rather it is a suggestion that the BoE have the power to change rules and regulations for mortgage lenders as a whole, based upon the index of house prices, with a suggestion that, say a 5% annual rise in average prices might trigger such an intervention.

"f the inflation limit was breached, Rics argues, the Bank's fledgling financial policy committee, which is in charge of safeguarding financial stability, could act.

If it believes a bubble is emerging, the FPC has the power to direct the banking regulator, the Prudential Regulation Authority, to force lenders to set aside more capital against riskier mortgages, for example, which could make high loan-to-value mortgages more expensive.

Joshua Miller, senior economist at Rics, said: "The Bank of England now has the ability to take the froth out of future housing market booms, without having to resort to interest rate increases. Capping price growth at, say, 5% is one way of doing this.""

http://www.theguardian.com/business/2013/sep/13/house-price-cap-property-bubble

[LazyGun]

To be clear - this is categorically NOT a call to impose some kind of ban or cap on the price someone can sell their house at.

[factor-fiction]

Maybe a deal could be negotiated though- eg leave in 3 months, pay 6 months. That may be attractive to the landlord as it gives him time to find a new tenant

[factor-fiction]

Sorry- I was another thread about flat rentals

[LazyGun]

@f-f eh?

[LazyGun]

@f-f heh ok thanks for the clarification :)

[factor-fiction]

Don't know how that happened- I was reading ummmm's reply on the other thread, added my own reply and it jumped to here. Don't know what I did wrong

[jake-the-peg]

Heh

I do like the idea that limiting what a vendor can ask for a house is communism whereas limiting what the railways can ask for a season ticket is (presumably) not!

[ToraToraTora]

Lunatic idea and impossible to carry out. house proices should not be the concern of the governement.

[LazyGun]

@3T Ermm - what?

What part of the idea is "lunatic"?
How would it be "impossible to carry out"?

Since this is a suggestion from RICS to the BoE which is independent of the government - how is this government interference or whatever?

It should however be very much the concern of the BoE or the government come to that to manage yet another house price bubble, and very much the concern of the BoE and the government that financial institutions are properly regulated and are not seduced through greed into adopting risky lending practices which, it could be argued, precipitated the near-total collapse of the global financial sector back in 2008.

Are you sure you understand what it is that RICS were suggesting?

[mikey4444]

Can someone please explain why rampant inflation is considered a bad thing for everything, like gas and electric prices, train fares, petrol, food, etc, etc but a terribly good thing when it comes to houses ?

[ToraToraTora]

Well you can work out the percentage and compound it for years I guess but it's open to all sorts of abuse. It also means that if 5% is the limit then that's what it will be 5% year on year forever, prices would be sky high in a generation better to have what we have now. Governments usually come un stuck when they mess about with the financial infrastructure.

[LazyGun]

@3T I still think, based upon your responses, that you are misunderstanding what is being proposed.